ICT investment trends in South Africa Enterprise ICT spending patterns through to the end of 2016 September 2015 KG0177CI Single User Price: US$2995
Introduction Summary Kable s survey of South African enterprises shows that overall ICT spending in South Africa is expected to increase in 2015 compared to 2014, with enterprises continuing to invest in hardware, software, and IT services in order to enhance their ICT infrastructure Enterprises in South Africa are increasingly using green IT & virtualization technologies to reduce IT maintenance and support, and energy costs Rapidly expanding bandwidth capacities and the proliferation of data centers within the geography has established a solid platform for the development of cloud computing services in South Africa Scope This report presents the findings from a survey of 51 South African enterprises regarding their Information & Communications Technology (ICT) investment trends. The survey investigates how South African enterprises currently allocate their ICT budgets across the core areas of enterprise ICT expenditure: hardware, software, IT services, communications, and consulting. The report illustrates the core technologies that enterprises are investing in, including business intelligence, mobility, and communications & collaboration. The survey also highlights the approach to purchasing technology adopted by enterprises in South Africa. Through Kable s survey, the report aims to provide a better insight to ICT vendors and service providers when pitching their solutions to enterprises in South Africa. The survey was conducted in Q1 2015 via an online methodology, with respondents all having ICT decision maker responsibility (typically CIOs and IT Managers). Kable plans to repeat the survey in Q1 2016, in order to monitor ICT budget changes on an ongoing basis. Appendix 2
Reason to buy Understand how the South African enterprise ICT landscape is set to change in 2015 to prioritize your target market Comprehend how ICT Rands are being allocated by South African enterprises in specific verticals and size bands to improve your market penetration Make effective business decisions by recognizing the opportunities within each of the core areas of ICT spend (hardware, software, IT services, telecommunications, and consulting) Realign your sales initiatives by understanding the current strategic objectives of South African enterprises Enhance your market segmentation with the included, detailed breakdown of opportunities within selected technology categories (business intelligence, mobility, and communications & collaboration) Prioritize your focus areas by understanding which factors are influencing South African enterprises decisions when selecting an ICT provider Understand the changes in customers priorities and identify the business and IT objectives that South African enterprises are looking to achieve through their ICT investment strategies Appendix 3
Survey demographics South African enterprise ICT survey industry breakdown South African enterprise ICT survey breakdown by size band (number of employees) Financial markets Utilities Education Retail Manufacturing Insurance Government Healthcare Energy Media Retail banking Pharmaceuticals respondents Over 10000 5000-9999 2000-4999 1000-1999 500-999 100-499 50-99 respondents Survey demographics 4
% of respondents South African enterprises are earnestly investing in various ICT domains in 2015 How did your ICT budget grow or shrink from 2013-14, and has it changed from 2014-15? 2013-14 (%) 2014-15 (%) Despite the uncertain economic conditions...... (Summary of the situation in the enterprise ICT market and discussion around the degree to which IT budgets are decreasing/increasing/staying flat.) Decrease 6% or more Decrease slightly (1%- 5%) Flat (0%) Increase slightly (1%- 5%) Increase significantly (6%+) respondents ICT budgets changes 5
Investment in hardware remains a key area of focus among South African enterprises How did you spend your (external) ICT budget in 2014? How will this change in 2015? x% Kable s survey suggests that South African enterprises are allocating a major portion of their IT budgets on......... (A brief description of the way in which enterprises are allocating their IT budgets.) 2014 2015 Hardware Software Services Communications Consulting Other respondents ICT budget allocation by core technology area 6
Expenditure on clients constitute the major chunk of hardware expenditure What proportion of your hardware budget was spent in the following areas in 2014? Kable s recent survey finds that almost one third of the hardware spend is on... (A brief description on where the investments are being made and what the implications are for hardware vendors.) Infrastructure as a service Processors Clients High end servers Storage Network and communications equipment Peripherals Servers Security respondents Hardware budget breakdown 7
Device management is expected to gain traction among South African enterprises The demand for mobility is growing in South Africa; such solutions enable enterprises to manage their operations more effectively by providing... (Briefly describe in which sub categories enterprises are planning on making investments). ICT investment priorities Mobility 8
Vodafone leads the list of IT systems management vendors among South African enterprises In terms of vendor satisfaction, Vodafone, which has been selected by of respondents as their primary provider, gets an average rating of, on a scale of one to four (Briefly describe the top providers for specific technology and satisfaction rating relating to that vendor). ICT vendor satisfaction Mobility 9
