Demand for IT services in Dubai is set to soar over the coming decade, underpinned by strong demand for both software and hardware products.
Last year saw the launch of the Dubai Smart City (DSC) initiative, the culmination of more than a decade of ICT development in the emirate, which is harnessing technology to enhance the business environment. Dubai has also been working to encourage IT start-ups, in addition to education and training initiatives that aim to maximize awareness of ICT opportunities amongst the emirate’s already highly tech-savvy and globally connected population.
The next stages of the DSC initiative continue to present many opportunities for IT providers, but challenges remain: issues such as data security are curbing growth, particularly at the state level.
Smartest city in the region
The DSC is a highly ambitious project that aims to connect different sectors of the emirate’s economy while also integrating data from both the public and private sectors. One example is where transport information will be linked with traffic reports from the police and weather conditions.
In a report issued in mid-January, network solutions provider Cisco Systems identified Dubai as a leader in the smart city concept. The report, entitled “Dubai and the Internet of Everything: Opportunity at the Crossroads," identified seven key areas that will benefit over the coming years, including municipal services; the police, national security and defense; ground-transport; utilities; as well as the travel, tourism and retail sectors. More specific examples include improved utilities services following the deployment of a smart-grid by the Dubai Electricity and Water Authority − which will automate grid-control decisions – as well as bolstering municipal operations from service provision to automated payments systems.
Following the DSC implementation, the three main growth areas over the next several years in the Dubai IT sector will be consolidation, business intelligence such as big data, and web services including mobile options, according to Fadi Abdulkhalek, the public sector business development vice-president for the MENA region at Oracle.
“The majority of public sector IT contracts pertaining to the DSC initiative have been focused on consolidation of pre-existing systems,” Abdulkhalek told OBG. “New customers want to build scalable systems where investment upfront is lower, but can be scaled up as volume grows. IT spend used to be centered around automating work, now the focus is on improving the customer experience via web services, mobile and cloud applications,” he said.
The “Global IT Report 2014” from the World Economic Forum ranked the UAE 24th of 148 countries in its Network Readiness Index, an improvement from its 25th-place ranking in 2013. The country ranked in the top five for one or more indicators in seven of the 10 overarching criteria “pillars”, with the high quality of infrastructure providing considerable opportunities for IT service providers.
According to Aaron White, general manager for Hitachi Data Systems in the Middle East and Pakistan, the IT sector in Dubai − and the rest of the region − is undergoing a period of exponential growth, with service providers in a sellers’ market as demand rises. “IT does not require lots of prospecting, it is not the IT that finds the business, it is the business that finds the IT,” he told OBG.
Public sector IT projects in the UAE are getting more sophisticated with the number of invites for tender increasing, presenting opportunities for service providers of all sizes. A mix of big and small systems integrators and developers are now seen bidding on each project, according to Abdulkhalek. “There are a decent number of projects which are now centered more on consolidation of pre-existing engineered systems, as opposed to new investments,” he added.
Security concerns over cloud
However, one segment of the market where take up is likely to be slower, at least in the short to medium term, is in data storage services for state agencies, according to Samer Abu-Ltaif, the regional general manager for Microsoft. Although some government departments are beginning to explore cloud solutions and are keen on leveraging the flexibility and cost efficiency of the cloud, enthusiasm is still tempered by security concerns.
“Despite the emergence of standards and increased levels of awareness, there is still a level of ambiguity around cloud services in terms of policies that govern privacy and data security,” Abu-Ltaif said. “Reluctance towards digital and online services adoption was seen among banks 15 years ago, and cloud computing will see a similar move towards phased adoption,” Abu-Ltaif told OBG.
Oxford Business Group