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Kathy Gibson at IDC Directions in Sandton – The digital economy is at a tipping point, as organisations around the world use technology to fundamentally change their businesses.

Globally, we will see moderate growth in IT spending,, but it will be transformative growth says Jyoti Lalchandani, group vice-president and regional MD: Middle East Africa and Turkey at IDC.

“Enterprise buyers will invest in 3rd Platform applications based on collaboration/social, mobility, cloud, security and analytics,” he says.

The Middle East and Africa region, which saw significant spending declines in 2016, started seeing a modest recovery in 2017 and this is set to continue in 2018, with growth of about 2,5% to 3% expected.

The biggest growth will be in areas like smartphones, servers and software. Moderate growth should be seen in networking and IT service.

“A lot of the growth in software will be in the cloud – we are seeing significant cloud adoption that will impact on software spend in the next few years,” Lalchandani says.

Over the next five years, growth in 3rd Platform and innovation accelerators will be sustained, he adds, with these technologies fuelling long-term growth.

Additional growth will come from applications that leverage the 3rd Platform, with things like big data/analytics and Internet of Things (ioT) driving significant growth.

In fact, IDC has extended its 3rd Platform trend to encompass what it calls three chapters.

The first of these is the chapter of experimentation where customers created point solutions that are not necessarily integrated. “We saw the evolution of the 3rd Platform, but it was not well integrated.”

The second chapter in the journey, which started in about 2015, is the era of multiplied innovation. “We see signs of the acceleration in these innovations. Organisations also started to dabble in leveraging 3rd Platform technologies to transform their businesses.

“Here we saw some common themes: companies wanted to enhance the customer experience, become more operationally efficient, and build resilience into the organisation. And how do I leverage data to create competitive advantage.”

The final chapter, which IDC calls the autonomous era, will see the emergence of autonomous, intelligent systems. We will start t move towards cognitive computing and quantum computing.

“We will move beyond companies using data as a competitive advantage, but as a way to create new revenue streams for their organisations. We believe a lot of companies will drive net new revenue streams using data.”

The South African market has seen some contraction over the last few years Lalchandani points out. “Over the next few years we expect to see more economic growth in the region.

“Depending on how things play out in South Africa, you may see GDP growth of 1,5% to 2%.”

IT spending will see growth, although it will be more moderate than what we experienced up to 2015. Telecommunications growth is expected to be similarly muted, although there could be some growth in mobile platforms.

“We believe telcos really have to make the transformation to be true ICT providers,” Lalchandani says. “We think we will see a big push in telcos making this transition We will see telcos setting up digital business units, there will be a lot more competition, and we think the telcos will bring in more born-in-the-cloud partners.”

The countries driving growth in the Middle East Africa (MEA) region will come from Saudi Arabia, Turkey and South Africa , each contributing about $11-billion. The UAE will contribute about $7,7-billion, Egypt $4,4-billion and Nigeria $3,5-billion.

Software and services will take the lion’s share of IT spend, followed by server, storage and networks. “Organisations are rationalising spend on traditional infrastructure, but they are spending more on things like cloud.

“It is clear that one of the key drivers for growth is digital transformation.”

Organisations are investing in digital transformation prorates differently, however,

Some organisations are investing in becoming more agile, while others are aiming to change the customer experience, and still others aim to leverage their data.

“A lot of investments so far in the MEA region have been in transforming the customer experience,” Lalchandani points out. “Moving forward we beliave a lot of investments will be in data monetisation, creating new revenue streams.”

Vendors face new challenges as digital transformation takes hold. The key performance indicators for customers will be less around managing cost and risk, to creating new revenue streams and customer experiences.

“Decision-making will move from the CIO, to line of business executives,” Lalchandani says. “You need to build a channel ecosystem beyond the traditional partners; engage with new companies and agencies to create a digital ecosystem.

“There will also be fewer big-bang projects. Customers will go beyond proof of concept to proof of value.”

This means a new set of channel partners will emerge, including born-in-the-cloud partners; there will be less focus on selling products. “We believe there will be a major overhaul in thh channel ecosystem unless they are able to re-invent themselves.”

It’s not just companies that are being affected by digital transformation. Lalchandani says whole counties will ave to develop visions for national strategies.

These strategies have been taken o a national level in some cases. For instance, South Africa has the National Development Plan that caters for digital transformation. Other planning could be at a  sector level, for instance in tourism or transport.

Some countries or cities are addressing strategies at a technology level.

Smart cities are a forerunner of how countries will use technology in the future. A lot of use cases are now moving from pilot to online, Lalchandani says.

Overall, cloud is going to be one of the fastest growth areas for IT spend.

In 2022 enterprises will spend 20% more on new IT infrastructure in edge location than on hardware in traditional data centres – by 2027 this will be up to 60%.

Investment in development platform will make PaaS the fastest-growing market.

Analytics will also see  major growth. Organisations are increasingly considering analytics at the edge rather than the core, Lalchandani says. It will also be more involved in security, and to create new revenue streams for the business.

“We are also going to see a significant shift in spending,” Lalhandani says “There will be a shift form predictive analytics to cognitive computing.”

Security is set to become a top investment area going forward. Spend is currently around 8%, although IDC believes it should be higher,

Threat complexity is going to increase, so there will be increased spending on security, especially from public sector organisations and governments.

“Give the size of security spending and overall landscape, IDC believes we will see some of the players disappear.

“We think security is going to be at the top of companies’ agendas.”

Spending on innovation accelerators will grow by almost 20% in 2018 as use cases go mainstream, Lalchandani adds.

This includes spend on IoT, which could surpass $10-billion, and cognitive/artificial intelligence (AI) where spend will pass $100-million.

Blockchain spend will probably double in 2018, as it moves beyond banking and new organisations start using the technology.