Study: South African corporate IT spending increases

Von Trisha Harinath

South African research company, BMI-TechKnowledge, last week launched a report focusing on end-user IT spending trends in the SA corporate and SME markets. A total of 330 interviews were carried out, half of the respondents being from the corporate sector and the other half from SMEs.

One of the report?s main findings was that the corporate sector would prefer to spend its money on bundled packages offered by vendors, whereas SMEs would much rather spend on single applications.

The report also notes an increase in spending in the corporate sector, and shows that the SME sector is growing rapidly, and therefore has a lot of potential for IT spend in the future.

BMI-T analyst, Astrid Hamilton, says that the increase in local corporate IT spending is in line with international trends, as companies become more efficiency-focused, while still aggressively driving initiatives to gain new business and improve and maintain existing customer relationships.

With regards to SMEs, Hamilton says: ?The SME sector needs IT solutions that are easy to use, modular, cost-effective and specific to their business needs. Availability of finances is the single biggest factor in determining the amount spent on IT and thus flexible financing options are important.?

According to the report, SMEs spend more on hardware and software as opposed to IT services, with companies generally spending on IT in line with their rate of growth.

The corporate sector, however, focuses more on customer services, and ways in which it can improve efficiency within the company. However, both sectors have ?customer relationship management? as a top priority.

When it came to open source software versus open standards, 68 percent of corporate users preferred open standards, as opposed to the 32 percent that opted for open source.

Seventy-four percent of SMEs did not even consider using open source, a possible result of the lack of information that they have regarding this, also, possibly, owing to confusion in the SME market as to what actually constitutes open source software.

?SMEs consider the top three emerging technologies to be wireless LANs, VOIP and mobile data access,? says Hamilton.

When it comes to vendor selection, the top three contributing factors include, quality and reliability of the product (132 SMEs chose this as opposed to the 115 corporates), price and customer service.

According to the report, there are three factors that are likely to delay IT spend going forward in 2005. Fifty-three percent of corporates and 39 percent of SMEs say that budget restrictions are the main contributing factors to this delay. Unstable business environments, as well as decreased technology requirements also provide challenges.

The report also shows that application software, networking hardware and software, and training and education services, top of the lists of both.

Unlike SMEs, the corporate sector also includes storage as a priority, where elements such as legislative compliance play a larger part in day-to-day business.

As expected, local corporates are taking BEE a lot more seriously, with just over half of respondents opting to cancel non-BEE-compliant contracts. To SMEs, however, BEE is still not seen as a primary concern, and takes a back seat to business survival.