How GCC companies can prepare for the digital era

Research being released by Siemens and Strategy& in the UAE and Qatar suggests that executives have not fully understood how digitalisation can enable far-reaching transformation.

There has been phenomenal digital growth for economies, businesses and consumers during the past two decades. GCC governments understand this and have developed ambitious digital plans such as Dubai’s 3D printing initiative and its unified government platform for citizens, DubaiNow. Meanwhile, consumers in the region are among the world’s most tech-savvy.

GCC companies, however, still have more to do. Research being released today by Siemens and Strategy& in the UAE and Qatar suggests that executives have not fully understood how digitalisation can enable far-reaching transformation. More than three-quarters envisage it simply as adopting specific technologies such as analytics or apps. Meanwhile, 40 per cent of companies in the region have allocated less than 5 per cent of their total investment to digital.

Just 37 per cent of surveyed companies have a strategy for going digital, with numerous factors impeding progress – obsolete technology, staff without the necessary skills and few leaders committed to a digital future. An underdeveloped national ecosystem with inadequate infrastructure, regulation and digital skills, doesn’t help. For example, the region does not have world-class cloud providers. Only 3 per cent of companies believe that they are at an advanced stage in their digital transformation.

There are also notable country differences – 36 per cent of UAE companies spend over 10 per cent of their overall investments on digital, while 19 per cent do in Qatar. