Reading time ( words)
Middle East and North Africa (MENA) IT spending is projected to reach $155 billion in 2018, a 3.4% increase from 2017, according to the latest forecast by Gartner, Inc.
Gartner analysts are discussing key IT and business issues that are driving the evolution of digital business during the Gartner Symposium/ITxpo in Dubai from Monday through Wednesday.
In 2018, the MENA region will exhibit its highest IT spending increase in the last three years. Spending in communication services (mobile voice and data primarily), mostly by consumers, is the segment that will largely contribute to the rise in IT spending in MENA this year.
Software is projected to exhibit the strongest growth in 2018, with a 12.7% increase year over year. Software spending has also been growing at a double-digit rate the last two years. The growth has been driven by companies pursuing new functionalities in major back-office systems like supply chain management, enterprise resource planning and customer service.
Not all categories of IT spending in MENA will surpass the regional total average in 2018. Cloud spending in the region is among the lowest in the world when measured as a percentage of total IT spending.
"There are insufficient local hyper-scale and large-scale data centers to support cloud systems, which cause local organizations to derive cloud offering from abroad," said Peter Sondergaard, executive vice president and global head of research at Gartner. "Moreover, latency, legal and local currency makes this option problematic and limits cloud adoption among businesses in MENA."
The communications services segment — the largest spending segment in MENA — is growing to serve increasing demand for premium mobile phones. Communications services are expanding coverage and increasing data transfer rates while keeping prices low. The rising demand of premium mobile phones by consumers is also set to fuel growth in the devices spending segment in 2018.
"The MENA region witnesses continued focus on technology initiatives and improvements," said Mr. Sondergaard. "Digital business transformation is creating new industry revenue streams. In 2018, the leading segments driving IT spending growth in the region are banking and securities growing at 3.6%, insurance at 2.9% and retail at 2.8%. IT spending in the banking sector is driven by its move into digital business and the corresponding investments in technologies such as analytics, blockchain and artificial intelligence. For the insurance sector, IT spending is led by investment in software applications."
Digital Is Here and Is Mainstream
Clearly, digital is here and digital disruptors are emerging in all industries. "We've seen this in books, clothing, and now it's happening in other industries such as traditional grocery markets and consumer durables," said Mr. Sondergaard. "MENA CIOs must embrace digital transformation. They need to build the momentum to scale and create value by amplifying the power of their people, their organization culture, and their technology platform to deliver breakthrough value."
Organizations that are not creating new digital business models, or new ways to engage constituents or customers, will begin to lag. "Those vendors that do not move more quickly than their clients will be left behind," Mr. Sondergaard concluded.
Gartner's IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecasts.
Additional analysis on IT spending outlook and how to drive digital innovation to the core of your business will be provided during Gartner Symposium/ITxpo 2018, March 5-7 in Dubai, United Arab Emirates, the world's most important gathering of CIOs and other senior IT executives.
Gartner, Inc. (NYSE: IT), is the world's leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities and build the successful organizations of tomorrow.