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IT spending in SA will grow 4.3% in 2018

Source: , 29/08/2018


According to Gartner, IT spending in South Africa will total R276.6bn
in 2018, a 4.3% increase from 2017. All IT segments are on track to
achieve growth this year, with data centre systems and servers
returning to growth.

`South Africa is playing technology catch-up,” said John-David
Lovelock, vice president and distinguished analyst at Gartner.

“After years of neglecting basic data centre requirements, the
country’s IT leaders are now drawing attention to their data centre
system spending. Although data centre 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.”

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 increase in data server system spending this year stems from
requirements to overcome a large corporate technology deficit and to
modernise data centres.

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 (see Table 1).

click to enlarge


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

`Digital transformation is happening in South Africa, but the pace and
penetration are low,` says 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.`

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,`
said Lovelock.

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,` added
Lovelock.

`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.`

Gartner`s IT spending forecast methodology relies heavily on rigorous
analysis of sales by thousands of vendors across the entire range of
IT products and services. Gartner uses primary research techniques,
complemented by secondary research sources, to build a comprehensive
database of market size data, on which it bases its forecasts.


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