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SA to spend R276.6 billion on IT in 2018

SA to spend R276.6 billion on IT in 2018

South Africa is expected to spend R276.6 billion on IT in 2018, a 4.3% increase from 2017, according to Gartner.

The market analysis and research firm said all IT segments are on track to achieve growth, with datacentre systems and servers returning the growth, driven by a renewed focus by IT leaders.

"The increase in data server system spending this year stems from requirements to overcome a large corporate technology deficit and to modernise datacenters," the company explained.

Ahead of the Gartner Symposium/ITxpo 2018, scheduled for 17 - 20 September in Cape Town, John-David Lovelock, vice president and analyst at Gartner said, "South Africa is playing technology catch-up. After years of neglecting basic datacentre requirements, the country's IT leaders are now drawing attention to their datacentre system spending. Although datacentre systems remain the smallest spending IT segment in South Africa, this segment's year-over-year increase is set to be the most profound in 2018."

According to Gartner, South Africa remains behind many of the more technologically mature countries when it comes to IT spending, both as a percentage of revenue and in the purchase of advanced systems, such as those involving Artificial Intelligence, cloud, digitalisation and collaboration technology.

The price of communication services, including voice and data services for fixed and mobile delivery, continues to drop, which enables spending to be allocated elsewhere. Spending on communications services in South Africa, which is projected to represent 43% of the country's IT spending, is forecast to be flat throughout the forecast period.

Table 1. IT Spending Forecast, South Africa (Millions of Rand)

 

2017 Spending

2017 Growth (%)

2018 Spending

2018 Growth (%)

2019 Spending

2019 Growth (%)

Data Center Systems

7,803

-3.6

8,594

10.1

8,456

-1.6

Software

27,908

12.7

31,396

12.5

35,361

12.6

Devices

39,634

3.0

39,995

0.9

44,196

10.5

IT Services

71,942

8.7

77,672

8.0

83,303

7.2

Communications Services

117,777

0.8

118,929

1.0

119,361

0.4

Overall IT

265,065

4.2

276,586

4.3

290,677

5.1

Source: Gartner (August 2018)

"Digital transformation is happening in South Africa, but the pace and penetration are low," said Lovelock. "Newly modernised data centres that can support application software purchases, as well as internally developed systems, will drive advances in digitalisation. However, low cloud adoption and underutilisation of strategic consulting and implementation services will mean a slow pace digital transformation in South Africa overall."

He said South Africa has relatively few organisations whose enterprise adoption profile classifies them as 'dynamic'. "By 'dynamic' we mean organisations that embrace a higher pace of technological change."

Gartner states that with South Africa's GDP growth projections being around half that of the world's projected GDP growth, a more measured approach to business and IT change may be warranted for the majority of the country's organisations.

"However, it's the dynamic organisations that are, on average, gaining greater revenue returns than their non-dynamic industry peers. Dynamic organisations are investing more in cloud, digitalisation and collaboration technology, and these investments are reducing cost, improving efficiency and opening up new business possibilities. They should set an example for many other South African companies that are looking to outperform the country's economy and their peers."

Sought-after infrastructure

According to Infrastructure Africa, the advent of Industry 4.0 and increasing demand for industrialisation means quality ICT infrastructure is sought-after in South Africa.

Liz Hart, Managing Director of Infrastructure Africa, said the focus is on leveraging ICT and broadband access in particular.

"The South African information and communication technology sector continues to demonstrate dynamic growth, particularly as driven by the mobile sector. Access to mobile services continues to grow, however, broadband access (particularly access to fixed broadband) remains very low in comparison to other lower-middle-income countries, and the prices of all communication services remain high by both African and global standards."

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