Devices decline, software up, for South African IT industry

South Africa IT spending is forecast to reach R272 billion in 2016, a 3.8% increase from 2015, according to Gartner. Software spending is on pace to exhibit its highest ever year-on-year growth in 2016, at 11.4%. “Last year we witnessed an 8% increase in overall IT spending by South African organisations, and in 2016 companies are maintaining this, prioritising software,” said John David Lovelock, Research Vice President at Gartner. “Once you have the platform in place, your priority is to add software. South African companies are doing just that this year, purchasing their solutions in North America and Europe primarily, while buying cloud storage where the data needs to reside.”

Device spending in South Africa is estimated to decline 6.5% in 2016. “Mobile phones, PCs and tablets are cyclical, with dips in 2014 and 2016,” said Lovelock. “Both the consumer and business segments are showing a decline in 2016, with the larger drop coming from consumers. “Users in South Africa are holding onto their expensive phones longer and refraining from buying cheaper phones,” said Lovelock. “With prices going up, the total spend on mobile phones was down 4.5% from last year.”

Building infrastructure continues to be paramount in South Africa, as services get more reliable and sophisticated. Communications services remains the largest segment in the country in 2016 with an estimated growth rate in spending of 4.2% year on year.

“Cloud infrastructure and software-as-a-service application spending remains low in South Africa. To embrace digital transformation, South African organisations need to continue investing in the Nexus of Forces, mobile, cloud, big data and social, and embrace viable digital alternatives, such as cloud, VoIP and digital assistance, even if purchased from overseas vendors,” said Lovelock.

South Africa IT Spending Forecast (Billions of Rand)

(Gartner August 2016)