Abstract
Background: Most organisations are undertaking digital transformation to enhance value-creation processes. Likewise, local municipalities are adopting digital technologies such as social media, cloud computing, and artificial intelligence to improve service delivery to citizens. However, despite the potential benefits of digital transformation, most initiatives are failing to deliver expected outcomes. As a result, rural local municipalities and citizens are missing out on opportunities presented by digital technologies.
Objectives: The study employs the dynamic capability view as a theoretical lens to understand why rural local municipalities are struggling to enhance service delivery performance through digital transformation initiatives.
Method: A deductive qualitative research design was utilised through in-depth interviews with nine different departmental managers in rural local municipalities in the Limpopo Province. A hybrid thematic analysis was conducted to leverage both theory-driven and data-driven approaches, thereby enhancing the study.
Results: Rural local municipalities are struggling to integrate emerging technologies into their business models. This struggle stems from a lack of dynamic capabilities that support digital transformation. The results show that local municipalities face issues, such as the digital divide and infrastructural, technical, financial, policy, and strategic challenges.
Conclusion: Digital transformation in rural local municipalities promises efficient operations and enhanced service delivery. However, local municipalities and citizens will continue to miss out on the benefits of digital transformation due to a lack of the required capabilities.
Contribution: The study contributes to the ongoing discourse on digital transformation by highlighting the importance of dynamic capabilities in public-sector initiatives. Thus, adding microfoundations to build dynamic capability for digital transformation in rural local municipalities.
Keywords: digital technologies; dynamic capabilities; local municipalities; business model; digital transformation initiatives; departmental managers.
Introduction
Digital technologies are swiftly changing the environment in which businesses and organisations operate. Consequently, in response to environmental changes, governments across countries are now under pressure to recalibrate their business models through digital technologies. Mai et al. (2024) highlighted that sectors such as communication, retail, healthcare, and agriculture are now integrating digital transformation into their operations, as no sector is immune to such transformation. In the public-sector, Kuhlmann and Heuberger (2023) highlighted that public organisations are facing increased pressure to establish more digitally driven services to enhance operational efficiency and performance, making digital transformation in government an imperative to ensure governmental reform (AlShdaifat 2024; Palos-Sánchez et al. 2023). Governments are now leveraging digital technologies such as cloud computing and artificial intelligence (AI) to enhance efficiency (Schneider et al. 2023). The integration of AI, cloud computing, and data analytics is found to be positively impacting public service-provision (Galushi & Malatji 2022; Jimenez-Gomez, Cano-Carrillo & Lanas 2020). In a municipality, digital transformation can promote citizen-centred, user-friendly services that improve the quality of life (Debeljak & Dečman 2022). Moreover, digital transformation promotes interaction between municipalities and citizens and improves the quality-of-service delivery and service management (Shava & Vyas-Doorgapersad 2022). The local municipality is the sphere operating closest to citizens, and its primary aim is to satisfy citizens and communities by providing essential services as assigned by the country’s Constitution (Zerihun & Mashigo 2022), including car registration and basic services such as water, waste, and electricity. In South Africa, local government, the lowest of three spheres in the democratic set-up, is regulated and controlled by two other higher spheres, as Van Wyk (2012) indicated. Moreover, De Visser, Steytler & Machingauta (2010) indicates that local municipalities, according to the Constitution of the Republic of South Africa of 1996 (ÁFRICA, 2020), must contribute to the realisation of the right to housing within their Constitutional mandate by making land available, by ensuring the provision of services such as water, sanitation, electricity, roads, storm water drainage, and transport, and by ensuring access to housing for its citizens. According to Makale (2015), rural local municipalities are those that fall into category B3 that comprises no large town as a core urban settlement, have a relatively small population, a large proportion of urban, and are based in one or more small towns; category B4 comprises one or two small towns in the areas, communal land tenure, and villages or scattered groups of dwellings, and are located in former homelands such as Venda, Lebowa and Gazankulu. Baleni, Jordan-Dyani and Pieterse (2025) indicated that digital transformation can deliver high-impact services that meet citizens’ needs and ensure that they are delivered to the people who need them, when they need them. Despite the potential benefits of digital transformation, local municipalities continue to struggle to achieve success with these initiatives (Adelakun et al. 2025). The survey conducted by McKinsey and Company (2018), titled Unlocking success in digital transformations, indicated that most organisations struggle to successfully improve performance through digital transformation. The literature points to multiple factors contributing to the failure of digital transformation initiatives. The study by Lafioune et al. (2023) in Canadian municipalities reveals that, regardless of size, most municipalities do not recognise the benefits of digital transformation and are less interested in it, resulting in fragmented digital transformation initiatives, inadequate resource allocation, and limited digital transformation expertise and training. The study by Kuhlmann and Heuberger (2023) indicated that digital transformation initiatives in local municipalities are impacted by governance, legal, technological, usability, and, lastly, resource-related constraints. Palos-Sánchez et al. (2023) also noted that the strategies and budgetary models adopted by local municipalities make it difficult for them to respond to technological and environmental change. Responding to environmental changes requires organisations to review their resources, capabilities, and competencies (Schneider et al. 2023). According, to Mai et al. (2024) and Matysiak, Rugman & Bausch (2018), strong dynamic capabilities enable organisations, such as local municipalities, to anticipate technological changes, realign assets accordingly, and strategically collaborate with other enterprises to co-create the business ecosystem. In South Africa, initiatives to integrate digital technologies into government operations date back to 1999, when the South African government established the SITA (State Information Technology Agency) as a strategic partner for its information technology (IT) initiatives. Since then, the South African government has been making efforts to enhance service delivery by integrating digital technologies into its business model through numerous digital transformation initiatives. These initiatives are aimed at modernising public service delivery, as indicated in South Africa’s roadmap for the digital transformation of government publication by Baleni et al. (2025). According to Manda and Backhouse (2018), the South African government’s recognition of ICT as a tool to address community issues has led it to adopt three key pillars of ICT: digital transformation of government, digital access, and digital inclusion. However, despite all the digital transformation efforts in the South African government, Baleni et al. noted that the country is still missing opportunities to deliver high-quality services to people in a seamless manner. Thus, the South African government’s digital transformation initiatives are failing to deliver according to its strategic objectives. According to Shibambu and Ngoepe (2025), South Africa is not enjoying the benefits of digital transformation and government services. Therefore, this study uses the digital-capability-view lens to examine local municipalities’ digital transformation and, through interviews with departmental managers, to understand why rural municipalities in South Africa are failing to maximise the benefits of digital transformation. Therefore, the study aims to answer the following questions:
- Why are South Africa’s rural local municipalities failing to maximise the benefits of digital transformation initiatives?
