While several speakers at the IT Confidence 2005 Conference held in Johannesburg yesterday believe the worst is over for the ICT sector, analysts aren`t quite as optimistic.
Business Connexion CEO Peter Watt said several issues continue to dog the sector, many of which could be directly related to the fact that the last "big spend" was Y2K-related.
Large segments of the sector`s client base were left with "a real feeling of indigestion" at the turn of the millennium, as they believed they had "spent unnecessarily and been taken for a ride", said Watt.
More mergers are on the cards, said Watt. Security remains a "major threat" and the lack of skills is "becoming a real problem".
However, he believes the "worst of the decline in the industry is now behind us" but cautioned that ICT suppliers looking for future success would have to provide affordable, reliable offerings with less complexity, that showed a solid understating of customers` businesses.
Confidence in the sector would be restored through the changing role of the CIO. "Today`s CIO needs to think like the CEO, act like the CFO and deliver like the COO," he said, adding that this is becoming possible thanks to a improved understanding of IT by management teams. Government is poised for significant IT spend in pursuit of its e-government initiatives, and this would also boost confidence, said Watt.
Absa senior treasury economist Chris Hart said the rand had undergone a fundamental trend change, and the weaker dollar "could be in place for years". Credit quality is improving, demand is going up and inflation is going down, he said. "It`s a wonderful situation to be in."
The economy has grown positively every year from 1995 and the strong currency is expected to continue to attract investment, he said.
[VIDEO]However, HSBC director Franca Di Silvestro was far less upbeat. "The global tech environment is giving us a fairly negative view at the moment," she told delegates. Too many companies are competing for the same amount of work, and pricing pressures are increasing as customers struggle to differentiate between suppliers. "Confidence is improving, but a shake-out is coming," said Di Silvestro.
Many companies expect outsourcing to prove a major business driver, she said, adding that those suppliers that provide effective and cost-efficient offerings in niche markets would fare the best.
Dimension Data group CEO Brett Dawson said the exuberance of the nineties had been replaced by "hyper competition", which saw supplier numbers increasing with the pool of customers remaining static. This, said Dawson, is "making it a fight for survival".
"The single biggest factor in a successful IT sector is customer satisfaction," said Dawson. "Customers want to pay less for more."
The IT sector is expected to grow by 8.5% during 2005, said Microsoft SA MD Gordon Frazer. Sized at R41.5 billion last year, IT spend during 2004 accounted for 3.5% of the gross domestic product, said Frazer.
[VIDEO]"IT is a vibrant industry with around 12 000 companies, over 300 000 employees and over a million end-customers. Until now, vendors have only scratched the surface and they must convince clients of business values," he said, adding that there is still a lot of room for the local sector to develop.
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