Networking hardware and professional services have seen the greatest growth in IT spend recently, with high-end hardware experiencing the slowest growth rates, according to BMI-TechKnowledge.
Analyst Barry Brady, co-author of the IT and telecommunications market intelligence and consulting company`s third annual Top 200 IT Users in SA report, says the PC market is maturing, but he expects it to drop "to some extent".
The document, as reported on ITWeb on Monday, shows that the 200 biggest IT budgets are growing at a slower rate that the overall IT market.
Brady says the 200 companies with the largest IT budgets - traditionally responsible for almost half of the IT spend in SA - have their infrastructure in place, while small, medium and micro-enterprises are establishing their infrastructure, hence the more marked IT budget growth in that sector.
Brady says companies are making more informed decisions when spending on IT. "It is a mature market; they are not rushing into fads," he says. "Companies understand what good IT solutions can do."
He emphasises that the top 200 companies are not spending less on IT than before. "They are spending more. It just means the increase is not as great as before."
The report by Brady and Neil Lightfoot shows that the top 200 companies` IT budget growth stood at 13% in 1998 and is expected to fall slightly to 12% this year.
The market share in terms of spend is also showing a shift, with the top 18 companies having spent 27% of SA`s total IT revenue. By 2001, this will have dropped to 24%. The top 200 companies` market share, which was 46% in 1998, will decline to 44% in 2001.
The banking sector continues to lead the top 200, collectively accounting for 29% of the top 200 IT spend. "However, the spend for the banking sector is starting to slow down," the report says.
"This is already evident in their spend on PCs in 1999, which is expected to grow only 2% on the previous year. Likewise, they have slowed in their budget growth in the services arena and expect a growth of only 11% in outsourcing in 1999.
"Overall, banks` IT budgets are expected to grow 9% year on year," Brady and Lightfoot say.
BMI says last year saw significant growth in hardware sales, particularly as many PCs were replaced because of Y2K compliance issues.
"There is an overriding trend towards network connectivity - many of the top 200 sites will be networked already, but a large portion of the revenues realised will be due to expansion.
"There is a definite need for more speed across the LAN/WAN infrastructure and this is a driver too. In addition, there is still a lack of skills in the SA IT market and companies increasingly rely on outsourcing and professional services companies for solutions."
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