- How can rural local municipalities successfully transform their service delivery models through digital technology projects?
Literature review
Digital transformation
The ongoing disruption of the ecosystem in which local municipalities operate requires them to reconfigure their business models to enhance performance (Parida, Sjödin & Reim 2019). The continuous emergence of digital technologies provides local municipalities with an opportunity to improve their efficiency through digital transformation. Today, digital transformation is a major item on local municipalities’ strategic agenda (Singh, Klarner & Hess 2020). Integrating digital technologies into how an organisation operates has a direct relationship with organisational performance (Sousa-Zomer, Neely & Martinez 2020). Thus, digital technologies such as cloud computing, social media platforms, AI, and virtual reality in local municipalities can enhance their service delivery performance. The study by Dang (2025) dubbed the integration of digital technologies into organisational operations ‘digital transformation’. McKinsey Global Publishing’s 2024 updated version of Digital Transformation defines digital transformation as the rewiring of an organisation to create value through the integration of technologies. Schneider et al. (2023) describe digital transformation as a strategic use of digital technologies to reshape business processes, customer experience, and organisational culture. Wang and Ma (2022) viewed digital transformation as an initiative to renovate organisations through digital technologies to enhance operations by automating tasks, activities, or processes and, consequently, refresh their value proposition. In the context of the public sector, digital transformation is defined as a process of implementing government innovations facilitated by information and communication technologies, which reformulates internal processes, organisational structures, governance, service delivery models, regulatory aspects, relationships between levels of government, and between private and public operators (De Magalhães Santos 2024). From the definitions, the outcome of digital transformation is value-creation, which is directly linked to organisational processes that satisfy customer and organisational needs. However, for organisations such as local municipalities to leverage the opportunities presented by digital technologies, they need dynamic capabilities to reconfigure organisational resources and competences (Sousa-Zomer et al. 2020).
Digital transformation in local municipalities
Big data, cloud technology, artificial intelligence and machine learning (AI/ML), enhanced robotics, data analytics, 3D printing, and blockchain are significantly disrupting industrial operations (Ghosh et al. 2022). Different sectors are making moves to recalibrate their business models through the adoption of digital technologies. Therefore, rural local municipalities are also taking advantage of digital technologies and are integrating digital technologies such as big data, AI, robotics, and data analytics into local municipalities’ service delivery models to enhance service delivery. A digital transformation initiative in Santander City, Spain, received a million-dollar grant for a digital technology project to install AI sensors to examine parking trends, water management, waste management, and personalise citizens’ services (Androutsopoulou et al. 2019), thus automating activities known to be performed by humans. It is enticing for local municipalities to undertake digital transformation projects because of the potential benefits associated with a digitally transformed business model (Delioğlu & Uysal 2022). Through digital transformation initiatives, local municipalities are enhancing efficiency and service quality by reducing service lead times, increasing transparency, and enabling seamless service delivery (Lindgren et al. 2019). Moreover, public participation in government is enhanced through the adoption of digital technologies (Veeramootoo, Nunkoo & Dwivedi 2018). The perceived benefits of digital technologies are driving government authorities worldwide to respond to technological developments. Digital transformation in local municipalities is more than just using and maintaining a technology environment, as it is directly linked to the service delivery model and citizens’ experience (Ellström et al. 2022). Digital technologies are transforming people’s and organisations’ activities, and in government, they can be seen as a symbol of modernity and responsiveness to citizens’ demands (Haro-de-Rosario, Sáez-Martín & Del Carmen Caba-Pérez 2018). Furthermore, Lember, Kettel and Tõnurist (2018) indicate that introducing new technological applications in local municipalities adds value, such as increasing life expectancies, reducing crime rates, shortening service delivery turnaround times, and improving trust between the government and its citizens. However, most municipalities, especially in developing countries, face challenges such as constrained budgets, a lack of human capabilities, and infrastructure and know-how (Luna-Reyes et al. 2020). The concept of digital transformation in the public sector is still in its infancy (Schneider et al. 2023). However, research in this area is now gaining consistency (De Magalhães Santos 2024). According to Mai et al. (2024), most organisations venturing into digital transformation are falling behind; they are hindered by a lack of comprehensive strategic policy, management, and infrastructure (Dang 2025). In addition, Adelakun et al. (2025) indicated that failures in digital transformation initiatives result from executives’ lack of understanding of digital transformation, organisational power dynamics, and insufficient support and interest from other parts of management. Furthermore, managers’ inability to sense the urgency of change is a critical factor contributing to digital transformation failure (Ellström et al. 2022). According to Sailer, Stutzmann and Kobold (2019), digital transformation initiatives are failing because business functions operate in silos. The study by De Magalhães Santos (2024) highlighted the key limitations faced by leaders involved in public-sector digital transformation initiatives, which include a lack of technical and non-technical skills, silos of institutional arrangements, distrust and lack of incentives for change, lack of a vision, lack of involvement, and lack of strategic thinking. The issue of culture was raised by Ghosh et al. (2022) as one key factor behind the failure of most digital initiatives, as it can prevent changes in an organisation. To respond to environmental changes through digital transformation, local municipalities need to develop technological capacity, which is the ability to explore, develop, and adapt to new technologies into the service delivery model (Lember et al. 2018). These capacities are developed by understanding the mechanisms that drive the speed and direction of technological development, such as identifying the right technologies to pursue at the right time, as Vial (2021) indicates. The study by Sousa-Zomer et al. (2020) highlighted key components that an organisation must develop to enhance digital transformation, including establishing partnerships with other organisations and developing digital skills and knowledge for leadership positions. Ellström et al. (2022) and Luna-Reyes et al. (2020) further highlighted the significant need to build dynamic capabilities for digital transformation. There is a need to develop dynamic capabilities to successfully transform digitally (Kowalski et al. 2025). Dynamic capability is defined as the firm’s ability to integrate, build, and reconfigure internal and external competencies to address a rapidly changing environment (Schneider et al. 2023). These capabilities, according to Dang (2025), are built on three main activities: sensing, seizing, and transforming, and, according to De Mendonça and De Andrade (2018), dynamic capabilities are at the centre of local municipalities’ digital transformation success or failure. This study employs the dynamic capabilities view (DVC) to understand why rural local municipalities are failing to realise the benefits of digital transformation through digital initiatives.
