Cloud computing and security spend priority
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.”