Gulf entrepreneurs keen on digitalization: Study

Updated 20 December 2016

Gulf entrepreneurs keen on digitalization: Study

DUBAI: Sixty percent entrepreneurs in the Gulf Cooperation Council (GCC) countries believe that digitalization has the potential to create new business models or lead to a more open culture of innovation.
A recently conducted study found that only 3 percent of organizations believe they are at an advanced stage of their digital transformation process, with only 18 percent using the cloud and 30 percent using big data and analytics specifically.
The study conducted by Siemens and the Ideation Center at the management consultancy Strategy& (formerly Booz & Company), part of the PwC network, has emphasized the benefits businesses in the GCC stand to gain from digitalization, and outlined a roadmap of how they can undertake a fully holistic approach to embarking on a digital transformation.
It also found that GCC companies are lagging behind their government and consumer counterparts when it comes to using digital technologies.
For example, GCC governments have acknowledged the economic and social benefits of digitalization, incorporating them into their ambitious strategies. Saudi Arabia’s Vision 2030 and National Transformation Plan 2020, Smart Dubai, Qatar’s Connect 2020 ICT Policy, and Oman’s digital strategy e-Oman all stress the importance of the use of digital technologies. Similarly, GCC consumers are among the most tech-savvy in the world. The UAE, Qatar and Bahrain have more than 100 percent smartphone penetration rates and young people across the region are playing an important role in influencing the development of new technologies.
Senior executives from Siemens Middle East and Strategy& launched the “Preparing for the digital era: the state of digitalization in GCC businesses” report at Dubai’s 3D-printed Office of the Future, highlighting key findings from the joint study.
“Governments and consumers in the GCC have been rapid adopters of digital technologies, and our report tells us the benefits of digitalization are widely acknowledged by the majority of organizations,” said Dietmar Siersdorfer, CEO, Siemens Middle East and UAE.
“The GCC is taking great strides toward economic diversification, and digitalization is a key driver of globally competitive business, industry and infrastructure. The region is in a position to fully embrace the disruptive potential of digitalization, across all sectors.”
Though GCC company executives show great enthusiasm for going digital, many are still coming to grips with its full meaning and potential. In general, executives have a narrow view of digitalization, which often ignores the far-reaching benefits that moving toward digital can bring, such as problem solving, reinventing business models, reimagining the customer experience, inspiring trust and accelerating change. The fact that many organizations have a partial understanding restrains the uptake of digital technology and obstructs the formulation of effective srategies.
Discussing the use of digital technology in the GCC, Samer Bohsali, Partner with Strategy& in Dubai, said: “Executives in the GCC are excited by digital. They recognize its benefits, such as stronger customer orientation and increased efficiency, which is vital in an era of budget constraints. Many companies, however, perceive the process of going digital as the adoption of a specific technology, rather than a transformation journey.”
While many organizations are gradually building technology capabilities, some lack the vision and the necessary leadership to drive their digital transformation.
Taking practical steps forward can often be beset by internal obstacles, be they cultural, organizational, people-related or financial. For example, 40 percent of companies in the region have allocated less than 5 percent of their total investments to digitalization activities. Only 37 percent of companies have a strategy for going digital, and less than 1 percent of companies have a Chief Digital Officer.
There is also work to be done on the infrastructure and regulation front, as well as tackling skill deficiencies in areas such as data analytics and human centered design, which are vital for the development of the region’s digital ecosystem.
However, there is a way forward for GCC companies to fully realize the benefits of digital technologies. Instead of simply importing best digital practices and technology, the Strategy& and Siemens report recommends that GCC organizations should approach this transformation holistically by creating the building blocks for digital transformation. This requires six key steps:
• Organizations need a business strategy for the digital era.
• They must identify those areas of their business where digitalization can help the most, and how
• Digital change requires senior sponsorship and proper governance. Digitalization should be an organization-wide collaborative effort, not the sole preserve of IT or marketing.
• They must develop digital skills in IT and across the organization.
• They should collaborate with stakeholders across the ecosystem including digital players and disrupters, government entities and academia, embracing open innovation.
• They should invest more wisely, not necessarily spend more, thereby accommodating investment risk.


OPEC, allies to keep oil market stability beyond 2020

Updated 50 sec ago

OPEC, allies to keep oil market stability beyond 2020

  • Compliance with production quotas among OPEC and its allies was at 136 percent, says Barkindo

NEW DELHI: OPEC and its allies are committed to maintaining oil market stability beyond 2020, with physical supplies relatively tight globally, OPEC Secretary-General Mohammad Barkindo said on Tuesday.

He added that compliance with production quotas among OPEC and its allies was at 136 percent, curbing global supplies, while production growth in North America including US shale basins was decelerating.

OPEC, Russia and other oil producer allies, a grouping known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020 to support oil prices. The producers are scheduled to meet again on Dec. 5-6.

“I have been hearing a resounding chorus from all the players that they are determined not to allow a relapse to the downturn that we just navigated out of,” Barkindo told the India Energy Forum by CERAWeek, referring to a period of low oil prices in 2014-2015 that had led OPEC to cut output. 

“They will do whatever is possible within their powers to ensure relative stability is sustained beyond 2020,” he said.

FASTFACT

1.2 m

OPEC, Russia and other oil producer allies, a grouping known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020.

In its latest monthly report for October, OPEC trimmed its forecast for world economic growth in 2020 to 3 percent from 3.1 percent. The report stated: “It seems increasingly likely that the slowing growth momentum in the US will carry over to 2020.”

A poor economic outlook has depressed oil prices, with Brent down about 22 percent from its 2019 peak of $75.60 a barrel reached on April 25.

The US-China trade war is affecting the global economy and oil demand, and financial markets have an increasingly bearish view of economic growth, Barkindo said.

Still, India remains a major driver of global oil demand with growth of 127,000 bpd in August, he said.