Theoretical foundation
Dynamic capability theory
The literature has identified dynamic capabilities as a driver of successful digital transformation initiatives across all types of organisations. Dynamic capability theory is essential in digital transformation because of its three primary activities: sensing, seizing, and transforming, which Sousa-Zomer et al. (2020) pointed out as three strong key pillars of digital transformation. Since its introduction in 1997 by Teece, Pisano and Shuen (1997), the concept of dynamic capability has attracted significant attention in academic research. Dynamic capability is closely related to the resource-based view (Helfat & Peteraf 2009), and it has primarily been used to understand an organisation’s core competencies, organisational performance, skills, and resources in response to business environmental changes. According to Helfat and Peteraf (2009), the topic of dynamic capabilities is broad and complex, spanning multiple levels of an organisation, including strategy process and content, and involving multiple levels of analysis, from managerial decision processes to organisational routines to competitive interactions and environmental change. According to Kaltenbrunner and Reuchel (2018), dynamic capabilities represent high-level activities and can govern other capabilities. Kevill, Trehan and Easterby-Smith (2017) describe dynamic capabilities as the capacity to purposefully create, modify, and extend an organisation’s resource base. Zollo and Winter (2002) define dynamic capabilities as a stable pattern of collective activities learned by a particular organisation to modify its operational routines and systematically improve organisational effectiveness. The literature has linked successful digital transformation initiatives to an organisation’s ability to sense opportunities, seize them, and reconfigure business models; therefore, this study views digital transformation capability as an enabler of successful digital transformation in local municipalities.
Dynamic capabilities for digital transformation
The success of digital transformation is largely attributed to dynamic capabilities, which Li et al. (2022) describe as the ability to respond to environmental changes through three dimensions: sensing, seizing, and reconfiguration. These three dimensions must be supported by the development of dynamic capabilities microfoundations, including skills, processes, procedures, organisational structures, and decision rules, so that organisations can digitally transform (Kowalski et al. 2025).
Sensing capabilities: the ability to recognise and assess opportunities and threats, continuously assisting the organisation in acquiring knowledge and understanding both internally and externally (Engelmann 2024). Internally, digital sensing capabilities enable the organisation to evaluate the existing digital transformation critical component (infrastructure) and search for a solution (Ellström et al. 2022). Marheine and Petrik (2021) identify three major sensing microfoundations as environmental screening, partner discovery, and growth exploration. Kowalski et al. (2025) further position sensing capability and its microfoundations within an organisation’s strategic position, as they help formulate digital strategies. Engelmann (2024) identified two sets of activities that comprise sensing: bridging and sharing. Bridging involves actively gathering and assimilating information from the external environment, and sharing is the process of making sense of information obtained through bridging, disseminating, and interpreting it for the benefit of the firm. In the context of a local municipality, sensing is the ability to scan the environment for new technologies and to understand the value of emerging digital technologies to the local municipality’s service-provision business model. Ellström et al. (2022) indicated that to carry out meaningful sensing for digital transformation, organisational routines must be linked to specific underlying activities and be focused on the entire ecosystem in which the organisation operates.
Seizing capabilities: to achieve digital transformation strategic objectives, such as responding to competitive pressure and meeting customer expectations, prioritising frequent environmental scanning should be emphasised. Once an opportunity is sensed and assessed as beneficial, an investment decision must be made to capture its value (Sousa-Zomer et al. 2020). However, organisations frequently sense opportunities presented by digital transformation but fail to seize them (Ellström et al. 2022). Seizing involves calibrating and exploiting the sensed opportunities (Engelmann 2024). Seizing involves deciding to reconfigure organisational resources, and, according to Malik (2023), seizing opportunities requires allocating resources and utilising existing capabilities.
Research methods and design
The study seeks to understand why local municipalities in rural communities in South Africa are failing to maximise the potential benefits of digital transformation initiatives. The study employs the dynamic capability view as a theoretical lens to understand digital transformation initiatives in rural local municipalities. The literature has identified dynamic capabilities as a primary enabler of digital transformation initiatives. The study involves interviewing departmental managers in rural local municipalities to explore their experiences with digital transformation initiatives.
