Regional IT equipment spending on the rise

Spending on IT infrastructure in the Middle East and Africa is set to reach US$3.47 billion this year, a rise of 4 per cent on last year, according to a study from Gartner, an information technology research and advisory company.

The region is spending more on storage, server and enterprise networking equipment to modernise systems and build up infrastructure for smart city initiatives.

“CIOs [chief information officers] in the Gulf are beginning to prepare their enterprises to stay relevant in the digital business era and they will continue to invest in technologies such as mobility, cloud, social and analytics,” said Mary Mesaglio, a research vice-president at Gartner. “In 2014, we expect a lot of digital business and innovation to be driven by the convergence of these forces in the Gulf.”

Most of the spending will be directed towards servers, accounting for $1.3bn this year and is expected to reach $1.54bn in 2017. The UAE and Qatar are spending the most, given their ambitious plans to create smart cities over the next few years. Large enterprises from both countries are investing heavily in data centres in particular, while some of the telecoms players such as du are buying infrastructure and providing cloud computing services for the mid-market, which is also driving growth.

“What we are seeing is some large enterprises as well as mid-market companies are investing in new technologies and cloud computing,” said Naveen Mishra, a research director at Gartner. “We definitely expect strong growth in the next two years plus and we will have to wait to see how smart city regulations will further fuel overall IT spending.”

The small-to-medium sized businesses still make up a small amount of IT spending, according to Mr Mishra.

“In the region, the government, public sector, health and education [providers] are all investing,” said Arun Khehar, a vice president and head of the applications business unit at Oracle Middle East and Africa. “We have seen a drastic increase [in cloud computing adoption] in the whole region. We’ve got customers in banking, retail, aviation, government, oil and gas, every sector has bought cloud computing services.”

CIOs have become more comfortable with outsourcing parts of their business to software providers in the form of software as a service (Saas) and storing their data on the cloud, which is helping to drive up spending in the sector.

“It has helped companies look at business differently and they are now looking at businesses that were not on the radar before like customer experience, recruitment, HR, these are typical areas which are new for investment [in Saas and cloud],” said Mr Khehar.

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