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Cape Town, South Africa, 27 August 2018

Gartner Says IT Spending in South Africa Will Grow 4.3 Percent in 2018

Analysts to Discuss the Future of IT and Business at Gartner Symposium/ITxpo 2018, September 17-19 in Cape Town, South Africa

IT spending in South Africa will total R276.6 billion in 2018, a 4.3 percent increase from 2017, according to Gartner, Inc. All IT segments are on track to achieve growth this year, with data center systems and servers returning to growth.

"South Africa is playing technology catch-up,” said John-David Lovelock, vice president and distinguished analyst at Gartner. “After years of neglecting basic data center requirements, the country’s IT leaders are now drawing attention to their data center system spending. Although data center systems remain the smallest spending IT segment in South Africa, this segment’s year-over-year increase is set to be the most profound in 2018.”

South Africa remains behind many of the more technologically mature countries when it comes to IT spending, both as a percentage of revenue and in the purchase of advanced systems, such as those involving artificial intelligence,  cloud, digitalization and collaboration technology. The increase in data server system spending this year stems from requirements to overcome a large corporate technology deficit and to modernize data centers.

The price of communication services, including voice and data services for fixed and mobile delivery, continues to drop, which enables spending to be allocated elsewhere. Spending on communications services in South Africa, which is projected to represent 43 percent of the country’s IT spending, is forecast to be flat throughout the forecast period (see Table 1).

Table 1. IT Spending Forecast, South Africa (Millions of Rand)

 

2017 Spending

2017 Growth (%)

2018 Spending

2018 Growth (%)

2019 Spending

2019 Growth (%)

Data Center Systems

7,803

-3.6

8,594

10.1

8,456

-1.6

Software

27,908

12.7

31,396

12.5

35,361

12.6

Devices

39,634

3.0

39,995

0.9

44,196

10.5

IT Services

71,942

8.7

77,672

8.0

83,303

7.2

Communications Services

117,777

0.8

118,929

1.0

119,361

0.4

Overall IT

265,065

4.2

276,586

4.3

290,677

5.1

Source: Gartner (August 2018)

"Digital transformation is happening in South Africa, but the pace and penetration are low," said Mr. Lovelock. "Newly modernized data centers that can support application software purchases, as well as internally developed systems, will drive advances in digitalization. However, low cloud adoption and underutilization of strategic consulting and implementation services will mean a slow pace digital transformation in South Africa overall."

South Africa has relatively few organizations whose enterprise adoption profile classifies them as “dynamic.” "By ‘dynamic’ we mean organizations that embrace a higher pace of technological change," said Mr. Lovelock. With South Africa’s GDP growth projections being around half that of the world’s projected GDP growth, a more measured approach to business and IT change may be warranted for the majority of the country’s organizations. "However, it’s the dynamic organizations that are, on average, gaining greater revenue returns than their nondynamic industry peers," added Mr. Lovelock. "Dynamic organizations are investing more in cloud, digitalization and collaboration technology, and these investments are reducing cost, improving efficiency and opening up new business possibilities. They should set an example for many other South African companies that are looking to outperform the country’s economy and their peers."

Gartner's IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data, on which it bases its forecasts.

Gartner's quarterly IT spending forecasts offer a unique perspective on IT spending across hardware, software, IT services and telecommunications segments. They help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast is available here.

Gartner Symposium/ITxpo

Additional analysis on IT trends and investments will be provided during Gartner Symposium/ITxpo 2018, September 17-19 in Cape Town, South Africa, the world's most important gathering of CIOs and other senior IT executives. Follow news and updates from the events on Twitter using #GartnerSYM.

About Gartner

Gartner, Inc. (NYSE: IT), is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and objective resource for more than 15,000 organizations in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.

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