Research design
The literature suggests that digital transformation in the public sector is still in its early stages, and the concept is still developing (Ellström et al. 2022). For this reason, the researcher employs a deductive qualitative approach to gain deeper insights into digital transformation initiatives in the public-sector, with dynamic capability theory as the point of departure for data collection and analysis. The nature of the research questions positions the study within an interpretive research paradigm. Using a qualitative research approach, the study contributed to enriching the concept of digital transformation in rural local municipalities (Azungah 2018), as its flexibility enabled the researcher to delve deeper into a concept still in its early stages of development. The study aims to investigate why local municipalities are failing to realise value from digital transformation initiatives by interviewing department heads in rural municipalities. Therefore, to achieve the study objective, a case study with a deductive approach was employed. The selection of a case study qualitative research approach for this study is underlined by the interpretive nature of the study research question (Baškarada 2014), which seeks to get an answer to the question of why rural local municipalities are failing to successfully benefit from digital transformation initiatives. As a result of the infancy of the digital transformation concept in the public sector, especially in South Africa, multiple cases (rural local municipalities) were considered preferable to a single case to achieve a more robust outcome. According to Baškarada (2014), a case study is more suitable when the researcher has little control over the event and when little is known about the phenomenon under study. Although in qualitative research the issue of sample size is considered less important, as the focus is on the sample that offers more in-depth information, the researcher purposefully recruited nine departmental managers across different departments in rural local municipalities through purposive and snowball sampling techniques. The recruitment process was mainly through office visits, emails, and telephone calls.
Data collection
Nine face-to-face semi-structured interviews were conducted with departmental managers from rural local municipalities across different districts of Limpopo province. According to Peel (2020), semi-structured interviews are guided by open-ended questions designed around predetermined themes derived from the microfoundations of the three elements of dynamic capability theory (sensing, seizing, and reconfiguring). Furthermore, the semi-structured interview was preferred for its flexibility in probing issues through questions and follow-ups; thus, the interviewees were not limited in their elaboration on the topic of digital transformation in local municipalities (Swain 2018). Table 1 shows the profile of the interviewees for this study. The interview guide primarily covered questions about participants’ understanding of digital transformation and initiatives in local municipalities. For ethical considerations, all participants were briefed about the study and its objectives, and, most importantly, informed of the audio recording of the interviews, with the consent form also provided to participants.
Data analysis
The study employed a hybrid thematic (deductive and inductive) data analysis, enabling the study to benefit from the advantages of both a theoretically driven and a data-driven approach (Joffe 2011; Gaol et al. 2023). Deductive thematic analysis is a theory-driven approach, as indicated by Bonner et al. (2021), whereas inductive thematic analysis is a data-driven approach. However, combining the two into a hybrid thematic analysis ensures that participants’ voices are valued while simultaneously allowing a theory-driven analysis (Proudfoot 2023). This approach adds value to the quality of the study’s findings.
Deductive: In this approach, the initial coding process begins with predetermined coding systems (Gaol et al. 2023) derived from the microfoundations of dynamic capabilities theory and the existing literature, which lay the foundation for the deductive approach.
Inductive: to avoid missing critical insights into digital transformation in local government, an inductive thematic analysis was conducted, allowing the researcher to generate and capture emerging findings that did not align with the existing literature. A three-phase, seven-stage analysis proposed by Swain (2018) was adopted. Table 2 illustrates the thematic analysis conducted to gain better insight into digital transformation initiatives in local municipalities.
| TABLE 2: Summary of hybrid thematic analysis. |
Ethical considerations
Ethical clearance to conduct this study was obtained from the University of Venda Research Ethics Committee (No. FMCL/21/BIS/03/1309).
Results
Digital transformation in rural local municipalities
The South African government has been continuously prioritising digital transformation to enhance service delivery, citizens’ satisfaction, and trust in government at all levels and across government operations. However, the study reveals that rural local governments, which are closely tied to citizens, are struggling to realise the benefits of digital transformation as a result of the absence of digital transformation dynamic capabilities and their microfoundations. The study reveals the following:
Lack of awareness and digital transformation expertise
Awareness and knowledge of emerging technologies and digital transformation are important to organisations’ digital transformation initiatives, and a digitally literate leader is more likely to promote them than a non-digital leader. Leaders in organisations, who are less knowledgeable about digital transformation, are more likely to negatively impact the success of digital transformation implementation in any institution. Digital transformation awareness is a critical component in driving an organisation’s ability to sense. It is less likely that local municipalities will perceive digital transformation as beneficial if leaders are unaware of the variety of digital technologies in their environment:
‘I think the first thing is awareness, to make us aware of the existence of technologies and the use of them and how they will ease the way to do our work, and that is for both the municipal officials and their society at large. The major thing is awareness, followed by training.’ (P3, Female, Black African, 40–45 years)
Rural local municipalities in Limpopo are largely dominated by digital migrants (those who are now making moves to understand digital technologies), and most of those in leadership are digital migrants in the process of learning and understanding the value of digital technologies in the value proposition. Digital transformation initiatives require individual and organisational competence to successfully deliver on the desired results. Digital transformation initiatives are not only about technology but also about people within the organisation and the organisation itself. The success of digital initiatives relies on the organisation’s ability to scan the environment for opportunities; however, this study shows a gap in local municipalities’ sensing capabilities. Local municipalities and citizens are less likely to benefit from digital technologies as a result of a lack of awareness of existing technologies that could enhance their performance. The study further highlighted a skills gap. Departmental managers in rural local municipalities highlighted the need for training to develop their digital skills relevant to the development of dynamic capabilities for digital transformation in local municipalities. The presence of digital skills within an organisation enables it to both sense and seize the identified opportunities. Rural local municipalities are currently struggling to sense the potential of digital transformation because of a lack of awareness:
