Kathy Gibson is at IDC Directions 2020 in Sandton – An uncertain economy is top of mind for South African organisations.

But IT is a subset of the total economy and there are still opportunities for the industry, says Jonathan Tullett, research manager – IT services: Africa at IDC.

The ongoing skills shortage is one of the issues that is curtailing IT investments with an imbalance still evident, he says.

Meanwhile, many companies have defensive strategies at the moment and are looking at how to curtail costs rather than investing for growth.

“But customers are looking to IT companies for solutions,” Tullett says.

Cloud is front and centre of any new opportunities, while services are more in demand than ever before.

Indeed, services is the leading light in infrastructure growth, with managed services seeing particularly healthy growth followed by project services, support services, infrastructure and software.

The local outlook for cloud is positive, Tullett says, with a number of high-end public cloud providers already operating and more coming soon.

What we haven’t seen is immediate growth in adoption, mostly due to a number of perceived barriers, although many of these have been addressed.

As the big players come into the market they are driving a step change in go-to-market strategy.

“These are big and aggressive companies. If you are competing against them you need to be on that level – or find a complementary strategy,” Tullett warns.

The hyperscalers are also being aggressive in how they onboard partners; and they are going to change the way customers expect services to be delivered.

The move to cloud means there is a shift in the way companies buy software.

While on-premise software investment is declining by 4,8% up to 2023, software as a service is growing at a massive 31,2% compound annual growth rate. Overall, the net new revenue from cloud software is about eight-times more than on-premise software sales.

“If you trying to just do business the old way, you could be trouble and things could move without you,” Tullett points out.

As we see an emergence of hybrid infrastructure and hybrid service, there is an opportunity for service providers, he adds.

These services will be particularly useful where technologies are tactical, inconsistent and siloed,

Multiple environments have escalated the complexity and risk of the cloud environment, so governance comes under scrutiny, a lack of co-ordination dampens innovation, and a skills imbalance could be a force multiplier in the wrong direction.

The reasons that South African companies embark on digital transformation is usually about efficiency rather than innovation.

The increasing popularity of artificial intelligence (AI) plays into this. By 2023, 47% of the services that organisations receive will be delivered via automation – and AI-enabled automation will represent 20% of this automation spend.

There are downsides to the adoption of new technologies, though.

One of the reasons that cloud is so seductive is that it allows companies to do things quickly and easily. This means that many customer underestimate the cost, complexity, and security that comes with a cloud deployment.

“I am expecting to see a lot of cloud based attacks,” Tullett predicts.

Although cloud is growing at a rapid rate, South African organisations are still investing at a healthy level in their own data centres. “We have many data centres and are still building them,” Tullett says.

A lot of the spend is in upgrading existing technology, in managing networks and utilisation, in improving data centre utilisation, and in migrating workloads to the cloud.

Partnerships are going to be vital in the commoditised ICT space, Tullett adds. By 2022, 78% of enterprises will partner with technology services vendors that can orchestrate technology innovation into business use cases to drive transformation at scale.

“There are still opportunities out there, and plenty of ways we can beat the gloomy predication,” he concludes.