Opening Oman

A transparent business environment and surprisingly well-developed IT infrastructures give Oman an often unrecognised edge, but many issues remain unresolved. ACN looks at the Sultanate.

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By  Eliot Beer Published  March 5, 2006

|~|oman200.jpg|~||~|The beautiful, rugged coastline on the south-eastern edge of the Arabian peninsula marks what might be called the forgotten side of the Persian Gulf. Here the Arabian sea washes the shores of Oman and Yemen, states which are frequently left in the shadow of the glamour of Dubai and its fellow emirates, or the sheer size and might of Saudi Arabia.

The Sultanate of Oman, with its population of around three million and ample but not dramatic oil and gas reserves, is not about to set the region alight with its application of technology, but that isn't to say the country is not making strides in developing its use of IT. The Sultanate's style is more 'slow and steady' than the urgent drive seen in some other Middle Eastern countries, at least according to Raza Taqvi, group IT manager at Mustafa Sultan Enterprises in Oman.

"If you look at somewhere like Dubai, it's always as if there's no tomorrow - everything must be done now; I don't think you can," says Taqvi. "In Oman, it's not like that. Sultan Qaboos [bin Said Al Said, ruler of Oman] has been encouraging a more gradual, consistent approach to growth and development. But Oman's growth is still around 8% a year, so it's not exactly slow."

3i Infotech's president and executive director Hari Padmanabhan says that the Sultanate's planning has definitely been long-term and considered. 3i has recently deployed solutions in several Omani insurance companies (see box), and its president rejects the view that the country doesn't have a plan to develop its IT infrastructure.

"If you look back 20 years or more, Oman was one of the first countries in the region to put a detailed plan for development into place," says Padmanabhan. "And certainly the CIOs in the larger enterprises and organisations have a very clear idea of how IT can contribute to the business as a whole. The pace of change is not as fast as in some other parts of the Middle East, but the change is there."

Dr Graham Smith, contracting and procurement SAP asset manager at Petroleum Development Oman (PDO), agrees with the view that Oman takes a rather conservative approach to many issues. He is on secondment to the Omani oil producer from Shell, which controls 34% of PDO, and has had experience of oil producing IT administrations across the world.

"One of the great things about Oman is the mix of Arabian, African, European and Subcontinental cultures here," says Smith. "But I think one tendency is that the more conservative elements of the various cultures come out, and you can end up with organisations which can be slow to change. Here at PDO this has certainly been an issue in various areas; having said that, there are some procedures which we have been able to modernise a lot, to great effect."||**|||~|taqvi200.jpg|~|Taqvi: Oman's growth is still around 8% a year, so it's not exactly slow.|~|Smith is partly referring to the implementation of new e-procurement and e-tendering procedures that PDO has brought in recently. He says these new channels have had a number of important benefits for both PDO and its suppliers by increasing efficiency and, more importantly, increasing the transparency of the procurement process.

"We had around 3,000 registered suppliers on our books before the e-procurement solution came in," Smith explains. "What we found when we analysed the vendors was that only 1,800 or so of them regularly responded to RFTs (requests for tender). This allowed us to find out if we had them classified incorrectly, or if they had just taken advantage of registration with us to win other contracts, such as with Saudi Aramco; being a registered PDO supplier can be a good reference for a firm to have in the region."

Smith also says the e-procurement process allowed PDO and its suppliers to eliminate allegations of corruption and unfair practices; by showing which firm had won a particular contract and at what rate as soon as the tender process was complete, it is now much harder for other parties to harbour suspicions of any kind of preferential treatment.

PDO uses an e-procurement solution from EOS Technologies, a Muscat-based provider. Its CEO Alan Livingston wants develop EOS's reach across the region, and claims EOS has more users, in terms of suppliers and vendors, than any other e-tendering firm in the region.

"In some ways it's the unsung story in the region," says Livingston. "Here in Oman, e-procurement has taken off, largely because it has been driven by PDO and its large number of suppliers. But this is spreading throughout the market, with the obvious benefits this brings, such as transparency."

This last claim is certainly borne out by other sources; Transparency International, an organisation which monitors corruption around the world, puts Oman at number 28 in its 2005 Corruption perceptions index with a score of 6.3. This makes the Sultanate the highest-placed Middle Eastern country in the rankings (for comparison, the USA is ranked at 17, with a score of 7.6).