‘So, you go to buy a Ford car; Ford must be able to service your car, and they must be able to maintain your vehicle. So, who will maintain that if we say we are implementing robots, for example, or adopting artificial intelligence or the Internet of Things, who will interpret whatever the Internet of Things has captured?’ (P1, Male, Black African, 50–55 years)
Digital transformation requires different expertise to support the business model reconfiguration process. Organisations engage in digital transformation initiatives for different objectives; however, before investing in a potential digital transformation to enhance organisational performance, they need to assess their existing internal infrastructure (Ellström et al. 2022). Investing in digital transformation initiatives without the necessary skills to manage, monitor, and interpret results and findings will not translate into objective achievement but will be a waste of resources. Hence, there is a need to have people with the right expertise and technical capabilities, such as business analyst skills, to support digital transformation initiatives, as indicated by interviewees. Thus, sensing capabilities must be supported by other capabilities for rural local municipalities to maximise the benefits of digital transformation initiatives and enhance service delivery performances:
‘We need people like web designers in the government. We need people who can come up with different things, people who are IT experts. Once you have those kinds of people, you can move quickly regarding IT. Most government institutions have IT sections responsible for responding to IT demands or current digital communication demands. If you don’t have those, it isn’t easy to move. Today, we can connect to people who are even outside our country. In our last mayoral committee meeting, a presenter joined us via Teams and shared the presentation on screens.’ (P8, Male, Black African, 50–55 years)
The study results show that some rural local municipalities are making strides towards digitally transforming how they communicate with their stakeholders, taking advantage of social media and communication platforms such as Microsoft Teams. However, a lack of expertise continues to hinder local municipalities from venturing into more advanced digital transformation initiatives. As a country, South Africa is still characterised by a lack of technological skills, and few people are in the field of IT. The shortage of IT experts in the country is significantly affecting the public sector, as they must compete with the private sector for these specialised employees. As a result of the salary structure, IT experts are ending up in private companies rather than public institutions such as the local municipalities.
Lack of finances and infrastructural resources to support digital transformation
Information technology projects must be funded, and in most cases, their costs are high. Once the opportunity is identified, the local municipality must invest in digital transformation initiatives and allocate infrastructure. Thus, an improper funding model may significantly affect any organisation and its managers’ intentions to digitally transform how the organisation operates. There is a direct link between finances and IT infrastructure, and it should be a local municipality that develops cross-functional capabilities among the organisation’s business units (Ellström et al. 2022):
‘And AI speaks volumes of cash because it is something we have from scratch. But if you get a few people with money to fund these initiatives. Truly speaking, I think this will be a costly exercise. So, cash is still a problem here.’ (P4, Female, Black African, 55–60 years)
‘Do you think the municipality can give me 20 million? The municipality has yet to get 20 million for now. The 20 million is a budget for the whole corporate services department. However, I will need 20 million to use artificial intelligence on certain reservoirs.’ (P1, Male, Black African, 50–55 years)
‘Yeah, the major challenge is that internally, I must buy the technologies. Then the financial part becomes a problem.’ (P1, Male, Black African, 55–60 years)
‘For artificial intelligence, we need a proper infrastructure. These emerging technologies require us to have a proper infrastructure. You look now, and other countries have already passed the 3IR. They are fully utilising the 4IR, but we are not yet fully utilising the 3IR technologies because of a lack of infrastructure. We have a water pumping system in Musina, and in that area, there is no network connectivity; you can only communicate using Zimbabwean ISP (SIM card and Airtime).’ (P1, Male, Black African, 50–55 years)
Some parts of rural local municipalities still lack Internet connectivity, a fundamental component of digital transformation. One of the study participants indicated that installing Fourth Industrial Revolution (4IR) technologies for water pumping and purification in some areas of Musina is impossible because of network connectivity issues. This fact further emphasises the need for partnership to support digital transformation in rural local municipalities. Sousa-Zomer et al. (2020) and Marheine and Petrik (2021) indicated that discovering and establishing external partnerships are significant for an organisation pursuing digital transformation. In the context of local municipalities, there is a need to identify partners, such as Internet Service Providers, to collaborate with on their digital transformation initiatives, specifically in infrastructure support.
Finance departments are finding it difficult to allocate funds to purchase digital transformation infrastructure to seize potential opportunities, as indicated by interviewees. The current rural local municipality set-up requires digital transformation projects to be funded internally.
Rural local municipality departmental managers, such as finance and human resource managers, lack awareness, which is one major cause of delay in the adoption and use of emerging technologies in rural local municipalities. A sensed opportunity requires the involvement of both the finance and the human resources departments to allocate sufficient funds and assign staff members with the knowledge and skills to seize and reconfigure the local municipality’s business model. Digital transformation in local municipalities should be considered a long-term goal, given limited funding and infrastructure. This change will allow local municipalities to decompose the digital transformation into smaller projects (Ellström et al. 2022), which are easier to fund, thereby removing the financial barrier.
