GCC Government IT: Directions for 2017

Government budgets are under pressure, but IT strategies require ongoing investment in different areas. Leading analysts give their view on how government IT departments can meet these diverse demands in 2017

Tags: Accenture (www.accenture.com/)Frost & Sullivan (www.frost.com)Gartner Inc. (www.gartner.com/technology/home.jsp)IDC Middle East and AfricaPublic private partnershipSaudi ArabiaStrategy& (www.strategyand.pwc.com/)United Arab Emirates
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GCC Government IT: Directions for 2017 Government IT spending is following a number of different priorities.
By  Mark Sutton Published  January 16, 2017

Government IT organisations in the GCC are facing one of their most challenging periods in recent history, with the demand for digital transformation building up on the one hand, while low oil prices and political uncertainty are placing exceptional pressure on budgets on the other. .GOV asked leading analysts from the region how they believe that government IT teams will manage the new reality of public sector IT in 2017.

Discussing the issues for 2017 are:

Haritha Ramachandran, Associate Director, Digital Transformation Practice, Frost & Sullivan.

Omar Boulos, Regional Managing Director of Accenture in the Middle East and North Africa.

Sevag Papazian, Principal with Strategy& (formerly Booz & Company).

Moutusi Dey Sau, principal research analyst, Gartner.

Ranjit Rajan, Associate VP Research, IDC Middle East Africa & Turkey.

What will be the main areas of spending for government in ICT in 2017?

Sevag Papazian, Strategy&: Government IT spend will revolve around continued automation of processes through enterprise applications, such as ERP and shared government applications; investment in infrastructure; investment in cross-government interoperability platforms - middleware platforms that connect agencies together, as well as harmonized mobile and web platforms to publish services, data and analytics platforms; and sector-specific platforms focused around eHealth, eEducation, eCommerce, etc. Governments will try to involve the private sector to build and operate such platforms.

Omar Boulos, Accenture:
Digital is changing the face of business and government across the world. For countries in the Middle East region, and more specifically the Gulf, digital technologies are seen as a key driver of efforts to diversify economies and transform communities. Many governments already have strategies and visions in place such as the UAE Vision 2021 and the Saudi Vision 2030 to capitalize on emerging digital technologies, and digital transformation plays a key role in enabling and accelerating this transformation.

In the Middle East, we have started seeing organisations investing more in digital technologies as part of an overall digital strategy or within select business units. Investment in artificial intelligence (A.I) have also significantly grown with companies anticipating to invest more in fields such as machine learning, deep learning, natural language processing, video analytics, and embedded AI solutions. This is only expected to grow in 2017.

Haritha Ramachandran, Frost & Sullivan: The main areas of spending for GCC governments in IT in 2017 revolve around up and coming technologies, infrastructure necessary to support it and development of new initiatives and themes including technology, infrastructure and theme-based spending.

In technology, with the common themes across the GCC being focus on healthcare, education and social spending — new avenues to use IT will open up such as e-health, telemedicine, e-learning, to name a few. These will be fuelled by investment in technologies such as cloud, mobility and analytics to extend access and the omni-channel experience for citizens.

In infrastructure, there will be continued investment in telecom infrastructure as well. Bahrain, KSA, Qatar are all focusing on investing in the next generation network, with the aim to specifically to increase coverage and roll out 4G/5G services in the future. A majority of these investments fall within the ambit of Government spending as it is initiated by the state-owned incumbents.

Theme-based IT spending has seen investment in projects — UAE is embracing ‘smart’ initiatives upgrading its data centres to be able to support smart city services resulting in IT spending across various sectors such as transportation, government services and education. Qatar is driving the smart homes initiatives through its MOU with Ooredoo and Alfardan Properties having signed in 2016.

In a nutshell government IT spend at various levels will increase with the focus on ‘smart’ and need to provide increased accessibility to engage citizens.

Ranjit Rajan, IDC: The key priorities for government organizations will be on areas such as operational efficiency, citizen/resident experience, strategic decision making, as well as aligning with the national goals/priorities/development plans. IDC believes that public sector entities across the region will continue to invest in designing and promoting a digital agenda that aligns with the country economic and social priorities.

