Spending by state-owned enterprises (SOEs) on ICT at a compound annual growth rate of 11.3%, to reach R11.2 billion in 2012/13, will bolster the ICT industry during the coming economic downswing, says research house BMI-TechKnowledge.
However, at least one industry veteran, Philip Savides, says the report may be a bit optimistic. He notes that most of the spending is being driven in preparation for the 2010 World Soccer Cup and no new tenders are coming out of government for post-2010 implementation.
“We have only recently seen the R100 million SA National Research Network tender that was won by Business Connexion (BCX) and very little calling for more infrastructure spend since then,” he says.
Savides, who was until recently the head of BCX's Western Cape operations, says the country seems to be almost overly committed to 2010.
“One must ask: 'what are the commitments for after 2010?' because once the infrastructure is built then they need to use it.”
Savides says a big project, such as the Square Kilometre Array, the international tender to build a large radio telescope that SA hopes will be located in the Karoo, has been in the pipeline for some years and there is no guarantee it will come through.
Unaffected by energy
In its latest report on SOEs, BMI-TechKnowledge says consumer spending and enterprise profits have decreased significantly due to the higher energy costs and increased oil prices. However, SOEs, particularly Eskom and Transnet, spend more during this time and are not affected by energy costs.
“Therefore, it hasn't all been doom and gloom since the current economic downturn will not have an impact on SOE capex plans and their ICT spend,” the report says.
SOE roles have changed and developed over the years. They are key in the growth of the economy and are essential in the development of important South African sectors that include energy, transport, telecommunications and manufacturing.
Lesley-Ann Dos Santos, BMI-TechKnowledge analyst, says SOE ICT expenditure is expected to increase as transportation and utility companies (Transnet and Eskom) expand and gear up to deliver on SA's infrastructure requirements. SOEs are currently focusing on the high-profile projects associated with the 2010 World Cup which will also drive ICT expenditure.
In the report, BMI-TechKnowledge profiled 11 SOEs. These are: Eskom, Transnet, SAPO, SAA, SITA, GSSC, SABC, SARS, SA Reserve Bank, Acsa and Armcor.
According to the research, the 11 SOEs spent R6.6 billion on hardware, software, IT services and communications in the 2007/8 financial year.
Private partnerships
SOEs in SA are starting to form partnerships with the private sector, as well as other state-owned enterprises. The goal of this strategy is to maximise the enterprise and national interest, as well as to alleviate the ICT skills shortage that is still a major concern for both government and private companies.
Dos Santos says SOEs are under strain to increase SA's competitive advantage, as well as to understand and be receptive to consumer needs. The trend of using business intelligence (BI) to get closer to consumers is growing since the use of BI not only allows for better control but also improved decision-making.
She says many SOEs and other organisations working closely with government are slowly implementing open source software (OSS), with a handful of companies only currently implementing small pockets of OSS. However, enterprises haven't realised the full potential of implementing and using OSS, and are still extremely hesitant to fully implement OSS.
Dos Santos says the top drivers of ICT adoption in SOEs are the enhancement of the effectiveness of operations and the improvement of service delivery. The biggest inhibitor of ICT adoption in SOEs is the lack of planning by departments that is making it increasingly difficult for managers to develop and implement ICT strategies, she concludes.
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