Cloud com­put­ing and se­cu­rity spend pri­or­ity

The Star Early Edition - - NEWS - Tawanda Karombo

IN­FOR­MA­TION tech­nol­ogy (IT) spend­ing by South African cor­po­rates will fo­cus on se­cu­rity, cloud com­put­ing and soft­ware.

Re­search and ad­vi­sory firm Gart­ner yes­ter­day said the in­vest­ments would rise 2.4 per­cent this year to R266 bil­lion com­pared with last year.

The firm, how­ever, warned that cur­rency fluc­tu­a­tions and pol­icy un­cer­tain­ties could curb spend­ing.

Garter said in­vest­ment in data cen­tre sys­tems, soft­ware, with an in­crease of 13.2 per­cent over the 2016 fig­ure, and de­vices would amount to R8.1m, R28.2m and R36.7m re­spec­tively.

Gart­ner an­a­lyst John-David Love­lock said IT ser­vices would spend of about R70.9m while com­mu­ni­ca­tions would top R112m com­pared with R121m last year.

Catch-up

Love­lock said next year the over­all spend­ing was ex­pected to be 3.4 per­cent higher at R275.1bn.

South Africa tra­di­tion­ally un­der-in­vested in IT, but cor­po­rates and or­gan­i­sa­tions “con­tinue to pri­ori­tise in­vest­ments in soft­ware”, he said, adding the in­vest­ments would en­able lo­cal cor­po­rates to “catch up with the rest of the world” through up­take and fur­ther in­vest­ment.

An anal­y­sis with Frost and Sul­li­van this week also said that cur­rency fluc­tu­a­tions could de­ter IT spend­ing as the cost of most prod­ucts was linked to the dol­lar.

“This means that lo­cal prices in rand must in­crease enough to cover costs and mar­gins in dol­lars,” Gart­ner said.

Naila Go­van-Vassen, dig­i­tal trans­for­ma­tion an­a­lyst at Frost and Sul­li­van said: “The cur­rent un­favourable eco­nomic out­look will con­tinue to pres­sure ICT bud­get among en­ter­prises.

“South African cor­po­rates are fac­ing rev­enue pres­sures and are seek­ing to re­duce costs to main­tain profit mar­gins.”

He said avail­able funds would fo­cus “on se­cu­rity, cloud-based ser­vices and man­aged ser­vices”.

“The goal is to in­crease ef­fi­ciency by out­sourc­ing non-core IT sys­tems to third-party ser­vice providers,” Go­van Vassen said.

Gart­ner said it was more bullish about the spend­ing.

“The in­tro­duc­tion of premium smart­phones will in­crease de­vice spend­ing by 3.8 per­cent,” said Love­lock.

The com­mu­ni­ca­tions ser­vices en­joy the largest chunk of spend­ing in the IT in­dus­try, but price com­pe­ti­tion be­tween re­gional car­ri­ers, along with ex­tremely price-sen­si­tive con­sumers, was pre­vent­ing sub­stan­tial growth in spend­ing in this seg­ment.

This is de­spite “an over­all in­crease in mo­bile de­vice own­er­ship”.

Re­tail com­pa­nies in South Africa “will need to merge phys­i­cal and dig­i­tal sys­tems and pro­vide a two-way com­mu­ni­ca­tion land­scape to the clients,” added Go­van-Vassen.

“There may be a sim­i­lar need for the bank­ing and fi­nan­cial ser­vices sec­tors, how­ever, there is greater like­li­hood for the re­tail in­dus­try to use third­party ser­vice providers.”

South African cor­po­rates are ex­pected to fo­cus much of their IT spend­ing on press­ing soft­ware needs.

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