By Safder Nazir, SVP of Digital Industries, Huawei Middle East
Over the last two decades, digital technologies have transformed our societies at unprecedented scale, changing the ways we live, work, and interact. The COVID-19 pandemic has only reminded us of this fact, teaching the world that it must build digital resiliency to prepare itself to better handle unforeseen, disruptive events. Overall, the digital economy as a share of the total economy has, in general, been growing and those countries with larger digital economies, relative to the whole, have proven to be more resilient.
According to the Organisation for Economic Co-operation and Development (OECD), the digital economy encompasses all economic activities reliant on, or significantly enhanced by, digital inputs, including digital technologies, digital infrastructure, digital services, and data. This can be taken as a broad definition. As such, the emergence and evolution of the digital economy is characterized by the dominance of digital business models and digital-native companies such as Careem and Noon. There has also been a clear shift, from providing mere services to creating experiences, allied to the rise of industry ecosystems that are scaled-up and integrated, using software platforms to deliver value.
Today, the impact of digital is visible everywhere, from accessing essential services and purchasing products through digital platforms, to the shift to virtual methods of learning and working. Indeed, the digital economy is vital to national leadership because of its positive impact on national economies and job creation and the boost it gives to inclusion.
The Implications for the Middle East
The Middle East has made significant progress in adopting digital technologies over the last decade. Mobile broadband penetration across Gulf Cooperation Council (GCC) countries is now at 100% and more than 50% of consumers in the region already shop online. In the UAE, 80% of digital payments are contactless.
Similarly, government-to-consumer interactions in the UAE, to take one example, are now predominantly digital, and there are plans in place to close half of the existing government service centers by the end of 2022. Indeed, the number of bank branches in the country has already fallen, by 34% between 2016 and 2020, coinciding with the launch of several digital banks, such as Liv., E20., NEO, NEOBiz, and CBD Now.
Every GCC country currently has a national vision focusing on the development of non-oil sectors for economic growth, local value and employment creation, and social development. National leaders have recognized the importance of the digital economy in achieving such visions. For example, Saudi Arabia has launched a Digital Economy Policy that aims to have the digital economy’s GDP share on par with other leading global economies. A little further east, the UAE plans to double the size of its digital economy in just 10 years. Indeed, all of the countries of the region have undertaken initiatives to realize ambitious policy goals, focusing on data, Artificial Intelligence (AI), the cloud, and 5G-enabled services.
Thriving in the Digital Economy
Organizations need to transition into digital enterprises to thrive in a digital-first world. Fueled by data, a digital enterprise provides personalized experiences to customers through digital platforms, backed by constantly evolving and expanding digital infrastructure. However, 62% of enterprises in the Middle East are yet to reach sufficient digital transformation maturity to take advantage of the digital economy. To get there, they must re-invent business models, create new customer experiences, reimagine work models, and innovate with partners. Such efforts often face significant internal challenges, which organizations must overcome through well-executed change management.
To start with, it’s vital to recognize that success in the new economic paradigm will depend on an organization’s capacity to collect, synthesize, and analyze data, along with the ability to apply resulting insights at scale. However, most organizations struggle to achieve such success due to the large volume and variety of available data. AI-based automation can enhance each step in the business intelligence and analytics process, from finding and preparing to exploring, analyzing, and acting on data. Such solutions can also help businesses re-architect into data-native enterprises, creating superior customer experiences and making more informed decisions.
Next, organizations must prioritize automation to address the global skills shortage. In the digital economy, organizations have to grapple with skills issues as digital technologies proliferate in the workplace. To tackle the issue and improve organizational agility, digital enterprises are increasingly investing in technologies such as Robotic Process Automation (RPA), AI, and Machine Learning (ML). Organizations that effectively use AI-augmented automation to boost efficiency and contain costs will gain a significant competitive advantage as the digital economy evolves.
Finally, digital organizations must embrace the cloud. A digital enterprise’s capacity to generate revenue depends on the responsiveness, scalability, and resiliency of its infrastructure, applications, and data resources. Cloud-centric digital infrastructure and applications are essential for any organization’s transition into a digital enterprise. Many features needed for the digital economy are now only available in cloud-based applications, requiring organizations to rapidly modernize legacy applications into cloud-native versions, to support new customer and operational use cases.
Embrace the Future
Today, a nation’s future heavily depends on advancements in science, knowledge, innovation, and technology. Many countries in the Middle East are nurturing such advances by developing foundational elements — such as infrastructure, data, and skills — through investments in critical technology enablers like 5G, the cloud, and AI. For digitally determined enterprises in the region that have embarked on their digital journey, renewed focus on these foundational elements and technology enablers will reveal significant opportunities to thrive in the new world.