But organisations in Oman still struggle with some of the usual problems faced by Middle Eastern IT operations. Ayman Abouseif, managing director of Oracle Middle East and Africa, says that there are still important issues for IT decision-makers in the country to deal with.||**|||~|hari200.jpg|~|Padmanabhan: The pace of change is not as fast as in some of the Middle East, but it is there.|~|"I'd say at the moment Omani IT departments are still very price-conscious, and perhaps don't look at issues such as the total cost of ownership as much as they could," he says. "It's still hard to explain why, if you can pay US$400 an hour for one integrator, you should pay US$600 for another. But I think the message is starting to get through now."

Another key issue is the level of IT specialist knowledge and education in the country, a common theme throughout the region. But Oman has factors, which are reasonably unique in this respect, partly as a result of its small size. PDO's Smith sees a lot of Omani graduates as lacking the range of skills required to get ahead within a modern IT department.

"A lot of the young people we see have gone through religious education, then have come straight into a specialist role," he says. "This doesn't necessarily mean that they can't do the job, but it can be hit and miss as to whether people end up in appropriate jobs. It also means more training needs to be done within the organisation."

Satyam's Prabhakar S, general manager for business development, says the Indian-based integrator takes the issue of training, and of developing local skills, very seriously. Satyam has recently won a number of high profile contracts in Oman's public and private sectors, including a number of government ministries and Oman Polypropylene.

"When we take on a contract, we undertake to transfer to the customer all of the skills necessary to run the newly implemented solution in the long term," says Prabhakar. "We also specifically train local staff, in this case Omanis, to reduce the dependence on imported, expatriate labour."

Oman, as with the majority of Gulf states, has a policy of localisation requiring a certain percentage of employees at particular levels and in particular roles to be Omanis. And as in other countries in the region, this policy is often seen as being counterproductive, at least in the short to medium term. While observers do not dispute the need to encourage local workforce growth, many express frustration with some of the practical implications.

"For certain roles, there is a time limit as to how long an expatriate worker can stay in the country," PDO's Smith says. "This means that after, say, 10 years, an individual who has spent all that time developing their skills and knowledge is suddenly lost to the organisation, along with everything they've learned. This can cause problems, because it means an organisation cannot build up the skill base it needs."||**|||~|livingston200.jpg|~|Livingston: E-procurement has taken off, because it has been driven by PDO and its suppliers.|~|Mustafa Sultan's Taqvi goes along with this view, but says there are other problems with the lack of particular skills and specialists in Oman, especially as regards vendors and integrators. One key issue is how vendors see the country, and allocate resources, something which seems to cause Taqvi particular frustration.

"Many vendors seem to think it is not worthwhile maintaining an office in Muscat," he says. "This is partly to do with the size of the country, but also because Dubai is so close, they don't think they need to duplicate resources. Having Dubai so near to Oman is both a blessing and a curse; on the one hand it means we have access to more specialists than we would otherwise, but on the other we end up dealing with a lot of complex tasks remotely, either over the phone or by email - this can be a real problem."

Because of Oman's traditionally agrarian economy and small population, the range of economic activity is relatively limited; industrial activity is largely confined to the oil and gas sector, while the private sector is dominated by the stalwart Gulf industries of finance, property and family businesses, such as Taqvi's company Mustafa Sultan.

"The main difference between industries in their use of IT is the 'muscle' they have in terms of compliance," Taqvi says. "If there's an especially large company - in Oman there is one, which I'd rather not name - they can use their clout to force smaller players to go along with their standards and requirements, or stop them trading with it. This is a very closed way of doing business; if you're truly open to integration, you should be willing to spend the time and effort it needs, and it needs it on both sides. At the moment it's the weaker guys who are getting their arms twisted."

In terms of the government sector, Omani ministries seem to be going through the same development pains as other regional public sectors. Several ministries have embarked on a major project with Microsoft to improve their overall infrastructure. Again, the consensus-driven, slow and steady approach seems to be guiding these implementations.

Overall, Omani organisations' approach to IT is not hugely different from that of its neighbours. Issues of understanding, especially in areas such as return on investment and total cost of ownership, are still prevalent although as with the region as a whole these concepts are gaining wider acceptance. The struggle to address the conflict between developing best practices along with sound infrastructures and building local skills remains largely unresolved.

But what marks the sultanate out from the rest of the Middle East is its clear, patient vision of what it wants to do and where it wants to be; many other states have vision, some have patience, but few
have both.||**||

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