IT spending in South Africa will top $26,6-billion in 2016 as organizations increasingly embrace digital transformation initiatives in a bid to streamline their costs and bolster their flexibility.
This is according to International Data Corporation (IDC), which has released its “IDC FutureScape Predictions” for the year ahead.
“Some combinations of the technologies of the 3rd Platform – namely mobility, cloud, big data analytics, and social business – sit at the heart of most digital transformation efforts across South Africa,” says Lise Hagen, IDC’s research manager for software and IT services in Africa. “For example, cities in major provinces such as Gauteng, Western Cape, and KwaZulu-Natal have engaged in smart city transformation activities in order to improve the quality of life of citizens, enhance the experience of businesses, and provide an environment conducive to economic development.
“These smart city initiatives, whether greenfield or brownfield, signal an earnest adoption of 3rd Platform technologies as well as a deeper paradigm shift on the part of provincial governments, technology users, and vendors. Indeed, the success of smart city initiatives will be central to South Africa’s digital transformation journey in 2016.”
The emergence of the Internet of Things (IoT) ecosystem is another key facet of the digital transformation revolution beginning to take place in South Africa. IoT applications in the government, retail, transportation, manufacturing, and utilities verticals will offer the greatest growth opportunity for vendors operating in South Africa, while security is expected to form a key component of any robust digital transformation strategy.
According to George Kalebaila, senior research manager for telecommunications and media at IDC South Africa, cost optimisation efforts and a lack of skills will drive demand for security services in the years ahead, while the proliferation of IoT technologies will push concerns around privacy and physical security to the top of ICT agendas.
“The adoption of IoT will accelerate the rate of digital transformation in South Africa as organizations and stakeholders seek actionable insights from the high volumes of data that will inevitably be generated by the proliferation of connected ‘things’ such as mobile devices, wearables, and sensors,” notes Kalebaila. “These insights will transform the way businesses and government organizations interact with customers, citizens, suppliers, and even employees, helping them to become more agile and innovative than they could have previously imagined.”
Elsewhere across the African continent, public and private sector organizations will shift to tighter, more digitized supply chains in 2016. Regional integration, public-private partnerships, and omni-channel services are expected to accelerate supply chain cohesion, driven by a combination of trade agreements and a reduced reliance on commoditised trade.
Lazaros Karapanagiotidis, a senior consultant for MEA at IDC, notes that continued urbanization and demographic and social changes will further drive the need for digital solutions.
“E-commerce and m-commerce developments are expected to bolster the African sharing community and mobile, IoT, user experience (UX), security, and analytics will create new experiences and opportunities across the continent. African examples of these trends will become showcases for established and emerging markets around the world,” says Karapanagiotidis.
Technology in Africa is undoubtedly an equalizer that enables innovation and transparency. In South Africa, the democratisation of information is preparing South Africans for the digital future and allowing them to be included in the digital economy. While the digital transformation trend signals a positive development for South Africa’s ICT vendors, a number of macroeconomic factors may nevertheless prevent the ICT market from reaching its full potential. Indeed, a challenging economic outlook, high structural unemployment, electricity supply challenges, and volatile currency fluctuations are all impacting ICT market spend.
Despite market headwinds, IDC predicts ICT spend in South Africa will grow 2,6% year on year in 2016, with mobile devices responsible for much of the increase.