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'SA IT spending to hit $18.1bn in 2017'


South African IT spending is forecast to increase to $18.1 billion in 2017, at a compound annual growth rate (CAGR) of 8%, according to a research synopis from Business Monitor International (BMI).

This growth is forecast to be achieved despite what BMI describes as a South African economic slowdown in 2012, a year in which vendors reported sluggish public sector tender spending because of a treasury audit and low business confidence. BMI further adds that South African businesses are "expected to maintain a cautious attitude to IT investments, due to continued global economic uncertainty".

But major infrastructure and transport projects planned in the nation for the next five years have provided what BMI says is encouragement for growth.

The research firm adds that IT spending opportunities also exist in sectors such as wholesale and retail trade, and financial and personal services. Meanwhile, other verticals such as mining and manufacturing could suffer a slowdown, resulting in lower IT spending in these sectors, says BMI.

"Spending still depends heavily on government programmes and the government will remain the largest spending IT services vertical, followed by financial services and telecoms," says BMI.

"Cloud computing is becoming viable in South Africa due to improved and lowercost bandwidth availability," the research firm adds.

Regarding the breakdown for headline expenditure projections, computer hardware sales recorded $5.4 billion in 2012 and could rise to $6.1 billion in 2013, a 12% rise in US dollar terms. The research house says that migrations to Microsoft's Windows 8 operating software could boost hardware spending among buyers.

Software sales are also predicted to increase from $2.4 billion in 2012 to $2.6 billion in 2013, a 9% growth rate. BMI attributes this mooted growth to vendors having reported increased enterprise and local government interest in Software-as-a-Service (SaaS).

BMI adds that IT services sales hit $4.6 billion in 2012 and could rise to $4.7 billion in 2013, recording growth of just over 2%. Cloud computing offerings are expected to drive utilisation of outsourcing and managed services, says BMI.

In terms of other key trends and developments, BMI says the South African Department of Education has announced a target of rolling out laptops to all school children in the country by 2014.

"The government is looking at various ways to achieve this, including the use of portable mobile computer labs for schools where there is no infrastructure. Following a strong recovery in PC shipments in 2011, the market should remain on an upwards trajectory," says BMI.

Business intelligence is another potential growth area as BMI says that South African organisations are looking to "improve information visibility and utilisation".

BMI says that vendors have reported that spending is increasing in organisations where business intelligence platforms are already entrenched, while strong sectors for business intelligence solutions could include retail.


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