Dubai: With UAE and Gulf economies having overseen some of the most successful handling of the Covid spread, is it time businesses shifted their tech investment focus? Will these suggest that the technology industry is on a fast ‘return to normal’?
Wilson Xavier, senior analyst at the tech consultancy IDC, believes that 2020 and this year shouldn’t be written off as lost ones for tech investments. “A majority of organizations in the Gulf (62 per cent), in fact, advanced their digital roadmap by at least one year,” he said. “The evolution into a digital enterprise requires significant investments in infrastructure, devices, application modernization, and IT services.
The digital-driven tech investments had been growing faster than traditional IT even before the pandemic - the pandemic acted as a catalyst.
Last year’s tech investments by businesses in the UAE and the region had three focus areas – ecommerce/digital, increased cyber defences, and pick up all the tech needed to smooth out work-from-home activities. Sure, AI and Blockchain did get mentions and some entities may have put in considerable funding – but there was no doubting what the Top 3 tech needs were.
In addition, telecom giants were focussed on their 5G speed up plans, with the UAE setting 2025 as the year for full coverage.
Dip in spending
But government-led spending did dip last year, with IDC estimating in the UAE and Saudi Arabia, the drop was around 2.9 per cent. But this year, that spending has returned strongly, and should close with a 4.9 per cent growth, led by initiatives such as government organisations switching to paperless entities at some point during this decade.
‘Digital’ and ‘smart’ technology are the two words that resonate in government departments and the initiative for wholesale digital transformation comes from the top. And with definite deadlines in place.
“The public sector essentially drives Blockchain investments in the region,” said Xavier. “Within the region, the maturity varies significantly between countries, with UAE at the forefront.
“IDC estimates more than a third of the blockchain spending in the UAE coming from the government sector. This will have a ripple effect in other sectors as well, predominantly banking and finance. Tech will remain government-driven for the near future.”
Big deals flow back
But the corporate led big-ticket IT deals are starting to flow in the Gulf. IBM won a cloud deal from Virgin Megastore’s Saudi operations. The contract calls for a full migration of the retailer’s its SAP ERP application workloads onto IBM Cloud. The migration from “on-premises to a cloud environment is designed to help the retailer create operational efficiencies and provide a platform for new digital services to their clients”.
As the COVID-19 pandemic continues, the challenges facing many retailers in the region are extensive. By adopting a secured and open hybrid cloud strategy, Virgin Megastore KSA can modernize applications and access an innovative infrastructure, designed to be agile and easily adaptable
Yes, project pipeline is gaining
“The past year has shown us how swiftly the pace of technological change moved forward - we expect it to accelerate even further in 2022,” said Shukri Eid, Managing Director for the Gulf Region at Cisco. “Having to quickly adapt and apply the technological changes to strategies and agendas was a challenging experience that simultaneously played a vital role in helping businesses, organizations and individuals to recover from it (pandemic).”
Will SMEs join in?
2020 was about survival for the UAE’s small and medium businesses – at least to those entities not involved in offering digital tech solutions or anything to do in the delivery and mobility business. “SMEs depend heavily on steady cashflows, and most don't have the luxury of deep cash reserves that help them sail through prolonged periods of crisis,” said Xavier of IDC. “As they went into an existential crisis in 2020, their tech investments went down as well.
“However, unlike other economic downturns in the past, technology is playing a pivotal role in sustaining more businesses through the COVID-19 crisis. IDC expects the SME tech-related investments to increase in 2021 and beyond as they expedite their digital transformation trajectory at a rate faster than pre-crisis.”
Right through this year, Artificial Intelligence has been offered up as the cure for all business needs of the future. Not some distant future, but one that begins right now. Even sectors that have had minimal needs for updated technology are talking having to invest in AI.
Again, this transformation is coming from the top – the UAE Government wants to anchor AI and AI-related investments as a key piece of its ambitions in the industrial sector. Plus, helping government services reach an increasingly connected populace.
AI, 5G and Blockchain – the tech industry is ready to welcome 2022.