South Africa Information Technology Report Q3 2012

BMI View: South African IT spending to increase to about US$17.6bn in 2016, at a US dollar 2012-2016 CAGR of 10%, slower than previously forecast. Major infrastructure and transport projects will provide encouragement for growth during BMI''s five-year forecast period. Most opportunities are likely to be in sectors such as wholesale and retail trade and financial and personal services, which will grow faster, while other verticals like mining and manufacturing suffer a slowdown. However, South African businesses are expected to maintain a cautious attitude to IT investments, due to continued global economic uncertainty.
Headline Expenditure Projections Computer hardware sales: US$5.1bn in 2011 to US$5.2bn in 2012, +8% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors and following a strong 2011, PC market growth is expected to slow in 2012.
Software sales: US$2.1bn in 2011 to US$2.3bn in 2012, +7% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors and analyst modification and, due to broadband infrastructure improvements, there is likely to be growing interest in Software-as-a-Service (SaaS).
IT services sales: US$4.2bn in 2011 to US$4.4bn in 2012, +5% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors and spending on IT services still depends heavily on government programmes.
Risk/Reward Ratings: South Africa''s score was 47.3 out of 100.0. South Africa ranked eighth in our latest MEA region RRR table, behind Israel and Turkey but ahead of Oman, Egypt and Lebanon. Despite ranking fourth terms of IT market size, South Africa''s overall ranking was restrained by a relatively low Country Structure score compared with the GCC countries.
Key Trends & Developments. 􀂃 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.
􀂃 Business intelligence is one growth area as South African organisations look to improve information visibility and utilisation. Vendors have reported that spending is increasing in organisations where business intelligence platforms are already entrenched. Strong sectors for business intelligence solutions include retail.
Major infrastructure and transport projects should continue to boost IT services spending growth during the forecast period. Spending still depends heavily on government programmes and the government will remain the largest spending IT services vertical, followed by financial services and telecoms. Cloud computing is becoming viable in South Africa due to improved and lower-cost bandwidth availability.