Since I wrote my January 2023 trends article 12 months ago, it seems like we've lived through about five years. Such is the perceived pace of life and work today, exacerbated no doubt by the continual, rapid onslaught of new information and data every day.
But then, reviewing last year's article before writing this one, it's clear that the themes I called out are still relevant. And thinking about it, on one level this stands to reason. Last year's polycrisis is now a cluster of polycrises, each with its individual epicentre, and also impacting on each other, escalating the overall fallout. And in times of uncertainty change is understandably challenging and an unnecessary risk.
So where do we stand today when it comes to the three themes and potential opportunities I discussed at the start of 2023 – Africa, ESG and the role of tech?
Opportunity in Africa
Cynically, you could say that the African markets and countries present growth opportunities simply because of the poor state of the rest of the world. I disagree and argue that the continent offers opportunities on its own merits. Acknowledging that the continent is made up of 54 countries and there's much variance across these markets, I still maintain that you should look to investments on the continent to diversify your portfolio and generate above-average returns.
Take the new African Continental Free Trade Area (AfCFTA) which I mentioned last year. After a successful pilot with seven countries in 2023, trading will ramp up to include 31 countries this year. This is more than half of the second largest and second most populous continent in the world. Further, a new payment system and digital trade will remove friction between different currencies, further boosting competitiveness and growth potential.
This, combined with our collective resilience and hardiness in the face of chaos, uncertainty and less-than-ideal circumstances, means opportunity in Africa should not be ignored.
Reporting on ESG2023 was something of an unfortunate holding pattern for ESG in some respects. The fuel crisis brought on by the Russian invasion of Ukraine meant ESG got kicked down the road somewhat. But work proceeded in the background and the European Union's Corporate Sustainability Reporting Directive (CSRD), the first of several reporting frameworks and other agreements, launched in January 2024. Also coming soon are the Global Plastics Treaty and the US SEC’s climate disclosure rules, among others. Unfortunately, it looks like the FRC has watered down ESG and audit requirements in the UK’s corporate governance code, which is expected to come into effect at the start of 2025.
With the fuel situation in Europe stabilising and the Paris Agreement’s first big deadline for carbon reduction approaching fast in 2030, it is to be hoped that ESG will return to the front burner this year and that we will see additional momentum and activity.
Technology (but not AI, yet!)
You'd be forgiven for thinking that 2023 was the year AI became mainstream and that 2024 will be the year the robots really come for our jobs. But despite the headlines and time spent discussing AI everywhere from around the barbeque to Davos, I don’t think we're there yet. And further, I'd argue that cloud computing will continue to be the biggest tech game changer and opportunity in 2024. In fact, cloud computing uptake is what is going to propel AI into the mainstream.
For now, what I have previously written about AI still holds true. We should be considering it in our succession planning and, although it's not here yet, we should be keeping an eye on advances in AI, and all tech for that matter.
Why do I say AI is not here yet? I have two main reasons. First, there's a lot of AI-washing going on today. Automation and what I call artificially intelligent processes (that still rely heavily on human input and existing thinking) are often what is actually being spoken about when people say something is powered by AI.
Next, despite the hype around ChatGPT and similar services which are undoubtedly very useful – I have become a regular user of ChatGPT – AI is still in its infancy when it comes to consumable, commoditised end-user products. It's a bit like we're at the birth of electricity. The utility was clearly there, but until homes were electrified and electric products were produced for a mass market, the electricity had nowhere to go.
All this is to say that the work starts now with developers to include AI into their offerings. We've already seen some exciting new services launched, such as Microsoft's GPT-4 powered Copilot integrated into Excel. But undoubtedly there are many more to come, and AI will be like the electricity that invisibly powers everything we do.
Back to my point about the cloud enabling AI. All these new AI capabilities are going to need the cloud to work and to be accessible. Think about the processing power AI needs and the size of the data lakes alone. It is neither financially feasible nor possible to replicate these capabilities in your own server room or data centre. This is yet another tick in the column for cloud computing, along with cost, agility, economies of scale and security that is going to hasten the back of the pack's migration to cloud-enabled environments.
In three to four years, I wonder what percentage of companies’ IT environments will still be on-prem? Single digits is my bet!
While we thought we were in for a rocky ride heading into 2023, 2024 looks like it might have some challenges up its sleeve for us too. With fragmented, layered crises and elections for almost half of the world's population, it's easy to feel pessimistic. Perhaps it is helpful to consider that the themes that I have discussed for two years now are a sign of quiet progression and opportunity (rather than stagnation) and are a reminder to hold the course even when the noise around us is overwhelming and distracting.
As published in AccountingWeb - January 2024