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South Africa still lags in IT spend despite 3.9% growth forecast

South Africa still lags in IT spend despite 3.9% growth forecast

South Africa is expected to spend R303.46-billion on IT in 2019, representing a 3.9% increase from 2018, according to Gartner. Yet the country is trailing behind in terms of overall IT spend and still has a technology debt to pay off.

Despite this, Gartner analysts are positive about the country's position in general.

"South Africa is a phenomenally interesting market ... some of the changes that are happening," said John-David Lovelock, research vice president at Gartner. "By achieving 3.9% growth in 2019, South Africa will be one of the fastest-growing countries in the world - ranked fourth globally."

Lovelock added that the lift the market has received from the consumer segment is over.

Spending on devices in South Africa is projected to total R46-billion in 2019, up 3% from 2018. This growth rate has more than halved, year-over-year, which shows that the country has largely moved past the stage of acquiring personal devices and is now more concerned with using them, according to Gartner.

Lovelock added: "There's a sort of 'yes and' market that we are leaving. In the past, everything in technology has been 'yes and'.... 'do you want us to keep doing what we're doing?' 'yes', "we'd like you to add HR' - 'oh, that's 'and'...'on top of'... so everything about IT has been a build-up. Well, South Africa has done some of its build up and its now looking, in some ways, at moving away from that. Consumer spending was a big lift, that level of dramatic growth is pretty much done."

He said the market has shifted from growing through the adoption levels to a replacement and upgrade cycle.

"This is at the same time that products in the market are actually lasting longer. So we see those consumer markets retracting because there's not that much feature functionality coming in, we are seeing price decline in many of the units, so even when we see units holding steady, we are seeing spending dropping off.

Gartner expects consumer spending on devices - PCs, tablets and mobile phones - to decline by 2020, and to keep contracting through 2023.

"Saturation in the PC, mobile phone and tablet device markets has limited the number of new buyers. And spending on mobile phone replacements and upgrades won't be enough to sustain current spending levels," said Lovelock.

Cloud reality

South Africa's 3.9% growth rate is actually a bit higher in terms of enterprise spending alone said Lovelock.

"On the enterprise side, the same kind of thing is happening, but it's more around the datacentre. Companies don't need to run their own datacentre, now that Amazon is on its way, Microsoft is there, cloud in South Africa is real. You can get local cloud, which means our latency problem is gone."

Lovelock said the country at the cusp of deeply entering the cloud market. "South African organisations are consuming significant amounts of cloud services, including software as a service, platform as a service and infrastructure as a service. CIOs in South Africa have started adopting cloud-first strategies."

CIOs have to decide whether to build on-premises datacentres or use the public cloud - and the cloud is prevailing. "With both Microsoft and Amazon planning to open local hyperscale datacentres in 2020, adoption and use of the cloud will only increase in South Africa," said Lovelock.

South Africa is still a few years away from paying off its technology deficit, having under-investing in IT for the last ten years, and still some way off from where IT spending ought to be informed against employment productivity levels.

But Lovelock says the country is still in a good position and the 3.9% growth rate in some ways masks some real growth that is happening.

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