International Data Corporation (IDC) today announced its annual predictions for 2014 for the information and communications technology (ICT) industry in the Kingdom. IDC’s predictions reflect the ongoing factors that will set the trend for the country’s ICT development. Experts anticipate that the trickle-down effect of these predictions will initiate a change within a variety of industries, such as government, healthcare, logistics, and finance.
“ICT based transformation, such as smart cities, mobility and security will be the hot topics for 2014 in the Kingdom, directly affecting government investment in cyber security, corporate investment in cloud, and a major shift in consumer brand preference in tablets and smartphones,” said Abdulaziz Al-Helayyil, Country Manager – Saudi Arabia, at IDC. “The Saudi market is unique in terms of technology adoption and investment, as well as infrastructure development, specifically in the fixed and wireless broadband, mobility and cyber security forums, following recent developments in the country across these three verticals. All of this is likely to play a major role that will touch upon other domains, such as nationalization initiatives across the country.”
IDC’s predictions for 2014, presented by Al-Helayyil at a press conference today, include the following:
- Transformation of telecom operators will accelerate, while they develop their role as an end-to-end ICT solution provider – Operators will move beyond merely launching ICT offerings and farm clear strategies to acquire a broader role in ICT solutions value chain. Partnerships will flourish as operators move to offer complex IT services. Also, acquisition that boosts telcos IT service delivery capability or expand their professional services cannot be ruled out. To this end, opportunities across the digital services spectrum such as mGovernment, mHealth and mEducation will be closely monitored by telcos, while M2M, Cloud, Mobility, Smart cites and Industry Intelligent solutions will remain key technology focus areas.
- Enterprise mobility will become more prevalent supported by the rapid penetration of SMBs – Instant globalization facilitated through use of social media, connected applications and mobile resources will continue drive to acceptance of Enterprise Mobility in 2014. Growing economic activity backed by the government’s focus to diversify its economy will continue to push businesses, particularly SMBs, to acquire ICT solutions in general and mobility in particular. Businesses are enthused about cost optimization and process efficiency delivered through mobility solution which will drive the mobility solutions market in 2014 and beyond, continuing a trend that started in 2010, where deployment of business applications on mobile has doubled by 2013 as an important technology priority among Saudi businesses, according to IDC’s Enterprise Communications Survey.
- M2M market will grow further with growing and diversifying demand – IDC believes that in 2014, utilization of machine-to-machine (M2M) services in the Kingdom will increase. According to IDC 2013 Enterprise Communication Survey, 40% of enterprises, which already use M2M in Saudi Arabia, plan to implement “fleet management” within 1 year, while 38.46% of them plan to do the same for “digital signage”. M2M stands as a strong opportunity for operators to generate revenue and IDC expect these kinds of M2M services as well as security monitoring and smart metering to spread further among enterprises in 2014. “Application support”, “vertical-specific solutions” and “consulting/service expertise” are also mentioned among the most important factors by the enterprises when selecting partners for M2M projects. Operators have already been developing their capabilities in 2013 so as to offer attractive M2M solutions to their customers.
- Cautious approach to cloud adoption will finally change; strong growth anticipated in medium term – Cloud spending in Saudi Arabia will continue to increase significantly from US$ 26.34 million in 2013 to reach US$ 40.3 in 2014. As international Cloud players continue to expand their footprint in the Kingdom, primarily through partnerships, cloud adoption will be met with considerable vigour, while telecom operators will continue to position their cloud offering in 2014, contributing positively towards market maturity and paving the way for future investments. Public cloud spending will gradually increase to reach US$18.12 million in 2014 from US$11.47 million in 2013. Upcoming sectors like education and healthcare along with BFSI and Telco’s will continue to adopt of cloud services while the government will be more sceptical regarding the security and control aspects of cloud based services.