Is government IT spending increasing or decreasing across the GCC? What factors are influencing this?

Moutusi Dey Sau, Gartner: There is a slowdown in IT spending in 2017 due to uncertain economic conditions, and low oil prices are anticipated to continue.

High dependence on the oil industry is one of the biggest challenges for this region. These regions are in a very early stage of technology adoption. Low oil prices are one of the primary reasons why we see government IT spending in MENA region is going to be affected in 2017.

The government in Saudi Arabia has planned to reduce the growth of public sector salaries and limit the dependence on oil. This event is unprecedented because they didn’t have to manage tight fiscal budgets before. The focus is on cost optimization, but there is an ongoing shift towards digital transformation.

There is going to be a big push around cloud and implementation programs around it are going to pick up. There were big announcements in 2016 around Vision 2030 and the National Transformation Plan 2020 in Saudi Arabia that changed the dynamics.

Regarding technology, new technologies like cloud computing, analytics, and cloud are going to be big next year. AI including cognitive systems, and robotics, and IoT are all gaining attention, with evolving use cases and some initial deployments in the region.

Rajan: The government sector has been one of the fastest growing sectors in the GCC over the past several years. Over the past couple of years, the pressure on overall government budgets is having some impact on IT as well. Budgets will definitely be tighter and spending will be ‘prioritized’. Having said that, IT is also being seen as a tool to improve operational efficiencies and achieve overall cost savings. The digital agenda will continue to drive investments in Third Platform technologies and innovation accelerators.

Papazian: Increased levels of digitization will require larger investments. Due to budget constraints, governments will prioritize initiatives and invest in the most critical ones. Governments are becoming more aware of duplications in investments, which will push initiatives for IT rationalization and common platforms, and reduce overall spend, and some governments will have shared government IT procurement functions (eg. shared services), which will lead to lower IT spend.

How are government IT leaders managing changes to spending?

Rajan: The key change that the CIOs will see is that they will have to ‘do more with less or the same’ and also will have to provide justifications to their investments than ever before as IT budgets come under increased scrutiny. Return on investment, alignment of the investment/project with national goals as well as organizational goals will be the important criteria that will be looked upon. CIOs will also be forced to look at new collaboration models such as private-public partnerships which will increase the complexity of vendor/supplier relationships. ‘Prioritized Spending’ will continue to be the way ahead in 2017.

Papazian: Governments will ask for IT rationalization, which requires a government CIO who has visibility across the government IT landscape and is empowered for decision-making. Governments will adopt smarter procurement models, including shared services and they will rely on the private sector contribution to fund and operate some platforms.

Ramachandran: ICT as a facilitator and contributor to GDP has become a reality to most GCC countries — most national visions have identified digital transformation and its enabling technologies as game-changers going forward. Keeping in light the same, government IT leaders are using two key techniques to garner funding.

Project/Theme-based Funding is very specific to smart cities, mega trends, smart services, and smart solutions spread across the various government bodies from the demand side. From the supply side, they are encouraging SMEs to innovate so there is a chance to nurture local talent and bring to light potential IT innovations.

Success Fee-based Models – with areas such as big data and analytics becoming crucial front runners as far as technology is concerned, the key bone of contention has become spending. GCC governments today are looking to get into Public-Private Partnerships (PPP) with technology companies to ensure that there is skin in the game and beyond the initial down payment, the remainder of the payouts happen as a percentage of the saving rendered through implementing technology.

Will we see more PPP in the region for IT projects in 2017? What factors will effect this?

Boulos: Governments are looking to partner with private sector organisations, vendors and service providers to execute specific projects.

Public-private partnerships are also becoming a focus for government in the region, although the current scope for these may be limited, particularly if the private sector do not see a clear return on investment. We have already seen some projects being developed through a partnership between public and private entities. Dubai’s PPP legislation came into force in November last year, which is an indicator that it is moving into seeing more PPP developed projects in the near future.

Papazian: The region is going through a PPP transformation, and digital platforms will be part of it. This will require a clear digitization vision and strategy, governance model, and regulatory framework to create an ecosystem that incentivizes and attracts the private sector.

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