SA 'bursting with potential'

The South African IT market is on the verge of bringing innovative solutions to the mass market, says Gartner.

However, entrepreneurs will still face challenges in bringing new products to market in an environment in which companies are slowly recovering from a global recession.

Will Hahn, Gartner principal research analyst, says: “South African entrepreneurs are in the perfect spot. The very difficulty of assembling a whole-product solution, and selling it to a new class of customer in a likely very foreign industry segment, is exactly the definition of opportunity.”

He says SA is where the “mass-market, big-name solutions of tomorrow will come from. You can say you knew them before they were famous.”

Hahn explains that the country is neither a developed economy, nor a true emerging market. As a result, SA will need to develop unique solutions to fill its specific needs, and does not need the same solutions as the US or South Korea, for example.

However, while entrepreneurs will still find it difficult to persuade the market to buy in to their invention, the country's IT spend is rising faster than the rest of the world, which creates a potential market, says Hahn.

SA should see growth rates in the ICT sector that outstrip the rest of the world by two or three times this year, says Hahn. In addition, the economy has recently attracted heavy investment through deals such as the R24.2 billion Dimension Data buyout by NTT.

Local IT services account for a third of total spend in the Middle East and Africa, while software accounts for a quarter, says Hahn. Telecoms accounts for 15% of spending in the region, and has “unfulfilled potential”, he adds.

Looking ahead, Hahn expects hardware in SA to grow at 15% in the next five years. IT services, software and mobile devices are expected to grow at between 5% and 10% in the same timeframe.

Hahn adds that the IT sector in SA is expected to grow at 11% this year. In 2009, IT end-user spending in SA was $24.1 billion in 2009, a moderate decline over 2008. Global IT spend growth is expected to average 3.9% this year.

South Africa also has the potential to become a hub and headquarters for regional investment, says Hahn. “South Africa is bursting with potential.”