Raising efficiency and using IT to support revenue growth are the most important business and IT objectives influencing IT investment strategy Please rate the importance of the following business objectives in influencing your IT investment strategy in 2014 A majority of South African enterprises rate... as their most important business objective. Raise efficiency Cut costs Increase customer satisfaction Increase revenues Achieve or maintain Improve supplier relationships A majority of South African enterprises rate... as their most important IT objective. Average rating (1 = not an objective, 4 = top priority) respondents Please rate the importance of the following IT objectives in influencing your IT investment strategy in 2014 Use IT to support revenue growth Align IT with overall business goals Deliver new functionality to business users Better demonstrate the value of IT to the business Meet internal service level agreements Average rating (1 = not an objective, 4 = top priority) respondents Business and IT objectives influencing IT investment strategy 10
Appendix Report Methodology Kable s Customer Insight Survey reports are primarily based on the information (related to ICT budgets, priorities and procurement plans) collected through an annual survey performed in the fourth quarter of every year. The primary research involves a major program of interviewing CIOs and IT executives regarding their IT investment and priorities. The secondary research process involves covering publicly available sources, company annual reports, and press releases. The content in the report is written by analyzing the survey findings and substantiating those findings through secondary research. About Kable Kable delivers unparalleled customer and market insight into enterprise ICT investment trends. Covering 12 key sectors in 33 locations, we identify investment patterns and trends, monitor how ICT budgets are set to change, inform our clients about the top-spending organisations, and provide market opportunity forecasts. Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Kable. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings and conclusions that Kable delivers will be based on information gathered in good faith from secondary sources, whose accuracy we are not always in a position to guarantee. As such, Kable can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect. Appendix 11
Appendix Further reading ICT investment trends in Brazil, May 2015 ICT investment trends in India, July 2015 ICT investment trends in the Middle East, August 2015 ICT investment trends in Russia, June 2015 Appendix 12
Table of Contents 1 Trends in ICT budgets... 4 1.1 Introduction... 4 1.2 Survey demographics... 4 1.3 ICT budget changes... 6 1.4 ICT budget allocation by core technology area... 7 1.4.1 Hardware budget breakdown... 9 1.4.2 Software budget breakdowns... 11 1.4.3 Third party IT services expenditure... 12 1.4.4 Cloud computing budget... 14 1.5 ICT budget allocation by function... 17 1.6 Outsourced IT functions... 19 2 ICT investment priorities and vendor satisfaction... 21 2.1 Introduction... 21 2.1.1 Business intelligence... 21 2.1.2 Communications & collaboration... 25 2.1.3 Mobility... 28 3 ICT procurement trends... 32 3.1 Introduction... 32 3.2 Business objectives and IT objectives influencing IT investment strategy... 32 3.3 ICT provider selection... 34 4 Summary 36 4.1 South African enterprises are increasing their ICT expenditure, driven by the favourable economic conditions... 36 5 Appendix 37 5.1 Definitions... 37 5.2 Further reading... 41 5.3 Contact the authors... 41 ICT investment trends in Belgium 13
Table of Contents Figure 1: South African enterprise ICT survey industry breakdown... 4 Figure 2: South African enterprise ICT survey breakdown by size band (number of employees)... 5 Figure 3: Recent and expected ICT budget changes among South African enterprises... 6 Figure 4: South African enterprises (external) ICT budget allocation, 2014 and 2015... 7 Figure 5: South African enterprises average hardware budget allocation... 9 Figure 6: Average allocation of software budgets in South African enterprise market... 11 Figure 7: South African enterprises average IT services budget allocation... 12 Figure 8: South African enterprises average cloud computing budget allocation by technology... 14 Figure 9: South African enterprises average cloud computing budget allocation by implementation type......15 Figure 10: South African enterprises ICT budget allocation by function, 2014 and 2015... 17 Figure 11: Outsourced IT functions South African enterprises current and future outsourcing priorities...... 19 Figure 12: Business intelligence South African enterprises current and future investment priorities... 21 Figure 13: Business intelligence selected primary provider and vendor satisfaction among South African enterprises... 23 Figure 14: Communications & collaboration South African enterprises current and future investment priorities... 25 Figure 15: Communications & collaboration selected primary provider and vendor satisfaction among South African enterprises... 26 Figure 16: Mobility South African enterprises current and future investment priorities... 28 Figure 17: Mobility selected primary provider and vendor satisfaction among South African enterprises..... 30 Figure 18: Business objectives and IT objectives which influence South African enterprises' IT investment strategy... 32 Figure 19: Factors influencing South African enterprises' decision to choose an ICT provider... 34 ICT investment trends in Belgium 14