By Sevag Papazian
Digitalisation has become an imperative for companies worldwide. The smart adoption of technology and exploitation of the data it generates can help companies reinvent their business model, achieve major operational and cost efficiencies, and become more relevant to their customers.
While UAE companies lead their GCC peers in going digital, they must do more to engage consumers in their market, who are among the most tech-savvy in the world, and stay relevant in an age of disruption
A recent survey by Strategy& and Siemens showed that 76 per cent of the UAE companies understand digitalisation simply as adopting a particular technology like automation, data analytics, or specific applications.
Many are held back by legacy systems, an insufficient local talent pool, and an absence of committed leadership to drive change. This is compounded by external factors highlighted in the survey: a national digital ecosystem in need of strengthening, cybersecurity concerns, and the absence of partners for implementing digital projects.
Only four per cent of the surveyed UAE companies believed they were at an advanced stage of their digital transformation.
To prepare for the digital era, UAE companies need to tackle these challenges from a holistic perspective, using a stepwise approach.
First, UAE companies need to understand how digital technology is disrupting their industry and where they want digitalisation to get them. They need to articulate a corporate strategy for the digital age that is tailored to their needs and ambitions. For example, they could aim to realise efficiencies in production lines, or grow existing business models, or even redefine or lead their industry. The survey, however, showed that only 40 per cent of UAE companies had such a strategy.
Second, these companies must focus on the activities where they will have the most impact. Three priorities stand out in the region: gathering and analysing big data, which could lead to more targeted and effective marketing, for example; moving to the cloud, which would allow companies to move from a capital expenditure to an operational expenditure model; and enhancing the customer experience by introducing new digital products and services or delivering existing ones digitally. In that last regard, UAE companies surpass their GCC peers by having the highest levels of social media and app usage, as well as digital transactions, according to a Strategy& analysis of the top 100 listed GCC companies.
Third, they need a motor to drive digitalisation within their organisation. In companies at a sufficiently advanced stage of digital development, a senior sponsor, such as a chief digital officer (CDO) — or equivalent — typically steers the transformation. However, none of the surveyed UAE companies had a CDO. Leadership should be supported by appropriate governance processes that bring together IT departments and business units to decide on important digital initiatives. Such collaborative processes would redefine the role of IT departments as centers for innovation, meaning that commoditised services would be outsourced. At the same time, companies must focus on preventing, detecting, and responding to cyber-attacks. Finally, they should institute a digital culture across their organisation to encourage innovation among employees, while promoting the need to respect cybersecurity practices.
Fourth, they will need people with the right skills to populate their organisation as they go digital. They can acquire these skills by training their current employees in-house or through exchange programs with technology companies. Alternatively, they can attract external talent by digitalising their recruitment process, for example by using social media or crowdsourcing.
Fifth, they must partner with other stakeholders in the digital ecosystem to develop innovative business ideas and — eventually — monetise them. The current trend among companies in the UAE is to set up corporate venture capital funds to invest in local digital players. This can generate innovative business ideas while improving the ecosystem. Companies could also build up the capabilities required for going digital by partnering with government entities to take advantage of national programmes such as the migration of government services to electronic platforms, or initiatives like the UAE Drones for Good Award or the Dubai 3D Printing Strategy.
Sixth, they should spend cleverly, not copiously. 62 per cent of the surveyed UAE companies said their spending on digitalisation projects increased over the past year, and around 20 per cent said it increased significantly. Yet these investments are still managed in a traditional manner, even though the risks are higher when it comes to transformative technologies. Companies should therefore adopt a venture capitalist approach, for these investments, run pilot projects and partner with other stakeholders whenever possible.
With these foundations, UAE companies can start to grasp the full opportunities that digitalisation offers. On the front end, they can improve customer engagement. On the back end, they can become digital enterprises, realising considerable efficiency gains and higher-quality outputs. Their digital transformation will be a key differentiator for them to compete in the global economy and advance their country’s digital development.
The writer is the principal with a global strategy consulting firm Strategy&