Unaligned information technology policies and implementation strategies
The approaches and choices an organisation adopt to create value are a critical aspect of any organisation. Digital transformation projects promise to bring benefits to rural local municipalities and their operating models. However, these technologies are not plug-and-play; there must be standard guidelines to follow or a framework to guide implementation. This study found that managers in rural local municipalities face IT policies that are not linked to other functional departments, such as finance and human resources. The digital transformation process requires a strategy, the ability to sense, seize, and reconfigure; thus, the success of digital transformation depends on its strategies to sense for opportunities, seize them, and reconfigure. Rural local municipalities lack clear, proper guidelines to help those involved deliver a digital transformation initiative that will enhance their performance:
‘So, currently, we do not have policies that promote monitoring municipality property against vandalism hotspots using emerging technologies like what is currently going on in Albasin Dam. That is where emerging technologies such as cameras or robots come in, and by doing so, we will be able to curb the vandalism of municipality properties.’ (P1, Male, Black African, 50–55 years)
‘According to the framework, something which should be completed in three years, it takes 15 years to accomplish what takes a framework of one year, it takes us about four or five years, which means your implementation of what is on that policy document will take place in 15 years, because of the little money that you have. By then, technology will not be waiting. Which means you will never catch up with technology. You may find that we are still receiving policy documents that are far away from the current trends of technologies, maybe seven times better than the trend. So, we are always behind. Unfortunately, technology is one thing that, to keep up with, you need to have the money for it; otherwise, you might as well forget about technology.’ (P2, Male, Black African, 40–45 years)
‘My challenge is that we need support from the national or even other upper bodies to give or assist us regarding the information, like the policies that should govern that. So that when I go into the actual implementation, it must guide the relationship it should have with the private sector.’ (P6, Male, Black African, 45–50 years)
‘The national imperatives should guide me in terms of guiding my relationship with the service providers as to what it is that I am expecting from them and what it is that they are expecting from us. Then, as the bylaws will even govern our relationship with service providers, so that when they go down into the communities, maybe they are going to implement the Fibre, we are guided by the regulations that are coming from the top to say, if you are going to implement this, this is how you should implement it. Once we have regulations that govern the whole process, then that will help us because I will be able to tell them in terms of the regulation number that is coming from the national office.’ (P4, Female, Black African, 55–60 years)
As a sphere closer to the people, local government is more responsible for delivering quality services to the stakeholders. In this digital era, leadership in rural local municipalities currently lacks clear, supporting guidelines and strategies to ensure a smooth transition to a digitally transformed business model. Thus, even though some interviewees intend to digitally transform the local municipality’s operations, they are unsure where to start, resulting in missed opportunities for both municipalities and citizens. Furthermore, managers in rural local municipalities are still faced with misalignment between business and IT strategies. Interviewees indicated that the implementation of some strategic policies is delayed because the local municipality lacks sufficient resources. Misalignment of IT-business strategies and delays in implementing IT policies result from poor strategic flexibility, which is very significant in responding to a turbulent environment and citizens’ technological demands. For a local municipality to be able to respond to changes in the environment, it needs to be strategically flexible, a key routine or microfoundation described by Ellström et al. (2022) for a successful digital transformation initiative.
Deficiency of external associates and/or collaboration
Deficiencies in external associates and/or collaborations are one of the challenges faced by rural municipalities in digital technology initiatives. External associations are very significant for any organisation’s digital transformation, as they provide the skills and expertise required. Furthermore, an external associate may come as a source of project funding. Establishing partnerships with organisations, such as institutions of higher education and private organisations, is vital to digital transformation processes:
‘The University of Venda, you can say, as a way of giving back to the community, let’s build this technology and test it. Or to say we have a technology course in the university, ask us to come, capacitate us. Let’s do it practically, to say let’s go and build a reservoir using the three 3D. If you can check, there’s nothing at all in there; I think it’s only UJ that implemented. I think a four-room using the three 3D in the whole country, so I will say the country, South Africa, we’re not, we’re not yet ready. We are not yet ready because the education system is one of the challenges. When the Second Industrial Revolution started, with the availability of electricity and other modern amenities, they began to convert from primary to secondary levels, and it became necessary to study science and maths.’ (P9, Female, Coloured, 50–55 years)
In the South African rural local municipality context, the existing, insignificant relationships among education entities, municipalities, and private companies are not benefiting rural municipalities, as both rural local municipalities and their citizens still face a lack of awareness, skills, and technical capabilities essential for digital transformation. External associates are critical to local municipalities’ digital transformation by enhancing sensing capabilities: bridging and sharing knowledge about digital technologies, transferring digital expertise, securing financial and infrastructural contributions, and relying on experts from other institutions to reconfigure local municipalities’ resources and business models. All these sensing capabilities can be obtained from institutions, such as local universities and private organisations. Interviewees believe that the lack of existing relationships between the government and other external stakeholders is negatively affecting digital transformation initiatives in local municipalities. This impact was also highlighted by De Magalhães Santos (2024).
