Kathy Gibson at IDC’s CIO Summit in Johannesburg – Forecasts for 2017 have been affected by turmoil in South Africa and the world at large, and CIOs may need to reconsider what they can expect to see in the industry this year.
Business confidence had dropped before the investment downgrades, and will probably fall more once the ratings are taken into account, says Jon Tullet, research manager: IT services Africa at IDC.
“The downgrade and its impact is likely to be a long-term thing,” he adds. “One of the direct effects will be in the exchange rate – and this matters because so much of what we procure is in dollars.”
The exchange rate has risen in the last couple of years and has probably more or less flattened out. While this will affect procurement, it is an advantage for companies involved in exports.
South African IT spend sees a decline in hardware and flat software sales. “There has been a move to software as a service (SaaS) and we expect this to accelerate,” Tullet says.
Services is a market that is growing healthily, usually associated with cost containment and changing the timeframes of projects.
“This is a good process to be going through, and hopefully companies will come out of it more robust.
“For suppliers, though, it creates a tough operating environment and they have to be willing to renegotiate contracts.”
Queries from IDC clients is still largely infrastructure focused. CIOs are looking at infrastructure and operations, security, enterprise software, mobile and client computing, application development, big data/analytics and cloud computing.
The IT disciplines that executives are interested in are IT strategy and governance, vendor management enterprise architecture, service management, IT metrics and benchmarks, application development and IT staffing.
“The reality is that we talk about innovation, but we don’t have time for it,” Tullet says.
CIOs around the world spend less than 15% of their time on innovation, with the rest going on keeping the lights on.
“The reality is an uncomfortable one. We are under pressure to embrace innovation the reality is that we cannot increases the 15% unless we can reduce the 85%.”
To reduce this, automation, optimisation and agility will play a big role.
In the MEA region, CIOs are being asked to more for the business – but with less time, resources and money.
Consolidation and outsourcing of legacy IT is happening, to improve efficiency and create a future path for IT.
CIOs are encouraged to embrace innovation as a disrupter. “It doesn’t have to be damaging to our business. But get on top of it now,” Tullet advises.
The alignment between technology and business is much closer than ever, although there is some room for improvement.
“And this is about digital transformation. There are very few companies that are not doing some sort of digital transformation.
“But don’t try to jump to the final block. Have a plan in place to take the next steps.”
In South Africa, cloud computing is growing healthily, with companies leaning to private cloud. “We expect that at least one top tier provider will open a data centre in South Africa this year,” Tullet says. “This hasn’t happened yet. But when it does it will spur investment in the country.
“It will be very important to drive adoption in the coming years.”
Local organisations are encouraged to ramp up their skills, to decide what they will need going forward and make the tough decisions. “Put the skills in place especially around integration; you will need to move quickly once it happens.
Internet of Things is expected to come of age this year. “South Africa has a lot of engineering companies. We have a lot of skills, but not necessarily a lot of locally-developed solutions.
We expect that these will happen, and we will probably have an export market round IoT.”
IoT is going to be a big market, Tullet adds. “If you start using IoT technology you will have a massive proliferation of data. This is good, and can be used to improve your organisation.
“So think IoT with analytics in mind.”
South Africa is very active in the mobile world. It hasn’t really embraced mobile money, but enterprise applications are expected to take off in 2017.
“Our guidance on mobile is to invest and invest now. In many cases, it is a fundamental change in the way you will attract customers.”
When it comes to big data and analytics, there have been tremendous developments over the last couple of years in terms of artificial intelligence (AI), cognitive computing and machine learning.
Tullet believes that, although the market has been slow to pick up, it will move quickly and soon.
“We are already seeing legal decisions being made on the basis of algorithms.”
It is very difficult for companies to plan for AI, so Tullet advises them to get their data and business intelligence systems in place. “Start to think about how it will impact your organisation and industry.”
Security is a sorry picture, he says. The level of cyber-crime typically increases when the economy is under pressure and when there is political uncertainty.
“So the threat level is likely to increase. But predictions for a high level of threats in South Africa remain.
“So should you be cutting your investment in security now? No you should not.”
The good news is that South Africa has some very good security skills. “Not as many as we would like but there are great skills,” Tullet says.
He advises CIOs to look at their security stance, gear it up and be aware of the threats within the environment they operate in.