IT spending by utilities in the four major Middle East and African (MEA) countries – Turkey, South Africa, Saudi Arabia and the UAE – increased 9,2% year-on-year in 2013 to total just under $1-billion, according to the latest round of data released by IDC Energy Insights. The figure is set to reach $15-billion in 2014 – and South Africa will be the biggest spender in this group.
The Middle East’s young and continuously growing population, along with a strong increase in national income, is driving rapid growth in demand for electricity across the region. In Africa, meanwhile, investments in restructuring the power sector, building essential infrastructure, deploying renewable energy (mainly solar), and making clean water accessible to all dominate the agenda and are combining to ratchet up the demand for energy across the region.
Currently accounting for around 45% of external IT spending in the utilities sector, IT services will be in particularly high demand over the coming years, with investments soaring by an annual average rate of more than 14% between 2012 and 2017.
The need for more efficient operational modules (such as, enterprise asset management, billing and data analytics) and heightened security will also propel software spending, with investment in this area set to grow at an average of 9,6% over the same period.
The IDC Energy Insights data also shows that:
* South Africa is the largest and most dynamic market, with double-digit IT spending growth expected in 2014 and 2015.
* Combined IT spending by utility companies in Saudi Arabia and the UAE will reach $500-million in 2014.
* Electricity companies will account for more than half of IT spending, and will grow by around 9,5% per year between 2012 and 2017.
* The gas and water segments account for around a quarter and a fifth of IT spending, respectively.
“It is an exciting time to be involved in the energy sector in the MEA region,” says Milan Kalal, IDC Energy Insights’ lead analyst for the CEMA region.
“In the Middle East, utilities need to keep up with surging demand for electricity, gas, and water in areas of new development. In Africa, the challenge is around building out infrastructure.
“Transforming economies have growing energy demands,” adds Kalal. “The construction of new plants, transmission and distribution capabilities, water and sewer systems, and gas pipelines are all on the table. A lot of IT suppliers can handle the boom, but only those that can clearly define their value propositions and make it match the priorities of IT managers will get the contracts.”