Discussion
Digital transformation in rural local municipalities is highly significant for both citizens and the institution, given the potential benefits of a successful digital transformation initiative. This study aims to understand why rural local municipalities are failing to fully exploit the emerging digital technologies to improve their service delivery performances. Furthermore, the study aims to answer the question ‘How rural local municipalities can successfully transform their service delivery model through digital technology projects’. The study results show that rural local municipalities are less engaged in reconfiguring the core functionality of service delivery business models, with only the communication function being technologically transformed. The study, as indicated by participant 8, shows that rural local municipalities are digitally transforming how they communicate with citizens and other stakeholders, using social media platforms and MS Teams. The study by Lafioune et al. (2023) found that little transformation is occurring in rural local municipalities. As a result, rural local municipalities and citizens are missing out on digital technologies opportunities. Citizens are still required to travel to access municipal services, and local municipalities continue to rely on outdated traditional systems that are slow, less efficient, and characterised by backlogs. This situation is a result of the inexistence of a set of capabilities required for a successful digital transformation initiative. The studies by Kowalski et al. (2025) and Sousa-Zomer et al. (2020) indicated that delivering a successful digital transformation initiative requires a strong set of dynamic capabilities. The success of digital transformation depends on its ability to sense opportunities, seize them, and reconfigure. Therefore, as a result of a lack of appropriate capabilities for digital transformation and supporting microfoundations for digital capability development, there is very little in terms of rewiring how local municipalities operate through the integration of advanced technologies such as data analytics, virtual reality, and AI. According to Sousa-Zomer et al. (2020), organisations need a strong digital sensing capability, which comprises bridging and sharing (Engelmann 2024). This study found a slight shift in local municipalities towards recognising the potential benefits of digital transformation, as some managers are becoming digitally savvy. This finding is supported by Shibambu and Ngoepe (2025), who found that most leaders in public institutions are now recognising the benefits of digital technologies, such as social media, for improving remote working and communication. According to the study participants, rural local municipalities are characterised by a lack of awareness of emerging technologies, lack of knowledge, skills, and training necessary for digital transformation, leading to a lack of interest. For an organisation to adopt emerging technologies, it requires the necessary support from its decision-makers through digital strategic planning and objectives. However, when decision-makers lack knowledge, awareness, and understanding, digital transformation initiatives can lead to resistance to change. A positive perception of digital transformation is critical for leaders driving digital initiatives. Managers in organisations need to have a positive perception of the potential benefits of digital transformation activities to support the initiative. Politicians are major stakeholders in municipal councils; hence, their perception towards digital transformation can determine the success of digital technology projects. People, characters, and competencies are the cornerstone of digital transformation in organisations; therefore, limited knowledge, insufficient training, and a lack of understanding make people less likely to advocate for and drive digital transformation initiatives. This finding means that sharing, a process of making sense of information obtained through bridging, which involves disseminating and interpreting information within the firm, is not as effective in rural local municipalities because some decision-makers have yet to fully acknowledge digital technologies as part of how they operate. The success of digital transformation also depends on the ability to convert sensed opportunities into reality. Thus, seizing involves capturing the value of potential opportunities (Ellström et al. 2022; Sousa-Zomer et al. 2020). However, rural local municipalities are characterised by a lack of expertise in emerging technologies and insufficient resources for digital transformation. This finding aligns with the statement by Rosário and Dias (2023), who, in their study, indicated that adopting emerging technologies will always be a daunting and complex endeavour if there are deficiencies in IT expertise and supporting resources. Digital and financial transformation require innovators, business analysts, and other IT experts to assist in the reconfiguration process by integrating IT into their business model. Furthermore, municipalities are not financially equipped to engage in digital transformation initiatives. Local municipalities in rural communities are not financially ready to promote and drive digital transformation. Most rural local municipalities rely on national grants for their operations because of their business models, which are less focused on profit maximisation. Emerging technologies infrastructure is also a core and initial phase of digital transformation in rural local municipalities. This study found that there is no supporting infrastructure to enable the reconfiguration of rural municipalities’ business models through the adoption of IT. Installing self-serving kiosks in villages requires network connectivity, planting wireless sensors in water pumping systems, and planting AI sensors in local sewage systems. Thus, there is an existing relationship among an organisation’s financial resources, IT infrastructure, and leadership interest. A leader in the financial department of a rural local municipality who is digitally illiterate is more likely to stall digital transformation initiatives by allocating funds. Information technology capabilities, human resources, sufficient IT infrastructure, and IT knowledge were all found to be vital for adopting technologies and realising their benefits. The study discovered that rural municipalities lack clear implementation guidelines and procedures, updated frameworks, policy documents, and IT strategies to promote digital transformation. The findings align with those of Shibambu and Ngoepe (2025), who also found that South Africa lacks a legislative framework for digital transformation. Policies and guidelines are vital for digital transformation projects in any organisation. Leaders involved in digital transformation projects need clear guidelines for approaching these initiatives. A clear guideline helps answer many questions about digital transformation projects, such as how much to invest, how to engage citizens and other stakeholders, who should take responsibility, and so on. However, as it stands, those questions remain unanswered, thereby delaying the use of advanced technologies in rural local municipalities. Collaborating with external organisations is very significant in facilitating the transfer of information, knowledge, skills, and expertise. Technologies are continuously evolving, and as a result, an organisation that is active in research and collaboration must be able to respond to technological changes. This study found that rural local municipalities are not collaborating more with private organisations, such as universities and colleges, for education, nor with private organisations for the transfer of technical skills and expertise. Organisations that are progressing well in digital transformation are also prioritising establishing working relationships with other organisations. According to Aruleba and Jere (2022), collaborating with external entities is a good technique for organisations to develop and enhance knowledge and skills, improve expertise, and enhance their operations. The findings also align with Hofisi and Chigova (2023) and Shava and Vyas-Doorgapersad (2022), who both find that digital transformation can enhance service delivery and help solve local municipalities’ problems; however, their studies further clearly articulate some of the challenges faced by local municipalities in digital transformation.
Delivering a successful digital transformation initiative in a rural local municipality
Delivering a successful digital transformation initiative is a strategic imperative for South Africa and its local municipalities to enhance service-provision to the citizens. The study results shows that rural municipalities are struggling to initiate digital transformation initiatives. The study suggests that the success of digital transformation initiatives depends on their ability to develop digital dynamic capabilities through microfoundations, or routines identified and described by Ellström et al. (2022), which enable successful digital transformation. Cross-industrial digital sensing, which involves scanning for information outside the system, can be achieved through networking with partners from outside. Inside-out digital infrastructure sensing involves the capability to manage and understand an organisation’s existing infrastructure. Digital strategy development requires that organisations involved in digital transformation must be strategically flexible and adaptive to new opportunities to respond to changing customer demands. Determine enterprise boundaries implicates that organisations that wish to digitally transform, must assess internal organisational competencies; by doing so, the organisation knows what to outsource and what to keep in-house. Decompose digital transformation into specific projects by creating a digital portfolio with separate projects for easy prioritisation and to avoid bottlenecks. Lastly, a unified digital infrastructure which will require connecting things, people, and data within the organisation and facilitating mutual understanding and collaboration across business units and departments. This goal can be achieved through communication.
