Stock - Gitex 2021
UAE and Gulf businesses are not waiting to bring on digital change - those that do will fall by the wayside. Image Credit: Virendra Saklani/Gulf News

As we emerge from the economic tsunami that has swept the world over the last two years, spending on information and communications technology in the Middle East is expected to grow 6.2 per cent this year – a significant and welcome reversal of the 3.2 per cent contraction in 2020.

The key driver has been the recovery of the regional economy and the return of consumer confidence, especially in the Gulf. Global demand has also been recovering, and this is supporting the recovery of economies across the Middle East. At the same time, economic stimuli from governments have also been significant and oil prices have recovered to top $80 a barrel, shoring up revenues for many governments in the Gulf.

Mega-events like the ongoing Expo 2020 in Dubai and next year’s FIFA World Cup in Qatar will further boost tourism and investment, while it is impossible to ignore the huge transformation in Saudi Arabia. The Kingdom is jumpstarting its economy with a $3.2 trillion domestic investment plan to drive growth over the next decade and achieve the goals of Saudi Vision 2030.

The massive economic package and ‘giga projects’ by Saudi Arabia - NEOM, the Red Sea Project, and AlUla - will infuse investment and drive a significant expansion of its digital infrastructure. In the UAE, property prices are rising significantly, consumer confidence and spending are recovering well, and hospitality is once again thriving as tourists. The UAE’s long-term focus on building its post-pandemic economy based on digital will significantly boost the ICT sector.

In fact, IDC estimates that digital transformation-related ICT spending by enterprises in the UAE will increase at compound annual growth rate (CAGR) of 16.3 per cent across 2019-22. The accelerated digital transformation efforts will focus on the Internet of Things, cloud, cybersecurity, big data and analytics, and artificial intelligence.

On the back of these factors, the key economies in the Gulf are expected to recover from the contractions of last year and continue on that trajectory in 2022.

Digital consumer

The pandemic has led to an expansion in the depth and breadth of the ‘digital consumer’. Many significantly increased their online purchases as COVID-19 took hold and used digital banking and government services, telemedicine, and digital payments for the first time.

These habits are shaping the responses of governments and businesses alike – and accelerating their digital transformation. Armed with advanced AI algorithms, new-born digital players, direct-to-consumer players, fintechs, learning apps, and so on are disrupting or nibbling away at the edges in most industries.

In response, leading governments and traditional businesses are increasingly adopting a digital-first approach to their operations. Indeed, our research shows that nearly 50 per cent of organizations in the Middle East have brought forward their digital roadmaps by about a year as a result of the pandemic, and 14 per cent by two years or more.

This is spurring governments to develop and introduce a whole new raft of regulations – not just around cloud, but in relation to data privacy, AI, and IoT as well. The aim of these new policies and frameworks is to create an environment that enables the safe use of new technologies and fosters greater levels of innovation. Image Credit: Gulf News Archive

Foundational platform

Investments in advanced technologies have accelerated, enabling the emergence of new digital use cases that are, in turn, fuelling the development of innovative products and services. In a digital-first world, business outcomes and innovation are tied to the ability to develop and use innovative technologies and services anywhere, as quickly as possible. Cloud is the obvious tool for addressing this need and is rapidly becoming the foundational technology platform for digital transformation.

Digital resiliency

Ultimately, the path to recovery from the pandemic through 2022 is likely to be a bumpy and uneven road, with different countries, industries, and segments emerging on the other side at different speeds. Potholes and pitfalls lie in wait for those organizations that are not fully prepared, and a focus on ‘business resiliency’ alone is unlikely to be enough to save them.

That’s because they need to develop ‘digital resiliency’ as well. This is the ability of an organization to not only be resilient to future disruptions, but also to be able to capitalize on the changed conditions by leveraging digital competencies.

Being digitally resilient requires resiliency across many parts of the organization, all working together. Organizations need to develop digital resiliency across all dimensions of the business – from leadership and organization to financials, operations, and the workforce to brand reputation, customers, and ecosystems. Only then can they look to thrive in the post-pandemic, digital-first world.