INTELLIGENT BRANDS // Software for Business
South Africa’s enterprise
application software
market poised for single-
digit growth in 2018
despite challenging
economic conditions
D
espite ongoing economic
uncertainties and political
instability, South Africa’s
enterprise application software (EAS) will
grow 1.7% year-on-year in 2018 to reach
a value of $410.05 million, according
to the latest insights from International
Data Corporation (IDC). The global
technology research and consulting
firm’s newly released ‘South Africa
Enterprise Application Software Market
2017-2021 Forecast and 2016 Vendor
Shares’ study shows that the South Africa
EAS market will grow at a compound
annual growth rate (CAGR) of 2.2% over
the 2017-2021 forecast period.
“The continued depreciation of the rand
has had a crippling effect on IT budgets
in general,” says Mervin Miemoukanda,
a Senior Research Analyst at IDC
South Africa. “This has led some large-
and medium-sized organisations to
reprioritise their IT spending and
renegotiate their software licensing
and maintenance costs. However, the
market is being boosted by digital
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transformation initiatives, upgrades, and
heightened cloud demand from small
and medium businesses.”
“The overall economic outlook will
remain bleak until 2018, with exchange-
rate challenges creating an unstable
environment for strong market growth,”
continues Miemoukanda. “That said,
EAS investments will remain a key
investment priority for South African
organisations throughout the forecast
period as they implement various IT
modernisation projects, including digital
transformation, during the forecast
period. Furthermore, cloud-based EAS
will increasingly be in demand over the
coming years.”
IDC’s research indicates that South
Africa’s overall EAS market totalled
$396.09 million in 2016, with enterprise
resource management (ERM) software
accounting for the largest share at
61.8%, which translates into license
and maintenance revenue of $244.97
million for the year. Meanwhile, business
analytics overtook customer relationship
management (CRM) into second place
in 2016, generating revenues of $57.30
million for 14.5% share of the overall
EAS market.
On the vendor side, South Africa’s EAS
market continues to be dominated
by the global giants SAP and Oracle.
SAP remained the largest EAS vendor
in South Africa in 2016, followed by
Oracle and Sage. However, competition
is intensifying in the EAS market,
particularly in the small and medium-
sized enterprise (SME) segment, where
small and niche local cloud EAS vendors
such as SmartHR and Sovtech are
positioning themselves strongly.
From a vertical perspective,
manufacturing companies (discrete and
process combined) were among the
largest EAS spenders in South Africa in
2016, representing 36.5% of the total
market spend. They were followed by
organisations from the banking and
retail sectors.
IDC’s ‘South Africa Enterprise Application
Software Market 2017-2021 Forecast
and 2016 Vendor Shares’ study provides
a detailed forecast of functional
market spending, including enterprise
resource management, customer
relationship management, supply chain
management (SCM), operations and
application management, and business
analytics. EAS vendors tracked in this
study include Microsoft, IFS, Sage, Oracle,
SAP, Hansaworld, Epicor Software, Unit4,
and Syspro. n
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