Overall enterprise applications software (EAS) spending in South Africa is set to increase 10.5% year-on-year in 2014 to total $518.45 million, according to the latest South Africa Enterprise Applications Software Market 2013–2017 Forecast (IDC #CEMA19765) from International Data Corporation (IDC). This represents a decline on the 10.9% figure predicted for 2013, with IDC attributing the marginal downturn to an anticipated delay in government spending plans as a result of the general elections scheduled for 2014.
With a further 12 months likely to pass before the new government is fully focused on its investment plans, improved growth is not anticipated for the country’s EAS market until 2016, with IDC predicting year-on-year growth of 11.8% for that year.
Other factors that will negatively impact the EAS market in 2014 include ongoing economic pressures that are likely to derail the investment plans of large and very large businesses (enterprises). Continuing financial challenges will also limit the access of small and medium-sized businesses (SMBs) to credit and curtail their subsequent investments, while the ongoing challenge of skills shortages will impair the adoption of new technologies.
“South African organizations are interested in adopting technologies such as advanced analytics, but are often limited by tight budgets and lack of advanced technical skills,” says Lise Hagen, a research manager at IDC South Africa. “In order to make headway in an increasingly competitive market, organizations will increasingly invest in business-enabling and customer-engaging technologies such as customer relationship management (CRM), mobility, social business, and other communication tools. Interest in business intelligence and analytics is high and demand will continue to grow, driven by the increasing need for greater transparency across organizations and enhanced customer insight. There is also a growing requirement for performance monitoring solutions that support better and more agile business decision making.”
Hagen also observes that while most enterprises have already invested in enterprise resource planning (ERP) solutions, the market remains dynamic as organizations are investing in ERP modernization and optimization initiatives, as well as in mobile ERP solutions.
Against this backdrop, IDC expects spending on enterprise applications software in South Africa to expand at a compound annual growth rate (CAGR) of 11.6% across the five-year forecast period to total $787.19 million in 2017. Investments are anticipated to stem mainly from the enterprise segment, with banking, government, and telecommunications entities set to be the biggest EAS spenders throughout the five-year forecast period.
In related news, IDC’s recently released South African Enterprise Applications Software Market 2012 Vendor Shares (IDC #CEMA20126) reveals that the top five vendors together accounted for 94.8% of total license and maintenance (L&M) revenues in 2012. SAP was the leading vendor with 48.0% share of the market, while Oracle placed second with 20.0% share. Sage ranked third with 18.0% share. Microsoft Dynamics and Syspro rounded out the top five vendors in the country, with respective shares of 5.3% and 3.5% of the market. Enterprise resource management (ERM) continued to dominate EAS vendor sales in the South African market with 66.1% share of EAS revenue, although business analytics (BA) and CRM tools were also in high demand, with shares of 14.7% and 9.9%, respectively.