Enterprise IT spend austere in South Africa; some recovery in 2010

Enterprises in South Africa are spending less on IT as they try to eke out lessening, unpredictable budgets in the face of continuing recession. Increasingly, senior financial executives are being involved in purchase decision-making, but there are signs that South Africa is attaching greater importance to planning and spend behind adopting enterprise mobility.

According to the Enterprise Software in South Africa 2009 report, 63% of medium-to-large enterprises budgeted annually to spend 1% or greater on IT in 2005, but that figure has dropped dramatically to just 39% today. There's also been a change in the way the money is spent, with 32% of firms opening wallets on an ad-hoc or 'as needed' basis rather than 19%, showing that spend has been deprioritised to emergencies or maintenance only in some cases. This is particularly bad news for the software sector where vendors and developers rely on structured upgrade planning from enterprises to buoy them during times between major releases. It also leaves corporate systems open to a greater risk of software security breaches outside of free patches and service packs.
This situation may leave enterprises that use shareware at an advantage, as all upgrades are usually offered free of charge, although companies using such systems will be in the minority. The report also reveals that four years ago, 50% of firms reviewed their IT spend every six months, but that cycle has been extended to every year in all but a third of enterprises. If so, South Africa seems to be bucking the global trend towards spending cuts on hardware, not software. Analyst firm Gartner predicts that there will be a 6% drop in global IT spending with hardware worst hit, although spending seems to be volatile in the current climate, as Gartner has already upwardly revised that figure once in 2009.
Some budgets will return in 2010. The same analyst predicts that global enterprise IT spending will increase 3.3% to US$3.3 trillion compared to 2009. While that may help some firms thaw projects that were put into deep freeze, it won't mean that spending fully recovers and so enterprise should remain aware that 2010 will not bring the budget gifts they might wish for during the end of 2009 holiday period. There are encouraging signs on the mobility front, however, with firms planning to attach greater priority to encouraging greater staff productivity through mobile devices and applications.

Nicolas Jacquey
Simon Marshall