The current economic downturn won't affect ICT spending by state-owned enterprises (SOEs) – in fact, they are expected to up expenditure as infrastructure projects get underway.
BMI-TechKnowledge has published its latest report: "ICT Market Analysis and Opportunities in State Owned Enterprises", which finds that SOEs are key to the growth of the economy and are essential in the development of important South African sectors which include energy, transport, telecommunications, and manufacturing.
South Africa was in its ninth year of non-stop expansion before the slowdown in 2007. Consumer spending and enterprise profits have decreased significantly due to the higher energy costs and increased oil prices.
However, SOEs, particularly Eskom and Transnet, spend more during this time and are not affected by energy costs. Therefore, it hasn't all been doom and gloom since the current economic downturn will not have an impact on SOE capex plans and their ICT spend.
SOE ICT expenditure is expected to increase as transportation and utility companies (such as Transnet and Eskom) expand and gear up to deliver on South Africa's infrastructure requirements. SOEs are currently focusing on the massive high-profile projects associated with the 2010 World Cup which will also drive ICT expenditure.
The report profile 11 SOEs, including Eskom, Transnet, SAPO, SAA, GSSC, SITA, SABC, SARS, SARB, ACSA and Armscor.
According to the research, conducted by Lesley-Anne Dos Santos, these SOEs spent R6,6-billion on hardware, software, IT services and communications in the 2007/08 financial year. This expenditure is expected to grow at a compound annual growth rate of 11,3% over the forecast period to reach R11,2-billion in 2012/13.
SOEs in South Africa are starting to form partnerships with the private sector as well as other state-owned enterprises. The goal of this strategy is to maximise the enterprise and national interest as well as to alleviate the ICT skills shortage which is still a major concern for both government and private companies.
SOEs are under strain to increase South Africa's competitive advantage as well as to understand and be receptive to consumer needs. The trend of using business intelligence by to get closer to consumers is growing since the use of BI not only allows for better control but also improved decision-making.
An interesting finding of BMI-T's research is that many SOEs, and other organisations working closely with government, are slowly implementing open source software (OSS) with a handful of companies only currently implementing small pockets of OSS. However, enterprises haven't realised the full potential of implementing and using OSS are still extremely hesitant to fully implement OSS.
Dos Santos says the top drivers of ICT adoption in SOEs are the enhancement of the effectiveness of operations and the improvement of service delivery.
The biggest inhibitor of ICT adoption in SOEs is the lack of planning by departments which is making it increasingly difficult for managers to develop and implement ICT strategies.