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Survey finds top corporates look to outsource application development

Johannesburg, 17 May 1999

Major skills shortage in application development arena 88% experience stability problems with existing applications Only 2% of systems developed on time and to budget 81% have ongoing application problems

Uskotec, systems integration house of JSE-listed USKO group, has unveiled research findings revealing that the majority of Top 200 South African corporates are moving to outsource their software application development activities. Underlying this trend, is an acute shortage of application development skills and significant problems surrounding the delivery, stability and adaptability of existing applications.

Commissioned by Uskotec and conducted independently by BMI-TechKnowledge in March/April 1999, the survey provides valuable insight into the IT constraints and frustrations among SA`s senior IT executives and addresses key business issues in the IT environment.

The research sample comprised 57 face to face interviews with IT managers and IT directors within the Top 200 corporations. Prior to the interview process, three regional Focus groups were conducted with IT executives from leading corporates.

Significant findings include:

IT Environment

  • 86% of companies outsource either all or some of their application development activities.

  • 44% of IS budget is spent on application development. IS budget is still growing ahead of inflation.

  • 84% of companies have already moved, or are currently moving to a client/server environment.

  • 79% of application development is going into a client/server approach with the banking sector leading the trend.

  • 64% prefer to build rather than buy their applications.

  • Only 37% have completed Y2K changes. 63% are still in the process of changing.

IT Skills Shortage

  • Three quarters of respondents cited IT skills shortage as a major issue.

  • The highest area of skills shortage was found in application development, accounting for 38% of the overall response. Other problem areas identified include general networking skills (11%).

Expectations and Delivery of the Company IT Infrastructure

  • 88% of companies interviewed experience stability problems with their existing applications.

  • 25% of companies experience over 10 problems per week and 56% experience between one and 10 problems per week.

  • Significantly, only 2% of respondents said their systems are always developed on time and to budget.

  • 94% of respondents experience varying degrees of difficulty in adapting application packages to fit their business

Expectations and Delivery of the Internet

  • Only 39% of respondents felt that the Internet has contributed to the success of past online projects.

  • 71% of respondents felt that the Internet is exceeding their prior expectations of levels of service.

  • However, 98% felt that usage of the Internet has future possibilities that have yet to be exploited.

  • In the banking sector, 44% of the sample were already conducting e-commerce with their customers, 24% for the insurance sector and 14% for the manufacturing and retail sectors.

Notably, the research also indicates that although IT is giving companies the tools to compete, it is not necessarily providing senior executives with the information necessary to take calculated business risks. In other words, it is delivering tactical but not real strategic benefit.

According to Matthew Walsh, sales and marketing director at Uskotec, application development is one of the most important issues facing IT executives today. Companies, he says, are budgeting more and more funds for application development in an effort to maximise the benefits of new technologies and computing paradigms. The past 10 years have seen an unending stream of new hardware technologies, new architectures, new operating systems and a broader base of new users. All of these factors are driving demand for application resources.

"The shift toward client/server computing is rapidly changing the way the modern enterprise manages and develops information. More and more mission-critical data is being delivered to end-users through the deployment of advanced networking technologies. And as our research findings reveal, application development in today`s complex environment is not an easy task.

"A successful application development environment should be scaleable, flexible, cost-effective and offer life-cycle support. Above all, it should deliver intelligent business solutions. At Uskotec, our highly qualified IT professionals work in partnership with our customers to maximise their application development investment, enabling them to harness the true strategic value of information technology both now and into the future."



Uskotec is a systems integration house and supplier of leading edge financial services products and solutions, with unique expertise in retirement funds and administration systems. The company focuses on four key areas of business, namely: strategy and architecture; software development; systems maintenance, support and renewal; and business intelligence.

Uskotec has extensive experience in managing the human resources issues surrounding the transformation of in-house IT operations into commercial enterprises.

Established in February 1998 and headquartered in Cape Town, Uskotec is a subsidiary of JSE-listed Usko group.