The road ahead...

As the largest IT market in the region, it’s no surprise that there is a lot of interest in the region from the world’s largest vendors

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The road ahead... Education is a major focus of IT spending because of Saudi’s population demographics.
By  Ben Furfie Published  May 8, 2011

As the largest IT market in the region, it’s no surprise that there is a lot of interest in the region from the world’s largest vendors. But what exactly are the key areas that they’re focusing on, and how does the market differ from the rest of the GCC?

The last few years have seen a flurry of activity in regards to public sector IT spending in Saudi Arabia. This has been due to a number of factors including the government’s identification of IT as a major area of emphasis for development moving forward.

The fact that throughout the economic recession the Kingdom has continued to be a hub of growth even when other markets in the region suffered has also played its part. Saudi Arabia has the biggest IT market in the Gulf region, with a forecast value of US$3.6bn in 2011, which is expected to rise to US$4.9bn by 2014 (Saudi Arabian Information Technology Report 2011) as the country invests in upgrading its IT and communications infrastructure.

“A significant proportion is anticipated spend on Saudi Arabia’s eGovernment projects, particularly targeting health and education,” says Aaron White, regional director, Middle East and Africa, Citrix Systems. “Broader economic stimulus packages in recent years have aimed to reform education and public services in the Kingdom, resulting in around 3,200 new schools and universities currently under construction and an enormous opportunity for technology vendors to contribute.

“In addition, the rollout of broadband infrastructure, both fixed and mobile, across the Kingdom is enabling more individuals, businesses and government services to connect online, further boosting eAdministration projects throughout the public sector. In the 2010 eGovernment ranking produced by the United National Group, Saudi Arabia rose 10 places on the previous year, and reinforced a commitment to investment in IT infrastructure and connectivity.”

According to Abdul Nasser Bangcola, country manager, Saudi Arabia for Interactive Intelligence, the focus on both the public and private sector is this concept of ‘unified communications’, including call centres, IP telephony and data and voice applications.

“The government is also investing heavily in projects like economic and financial cities, built with the latest technologies, which is driving the overall IT spend,” he adds.

Saudi Arabia’s public sector is continuing to push the Kingdom forward in terms of technology, with IT spend highest across areas such as healthcare, education and infrastructure. The main theme across all the areas projects is ‘enhancement’, but the Kingdom will also realise some great return on investments as the projects will make processes more efficient and lower costs.

“The main driver has been the realisation that well placed investments in IT can be an effective means of bringing down operational costs,” notes Wayne Fullerton, managing director, Cisco, Saudi Arabia.

As for the kinds of technologies the Kingdom is purchasing, a lot of money is going toward process automation and efficiency, so enterprise resource planning, customer relationship management, business intelligence, dynamic infrastructure and shared service solutions are becoming evermore popular.

“The entire market is seeing a good level of growth, but perhaps enterprise solutions such as ERP, CRM and the like are gaining special interest and importance. The government sector has realised the saving potential that these solutions can afford it and also the increased levels of productivity. These platforms also pave the way for shared services, which are required for the expansion of eGovernment services,” says Lindsey McDonald, consultant, Information and Communication Technologies Practice, MENA, Frost and Sullivan.

“In the public sector, the focus is on efficiency and connectivity,” continues White. “The Saudi Arabian government is striving to convert manual systems to eAdministration and exploring software-as-a-service to maximise efficiency in the new, automised environment. CRM, ERP and business analytics tools are a critical component in a government administration as vast and expansive as that operated throughout the public sector and investment is growing.”

The entire country is already seeing benefits from the government’s work. 2010 saw a significant and positive shift in attitude towards cloud computing and virtualisation. Until recently, adoption was inhibited by cost and the availability of bandwidth in certain regions – something the government is continuing to dramatically improve. Thanks to this support as more enterprises are implementing virtualisation and cloud solutions. The trend is set to expand as more organisations realise the cost, management and security benefits that come with such strategies.

One of the main motivators of this public sector IT spend has been the demographic shift the country is facing: there is a growing aged population, as well a high birth rate contributing to a growing youth. This has been exerting pressure onto a number of the country’s public sector systems and services.

Expansive projects are taking place across the sectors: most specifically healthcare and education, which will unify currently disparate systems and provide both the younger and older citizens with access to the best technological systems to support them. But with 50 per cent of Saudi Arabia currently under 25, government spending is focusing on developing extensive education facilities in the Kingdom.

“Initiatives like the Princess Noura University - which is the biggest women’s university in the world, with a capacity to handle over 40,000 students - have been built using the latest information technology infrastructure,” notes Bangcola. “Youth are also adept and skillful at grasping and utilising technology. Modern day gadgets and gizmos like the iPad, smartphones etc have become indispensible. This has encouraged the government to focus on introducing eGovernment initiatives.”

“A growing population and a youthful demographic is a major and positive driver for the IT market as a whole,” says Mohammad Almahdi, regional channel manager, Brocade Communications. “It is clearly noticed year on year that the Saudi government is increasing the size of expenditure on education and healthcare. This is considered a full commitment towards this huge group and its needs.”

Also in response to the growing youth population, the government has worked closely with companies, such as Cisco, on the concept of 21st Century smart cities. These are set to transform physical communities into connected communities run on networked information, which will enable economic, social and environmental sustainability, by creating jobs, attracting new businesses, promoting social inclusion and providing a ‘greener’ environment.

“The large youthful population demographic is affecting a lot of IT spending by directing a lot of budget allocation toward information society development and economic diversification and job creation,” says George DeBono, general manager, Middle East and Africa, at Red Hat. “This in a way focuses on developing key skills by providing the right education/training. Training services will be one of the key projects in the Kingdom’s IT spending.”

The future continues to look positive when it comes to public sector IT spending in Saudi Arabia. The government looks set to continue moving forward with new IT projects for the foreseeable future, investing heavily in IT for the next five to ten years.

“A significant portion of IT spending will be focused on services that will help tune current projects or enable new ones, and eGov continues to be a key government initiative,” says DeBono.

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