IT spending in MENA to pick up pace in 2018: Gartner

Cloud spending remains subdued as regional businesses opt to store data externally

Tags: Gartner Inc. ( Arab Emirates
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IT spending in MENA to pick up pace in 2018: Gartner Digital business transformation is creating new industry revenue streams, said Sondergaard.
By  David Ndichu Published  March 5, 2018

IT spending in the MENA region will grow the fastest in 2018 compared to the last three years, Gartner says in its annual forecast.

The research firm says IT spending will reach $155 billion in 2018, a 3.4% increase from 2017.

Cloud spending in the region will however lag behind the rest of the world, expected to be among the lowest globally, when measured as a percentage of total IT spending.

Speaking on the sidelines of this year’s Gartner Symposium, Peter Sondergaard, executive vice president and global head of research at Gartner, said there are insufficient local hyper-scale and large-scale data centres to support cloud systems, which causes local organisations to derive cloud offering from abroad. "Moreover, latency, legal and local currency makes this option problematic and limits cloud adoption among businesses in MENA," he added.

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.

The communications services segment — the largest spending segment in MENA — is growing to serve increasing demand for premium mobile phones (3.4% expansion). 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 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."

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