SA cloud subscriptions to be worth US$1.7bn in 2024
Cloud computing annual subscriptions in South Africa will grow 29% annually, from US$370-million in 2018 to US$1.7-billion in 2024. Spending on non-cloud software will decrease 4% annually over the same period.
This is according to IDC research, released by global CRM company Salesforce, which found that cloud computing is growing exponentially and driving economic benefits in South Africa.
It is generating incremental value for companies through enabling lower investments in IT maintenance and improvements, which currently comprise 70% of IT spend, and democratising innovation.
IDC's forecasts show a significant payback from investments in cloud computing out to 2024. But even by then, spending on public cloud computing in South Africa will be less than 11% of spending on total IT.
The market analysis and research company expects Salesforce and its ecosystem of partners and customers to create US$2.1-billion in new business revenues and 5 240 new, direct jobs in the country by 2024.
Those jobs are in turn expected to create a further 6 900 indirect jobs due to opportunities and jobs created in the supply and distribution chains serving those Salesforce customers, and new employees spending money in the general economy, IDC says.
According to IDC, the products and services provided by the Salesforce ecosystem in South Africa are dominated by professional services (64%) but also include add-on cloud subscriptions (17%), as well as on-premises software, hardware and networking (19%).
“With this sanitary emergency, we realised that digital is becoming more and more important. In fact, according to IDC's global forecast of today's market for digital transformation-related technology, by 2024 nearly 50% of cloud software spending will be tied to digital transformation,” says Petra Jenner, General Manager and Senior Vice President – Europe, Middle East, and Africa Emerging Markets, Salesforce.
“Salesforce’s rapidly growing economic impact in South Africa – with $2.1 billion in revenue and 12 140 jobs by 2024 – shows that organisations and channel partners are delivering innovative digital business models to foster new levels of employee and customer experiences and business competitiveness.”
Because organisations that spend on cloud computing subscriptions also spend on ancillary products and services, in 2019 for every dollar Salesforce made in South Africa, the ecosystem made $4.75 – and that figure will increase to $7.03 by 2024. In other words, the Salesforce ecosystem in South Africa in 2019 was 4.8 times larger than Salesforce itself. By 2024, it will be more than seven times as big.
“We expect South Africa’s digital economic growth and job creation to be strong across financial services, high tech, professional services, and telecommunications,” says Robin Fisher, Senior Area Vice President – EMEA Emerging Markets, Salesforce. ”The COVID-19 pandemic is accelerating local uptake of cloud services as it enables companies to be agile, and save on capital expenditure, while also delivering great customer experiences and helping them bring new products to new markets – rapidly.”
“The growth and success of the Salesforce economy in South Africa provides new and existing businesses an opportunity to quickly and easily shift their skills to take advantage of cloud-based data and AI technology… We see many recent graduates as well as technology veterans building their skills through Salesforce’s Trailhead online learning platform, to prepare themselves for skills required in the digital economy,” Fisher adds.
The IDC projects that growth in IaaS investments will reach $204-million in 2020.