The focus of this insight is to understand the key areas of IT spend within the manufacturing sector in South Africa with the aim of highlighting the chief areas of opportunities for IT service providers. The objectives are to provide an overview of South Africa’s macro-environment and its impact on manufacturing; offer insights into the sector‘s value chain and the adoption of ICT services across participants; discuss the global and domestic challenges facing manufacturing; highlight ICT spend in 2016 and offer future forecast insight; and identify the Growth Opportunities within the manufacturing sector for IT and telecom service providers.
The market for service providers is highly competitive, especially because they offer similar IT solutions and services to enterprises. Differentiation through innovative pricing models and industry knowledge are key factors. For service providers to remain competitive and for them to differentiate themselves, they must increase industry expertise, build dedicated and industry-focussed teams able to cross-sell, offer innovative branding and price strategies such as pay-per-use models, change their approach from selling services to providing full ICT solutions, that is, augment their business focus, and develop contracts with flexible SLAs. In addition, enterprises are looking for more flexible contracts that will help accommodate change in their IT strategy as well change in the overall technology landscape. In doing so, enterprises will have better control in terms of cost and the ability to implement innovative IT services, as needed.
The top 3 highlights for the manufacturing sector in South Africa are as follows:
1. ICT spend was ZAR 2.5 billion in 2016; it is expected to grow at a CAGR of 2.0% and reach ZAR 2.7 billion in 2019.
2. The plan of action that will shape IT strategy in the manufacturing sector is moving towards managed services, customized system integration, and the consolidation of data centres. The key objective is to move towards cloud-based services as a measure to reduce operational IT costs and footprint.
3. Deficient infrastructure and services, legacy systems, and shortages of skilled resources and services providers are some of the restraints delaying the adoption of innovative IT services and solutions.