Global IT spending is expected to reach $3.7 trillion in 2018, a 4.3 per cent increase from 2017, according to the latest forecast by Gartner, Inc.
Gartner says that software spending will grow by 9.4 per cent in 2018 to total $387bn. “IT services spending is on pace to grow 4 percent in 2017 to reach $931bn, and increase 5.3 per cent in 2018 to reach $980bn,” Gartner said, highlighting the service sector.
The IMF panel in Washington exploring how technology can help growth in MENA concluded that countries in this region needed to address incorporating technology in the classroom and support technology entrepreneurs, among others, to take the sector to the next level and to be in line with global standards.
A 2016 report by consultancy firm McKinsey estimated that the digital sector was only adding 4 per cent to the Middle East GDPs, which represents half of U.S. digital sector contributions.
Saudi, for example, earmarks sector contributions at 2.24 per cent in 2020 as part of the National Transformation Plan (NTP), a number that currently stands at 1.1 per cent.
Most aggressive country
The UAE is the most aggressive in the region when it comes to technology programs adoption.
Just yesterday, Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai the UAE launched the Strategy for Artificial Intelligence (AI) towards UAE’s Centennial 2070 objectives, according to state media agency WAM.
“We initiated electronic services 16 years go and today we are launching a fresh stage relying on Artificial Intelligence. We are seeking to adopt all tools and methodologies related to artificial intelligence to expedite and ensure more efficiency for government services at all levels,” said Sheikh Mohammed bin Rashid Al Maktoum.
The UAE is steadfast in its efforts to take the region towards a technology-rich environment. The UAE, for example, announced that 2018 was the year when blockchain technology would be adopted launched the era of cryptocurrency.
The country already began police patrolling the skies on flying motorbikes, and has an air-taxi program in place, not to mention plans for a 500 mph hyperloop train between Abu Dhabi and Al Ain.
PWC said in a 2017 report that companies would spend $1.7trn a year on the combined industrial and consumer Internet of Things (IoT) and that those using the technology expected a 55 per cent ROI within two years.
The 2014 launch of the UAE’s Smart City Initiative has placed Dubai into the IoT forefront, starting with Smart Life (governing health, education, transport, communications, public utilities, energy services, etc.), Smart Economy (dealing with developing smart companies, smart port services, smart stock exchanges, smart jobs, etc.); and Smart Tourism (concerned with providing a smart and convenient environment for tourists, such as visa, flight, smart gate and smart hotel services).
Not to be ignored are smart eGovernment initiatives, looking to make the Emirate a virtual entity when it comes to paperless services.
Electricity and Water Authority DEWA, for example, already began to lay out a network of 250,000 smart meters across Dubai, projected to be completed within 5 years.
Read: Air taxis will have ‘top safety and security standards’: RTA
IT implementation challenges
Going back to AI, a recent report by MIT Sloan Management Review and Boston Consulting Group finds that, while expectations for AI are ambitious, only a scatter of companies put a serious effort into it.
The study said that over 75 per cent of business executives believed AI would provide their businesses with a clear competitive advantage or new lines of business, but that only one-fifth of companies extensively incorporated it into its platforms.
fintech and bank profitability
An October S&P Global Ratings believes that financial technology (fintech) could reduce the profitability of some business lines of Gulf Cooperation Council (GCC) banks.
A report titled “The Future Of Banking: Could Fintech Disrupt Gulf Cooperation Council Banks’ Business Models? ” believed fintech could change the way banks operate over time.
“While we do not expect major disruption of lending activity in the GCC – which remains concentrated on the corporate sector and by individual corporate borrowers – we think that fintech could impinge on retail banking, particularly money transfer and foreign-currency exchange. This would push some banks to adjust their operations through increased digitalization, branch network reduction, and staff rationalization,” said S&P Global Ratings credit analyst Mohamed Damak.
The report expects that banks will be able to adapt to the changing environment, using a combination of close collaboration with technology companies and logical cost savings that these technologies will allow.
Security preparedness lacking
An independent report by research company Ponemon Institute found that 42 per cent of Middle East businesses performed encryption on their premises prior to sending data to the cloud.
Cybercrime is a global problem and could reach $1trn, according to market estimates. The report indicated that a comprehensive encryption strategy was lacking in the Middle East, and only 30 per cent of those surveyed in the report said that they installed such protection.