Dubai: Middle East companies that digitise their business models and products and services could generate $16.9 billion (Dh62 billion) in additional revenue every year until 2021, and $17.3 billion in annual cost and efficiency gains, according to a new report by PwC released on Wednesday.
The global consultancy predicts that annual digital revenues will grow by 3.8 per cent on average in the next five years, through additional customer benefits and new digital products and services.
The “Industry 4.0: Building The Digital Industrial Enterprise” report is based on a survey of over 2,000 companies from 26 countries, including more than 50 companies from the Middle East. Industry 4.0 refers to the fourth industrial revolution.
Company costs could be reduced by around 3.8 per cent annually through digitisation, shortening operational lead times and maximising product quality.
“Companies here in the region should map their own Industry 4.0 strategy, taking steps now to become fully digital enterprises. Although some countries will face challenges linked to skills availability, culture, leadership and data readiness, there is strong awareness of the importance of digital transformation to drive new revenues and growth,” said Anil Khurana, Strategy and Innovation Partner at PwC Middle East.
Demand for digitisation is strong in the region, with companies expected to invest on average $42 billion in digital transformation each year over the next five years, according to the report.
These investments will focus on digital technologies like sensors or connectivity devices, and software and applications such as manufacturing execution systems and enterprise resource planning platforms.
“Saudi is beginning to build 3-4 new factories that are going to be digitised. In the UAE, Strata is going to build a digital factory,” Khurana said.
Government agencies in the Middle East have started using smart machines for functions including inspection, mapping, surveillance, search and rescue, maintenance and distribution.
Countries that are not technologically advanced “have found that technology … enables them to solve many of the problems that are day to day without a high cost … technology has … reduced the barriers to entry. [We can] access information at any time,” Khurana added.
PwC said that 41 per cent of the survey’s participants say they have reached an advanced level of digitisation and integration. Meanwhile, more than 62 per cent expect to be at that level in the next five years. This lags behind the 72 per cent reported globally, partly because sectors such as automotive and electronics do not have a strong manufacturing presence in the region.