Modest Growth for SA’s Enterprise Application Market

Despite 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 organizations to reprioritise their IT spending and renegotiate their software licensing and maintenance costs. However, the market is being boosted by digital 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 organizations throughout the forecast period as they implement various IT modernization 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 totaled $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 organizations from the banking and retail sectors.

IDC’s ‘South Africa Enterprise Application Software Market 2017-2021 Forecast and 2016 Vendor Shares’ (IDC # CEMA42820017) 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.