Gartner says South Africa IT spending to grow 3.8 percent in 2016

Via Gartner Newsroom

Aug 2, 2016

Cape Town, South Africa, August 2, 2016

Analysts to Discuss IT Investments at South Africa Symposium/ITxpo 2016, September 26-28 , Cape Town, South Africa

South Africa IT spending is forecast to total R272 billion in 2016, a 3.8 percent increase from 2015, according to Gartner, Inc. (see Table 1). Software spending is on pace to exhibit its highest ever year-on-year growth in 2016, at 11.4 percent.

"Last year we witnessed an 8 percent increase in overall IT spending by South African organizations, and in 2016 companies are maintaining this, prioritizing software," said John-David Lovelock, research vice president at Gartner. "Once you have the platform in place, your priority is to add software. South African companies are doing just that this year, purchasing their solutions in North America and Europe primarily, while buying cloud storage where the data needs to reside."

Table 1. South Africa IT Spending Forecast (Billions of Rand)

2015 Spending 2015 Growth (%) 2016 Spending 2016 Growth (%)
Data Centre Systems 7,791 20.2 8,353 7.2
Software 22,741 3.6 25,333 11.4
Devices 35,471 12 33,152 -6.5
IT Services 67,684 7.5 71,312 5.4
Communications Services 128,321 11 133,709 4.2
Overall IT 262,008 8.3 271,858 3.8

Source: Gartner (August 2016)

Device spending in South Africa is estimated to decline 6.5 percent in 2016. "Mobile phones, PCs and tablets are cyclical, with dips in 2014 and 2016," said Mr. Lovelock. "Both the consumer and business segments are showing a decline in 2016, with the larger drop coming from consumers. "Users in South Africa are holding onto their expensive phones longer and refraining from buying cheaper phones," said Mr. Lovelock. "With prices going up, the total spend on mobile phones was down 4.5 percent from last year."

Building infrastructure continues to be paramount in South Africa, as services get more reliable and sophisticated. Communications services remains the largest segment in the country in 2016 with an estimated growth rate in spending of 4.2 percent year on year.

"Cloud infrastructure and software-as-a-service application spending remains low in South Africa. To embrace digital transformation, South African organizations need to continue investing in the Nexus of Forces (mobile, cloud, big data and social) and embrace viable digital alternatives, such as cloud, VoIP and digital assistance, even if purchased from overseas vendors," said Mr. Lovelock.

Gartner's IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available here. This Quarterly IT Spending Forecast page includes links to the latest IT spending reports, webinars, blog posts and press releases.

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