Conclusion
Public sectors in most parts of the world are now integrating IT into their operations. These technological initiatives aim to enhance performance and improve service delivery to their customers and/or citizens. However, despite the potential benefits of digital transformation in municipalities, organisations still face major challenges that hinder the successful implementation of digital technologies in public institutions. These challenges include digital illiteracy, a lack of resources and supporting infrastructure, a deficiency in digital transformation expertise, and a lack of supporting guidelines and IT strategies, all of which are left hanging because of insufficient funds and a lack of knowledge, and which form microfoundations for the development of dynamic capabilities for digital transformation. This study concludes that for local municipalities to succeed in digital transformation initiatives, they need to develop dynamic capabilities to avoid missing out on the opportunities it offers.
Practical implications
Digital transformation in organisations is continually proving to be important, as it positively impacts organisational performance. In local municipalities, digital transformation also promises a more efficient and effective operating model. However, there is a need to build dynamic digital transformation capabilities in the local municipality. The South African government should prioritise building a culture of digital transformation to enhance understanding of emerging technologies. The SITA needs to partner with SALGA (the South African Local Government Association), rural local municipalities, and other strategic partners to build microfoundations to support the development of digital dynamic capabilities.
Stakeholders’ implications
A digital transformation initiative in rural local municipalities affects all stakeholders, including leaders (professionals and politicians), municipal staff, and community members. Therefore, changes in their perceptions, awareness, skills, and interests are more likely to influence their decision to adopt or reject digital transformation initiatives. Digitally savvy stakeholders are highly critical of local municipalities’ digital transformation initiatives. Digital transformation is cross-functional; therefore, initiatives to build dynamic capabilities should be stakeholder-focused to ensure interoperability and strong relationships among departments and all stakeholders.
Organisational implications
The success of digital transformation also depends on internal relationships among organisational departments, i.e. the financial department should understand what the IT department is trying to achieve, and the human resources department should understand the expertise the IT department requires and the way to remunerate them. Furthermore, as part of their IT strategic development, rural local municipalities need to reconfigure their internal funding model to a bucket funding model to ensure that digital transformation is allocated sufficient funds. Rural local municipalities in Limpopo need to strategically be flexible; thus, they need to constantly review their strategies to align them with technological needs and environmental turbulence. Constantly reviewing business and IT strategies enables an organisation to identify value opportunities and convert them into tangible organisational benefits. In digital transformation, project portfolio management is key; therefore, local municipalities must be able to select the right projects and prioritise them. Additionally, if Rural Local Municipalities choose and prioritize the appropriate projects, they will find it simpler to concentrate on a limited number of significant projects instead of pursuing numerous projects simultaneously, which could ultimately hinder IT value creation. This change can be achieved by recruiting people with relevant IT skills to support digital initiatives, establishing partnerships with external companies, colleges, and universities, and benchmarking with other municipalities that are getting it right nationally and internationally.
An investigation into rural local municipalities’ perceptions and their capacity for digital transformation will be significant for future research.
Theoretical implications
Dynamic capability theory has been widely used by several authors across disciplines to examine how organisations respond to environmental changes. Local municipalities have very different organisational structures, comprising managers of different kinds, some of whom are digital-savvy and some who are not. There is a need for clearly defined microfoundations or routines that help local municipalities build and/or develop their sensing, seizing, and reconfiguration capabilities, as performed by Ellström et al. (2022). Rural local municipalities in Limpopo are still far behind in utilising digital technologies to enhance service provision. Previous studies by De Magalhães Santos (2024) and Ellström et al. (2022) have posited dynamic capability and its microfoundations for successful digital transformation. This study heightened the significance of dynamic capabilities for digital transformation in rural local municipalities by further identifying the establishment of partnerships with universities as a micro-foundation for enhancing local municipalities’ dynamic capabilities (sensing, seizing, and reconfiguring).
Acknowledgements
This article is based on research originally conducted as part of Vusani Netshirando’s doctoral thesis titled, ‘Digital framework for redefining the South African local municipalities business model’, submitted to the Faculty of Management, Commerce and Law, Department of Business Information Systems, University of Venda in 2024. The thesis was supervised by Dr Willard Munyoka and Prof. Armstrong Kadyamatimba. The manuscript has since been revised and updated for the journal publication. The original thesis is available at: https://univendspace.univen.ac.za/items/482ba75d-d46a-4234-9758-48904de2afbc/full. The authors would like to acknowledge Rambau T, Nemadodzi T, Rasuba IR, and E. Netshirando for their support.
Competing interests
The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.
CRediT authorship contribution
Vusani Netshirando: Conceptualisation, Formal analysis, Investigation, Methodology, Resources, Visualisation, Writing – original draft. Willard Munyoka: Funding acquisition, Project administration, Supervision, Writing – review & editing. Armstrong Kadyamatimba: Funding acquisition, Project administration, Supervision, Writing – review & editing. All authors reviewed the article, contributed to the discussion of results, approved the final version for submission and publication, and take responsibility for the integrity of its findings.
Funding information
This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.
Data availability
The data that support the findings of this study are available on request from the corresponding author, Vusani Netshirando.
Disclaimer
The views and opinions expressed in this article are those of the authors and are the product of professional research. They do not necessarily reflect the official policy or position of any affiliated institution, funder, agency, or that of the publisher. The authors are responsible for this article’s results, findings, and content.
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