- Nationalization initiatives will impact skill shortage and market stability; “alternate” managed services to see lukewarm response – As the nationalisation initiatives gather steam and the Saudi government continues to push organizations to comply with Nitaqat regulations, IDC anticipates that the availability of advanced IT skills will become scarcer and uncertainties around regulations pertaining to on-site support will continue. This will put more pressure on providers to hire and train nationals more rapidly, which may be adversely affected in the short term. IDC also believes that there will be delays in projects, especially large infrastructure driven mega projects, and existing contracts will face profitability pressures as resource costs go up. The national pool of IT talent will eventually grow and the market will stabilize in the medium term.
- Line-of-Business (LoB) users will drive analytics investments; demand for advanced analytics will set the base for future Big Data investments – IDC believes that LOB level users will increasingly make a case for better insights from the vast amount of data they generates across the Kingdom, driving demand for advanced analytics. Even though many sectors are still investing in core applications, verticals like energy and manufacturing, BFSI, communications and retail will drive investments in SCM, risk, inventory and CRM analytics. IDC anticipates the spending on business analytics software will grow to reach US$62.7 million from US$51 million in 2013. Analytics on mobile devices will gain popularity in the public sector as mobility adoption increases.
- Brand preference will start shifting for mobile devices adoption amongst consumers – The brand consciousness that had been driving consumers in Saudi Arabia to give preference to higher-priced tablets from the top players in the past few years will now start shifting to lower-priced options. These options are being made available by several multinational vendors which are expected to continue offering an expanding portfolio of low-cost Android-based tablet, causing the average end-user price of tablets shipped into the country to decline to around US$370. Additionally, declining prices of ultra-slim notebooks and convertible notebooks, coupled with early adoption habits of consumers in Saudi Arabia, will also generate greater demand for these product categories, contributing over 14.0% of portable PC shipments into Saudi for the year 2014.
- Increasing cyber threats will force government and businesses to strengthen security, as the challenge spreads beyond “traditional IT”, particularly in the oil and gas sector – The development of high profile cyber attacks since 2011, and more specifically, the 2012 Shamoon attacks on Saudi Aramco and Rasgas have been considered as real game-changers for many companies operating inside the Kingdom. As the topic of IT security will remain a top priority for most Saudi oil and gas organizations in 2014 and beyond, IDC believes that security will not only become a major area of investment for oil and gas CIOs in the country, but also a key influencer for all technology investment decisions in the years to come. IDC expects IT security software spending in Saudi Arabia to increase at an average CAGR of 16.10% between 2012 and 2017.
- Mobile banking will be tapped as key technology to drive new customer acquisition and positive service quality in Saudi Arabian retail banking – As the Kingdom’s economy grows, so too does demand for retail banking services amongst its population – of which approximately 70 percent are under the age of 30 years old. This younger generation is demanding more from their banks, and are more willing to switch institutions if their service quality expectations are not met. IDC predicts that with customer experience so critical to retention of this young and technology-literate population, Saudi banks will invest in various technologies to ensure customer experiences are as positive as possible. In particular, we expect the Kingdom’s banks will zero in on launching and improving their mobile applications targeting the sub-30 year old age group.
- Saudi Arabia Will Increase its Focus on Smart City Initiatives – both for Greenfield and Existing Cities. – There will be two dimensions to Saudi Arabia’s focus on its Smart Cities efforts: focus on existing cities, as well as focus on its greenfield initiatives. In terms of its existing cities, IDC predicts that, in 2014, the discussion for Smart Cities will move to the next level. Municipalities in the Kingdom will start to allocate resources towards developing ideal Smart City projects given the specific needs of citizens. As a complementary effort, the Kingdom of Saudi Arabia has been investing billions of dollars to build new “Economic Cities” in order to diversify its economy away from the hydrocarbon sector. IDC predicts that, starting in 2014, demand for ICT solutions and services arising from developments related to these Economic Cities will begin to gain traction. As the Kingdom is building these cities from the ground up, they will be able to adopt the latest technology solutions to make them truly competitive. IDC expects that the immediate focus of IT spending will be concentrated on the deployment of fixed and wireless broadband infrastructure.