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Amid a climate of low crude oil prices, the Gulf region is set to spend big on new and existing IT projects to drive business innovation in 2017.
Total ICT investment in the Middle East, Turkey and Africa (META) is forecast to reach $243bn in 2017, according to IDC. The research firm expects the region’s ICT market to grow by 3.6% in 2017, compared with 2016.
Saudi Arabia will lead the way in IT spending in 2017, investing an annual budget of $7.5bn in transformative technologies such as cloud, big data, social and mobility.
Birag Siraj, IT director at Saudi Arabia’s Zahid Group, said the current economic climate made cost-cutting initiatives the key factor, but added: “Smart companies investing for the future will look at IT spending as an investment.”
Jonas Zelba, industry analyst at Frost & Sullivan, said big data was initially seen as a buzzword in Saudi Arabia, but the technology has quickly become standardised and embedded into the country’s organisational processes.
“Previously in Saudi Arabia, big data was used to collect information and perform operational improvements, but now the emphasis is shifting to the application of insights and the resulting revenue generation or cost reduction,” he said. “Increased machine learning capabilities have allowed analytics to become smarter, both in terms of self-adjustment and self-implementation.”
The IDC META trends report 2017 predicts that big data analytics will become increasingly more predictive than descriptive, driving new use cases around exploration and discovery, performance management and operational intelligence.
Frost & Sullivan’s Zelba said Saudi Arabian companies had typically struggled to obtain reliable market data, but effective big data applications would soon change this. “Mobile operators occupy an enviable position in the market with their access to usage and location data, as well as billing information,” he said. “Given their influence in the country, they will soon lead the way in utilising big data analytics to enhance customer insights and personalisation of services.”
Government IT focus
Zahid Group’s Siraj said the Saudi Arabian government had made a firm commitment to accelerating e-commerce with the recent establishment of Noon, the Arab world’s answer to Amazon. “It will be interesting to see how both the private and government sectors use the platform,” he said.
Siraj said he expected to see further “digitisation of the nation” as the government encouraged e-payment and wireless payments through banks and telcos, as well as e-government payments.
IDC expects a more pragmatic focus from the region’s smart city initiatives in 2017, with governments and their partners looking to enable innovative transportation, citizen engagement, and emergency response services that drive improvements in the lives of residents.
Everything as a service
Zelba said the hybrid integrated cloud ecosystem would be delivered increasingly as a service on demand, ranging from computing infrastructure and business processes to personal contents and applications.
“It gives Saudi Arabian enterprises the flexibility to customise their computing environment based on their needs at a given time,” he said. “Consequently, customers have the option to cost-effectively upscale or downscale their IT operations depending on prevailing market conditions.”
Zelba expected to see growth in communication, datacentre, monitoring and business processes all offered as a service.
According to IDC, Saudi Arabia’s public cloud market will be worth $70m in 2017. Ranjit Rajan, analyst at IDC Middle East, Africa and Turkey, said the cloud would accelerate to a new level of adoption in 2017, with increased competition among cloud providers driving aggressive pricing, bundling and customer service, as well as a growing focus on securing SME accounts.
Rise of the IoT
IDC also expects the emergence of innovation accelerators to usher in a new wave of IT disruption as early adoption gathers pace. It expects the transformational impact of the internet of things (IoT) to become more evident over the next 12 months, with prominent use cases including freight monitoring, smart grid electricity, manufacturing operations, production asset management and remote health monitoring.
In the light of these developments, the biggest spenders on IoT in 2017 are tipped to be the region’s manufacturing, transportation, utilities and healthcare verticals.
Zelba pointed out that digital transformation, with initiatives around the cloud, bring your own device (BYOD) and the IoT, also brings security risks. This was creating a fundamental shift from traditional parameter protection and anti-virus activity towards content and application governance security models, he said.
Zahid Group’s Siraj added: “Hacking is epidemic in the country and now even ATMs are being hacked.” He said security was at the top of his technology agenda for 2017.
As hacking incidents increase, Zelba predicts growing demand for biometric technologies and encryption software.
According to the IDC report, maintaining security continues to be the top challenge facing the region’s CIOs, with spending on security systems by META organisations set to hit $2bn in 2017. The analyst expects the top five investment priorities in this area to be threat management, compliance remediation, security management, automatic malware removal and mobile security.
Digital transformation drives
The last 12 months have been particularly challenging for the Gulf region, due to issues such as currency volatility and weak oil and commodity prices, according to Jyoti Lalchandani, IDC’s group vice-president and regional managing director for META. “While these issues will continue to linger, we expect organisations to start pushing ahead with their planned technology investments as the ‘wait-and-see’ period draws to a close,” he said.
“Digital transformation initiatives will top the CIO agenda in 2017, as emerging technologies are increasingly leveraged in an effort to drive desired business outcomes. Innovation will be key in this regard, and we expect to see considerable disruption of the traditional ICT mix as a result.”