Upswing expected in SA’s ICT spending in 2020
Technology will play a massive part in South Africa’s growth in future, said Mark Walker, associate VP for Sub-Saharan Africa at the IDC.
Walker made the comments yesterday at the annual IDC Directions event in Sandton, Johannesburg, while reflecting on SA’s dire economic prospects.
The South African economy has taken quite a few knocks, with a youth unemployment rate above 60%, imminent large-scale job cuts in some key sectors and slow gross domestic product (GDP) growth adding to the waning economic confidence levels.
Despite this, the IDC predicts SA’s total ICT market will reach $26.4 billion (R393 billion) in 2020, growing by 2.5%, which, according to Walker, is a little bit better than growth expectations for the country’s GDP.
The IDC charted an outlook for this year's ICT market, looking at key markets in Sub-Saharan Africa, namely SA, Nigeria, Kenya and Ethiopia.
While there is big opportunity in doing business in Nigeria, the business environment is very difficult, said Walker. “It’s very difficult to get business going; it’s complicated to make things happen but if you get it right, you do make a lot of money and at a nice high growth rate.”
Turning to Kenya, the IDC analyst noted it has a smaller ICT market but a nice growth rate. “Kenya is becoming very attractive, as SA is becoming very business-tough.
“A lot of people – even in this room – are looking at Kenya and saying maybe we should put a bit more effort into the Kenyan market; especially now that it is fully lit up in terms of the access to technology and global data streams.”
According to Walker, everybody is talking about another East African country: Ethiopia. “It is the shining light of the continent. To get it right, you will have to have local representation, and local partnerships and discussions.”
When looking at SA’s ICT spending by industry, Walker said finance still comes out on top, as the sector that will probably grow the fastest over the 2019 to 2023 period.
He highlighted communications, government, retail and wholesale, professional and personal services and manufacturing among the IT big spenders.
“There is some nice growth rates in communications at the telco environment ‒ there are big areas of investment still going on.
“South Africa is getting government use of technology right. Things are happening, even though they are not working as smoothly as we’d like…this tells us that help is needed.”
Other sectors spending on technology include education, healthcare, utilities, transportation, and resource industries and construction.
DX is a reality
Even though it’s a tough economic environment, over 50% of South African companies have indicated they are currently engaged in a digital transformation (DX) strategy.
Walker explained this data is based on an IDC survey conducted with local CIOs.
Twenty-five percent of the companies say they will start DX in 2020, 12% are not currently engaged but planning for DX efforts over a two-year timeframe, while 8% say they don’t see the need and have no plans for DX in the near future.
“The digital transformation message is there and people understand it is important…digital transformation is a reality.”
In terms of which emerging technologies and services they have already implemented or plan to implement by the end of 2020, the Internet of things (IOT) came up on top, with 46% of the companies saying they have implemented IOT solutions.
“IOT is being adopted and companies say they are happy to continue implementing Internet of things solutions.”
Software-defined networking, artificial intelligence and robotic processing automation are also among the technologies companies have implanted or are looking into, he stated.
Looking at the IT investment focus in SA in 2020, Walker indicated the big focus area is still infrastructure, with 61% of the respondents picking it.
This is the next level of infrastructure like data centres, storage, networking and computing, he said. “The big focus is still on infrastructure, getting your basics right, moving from a legacy system into a cloud-based system.”
Next on the investment list is mobility, which includes mobile apps, devices and endpoints. “Mobility is still a big play; it is very strongly aligned with infrastructure, once the infrastructure is right – mobility starts becoming much easier,” he stated
According to the survey, 33% of the CIOs indicated security as a focus for investment in 2020. “We see security as the Cinderella investment, it has to be done. As complexity increases, so do the requirements for security.”
Walker concluded by noting customer applications, public and private cloud, data analytics, and process, organisation and skills as some of the other areas of ICT investment in 2020.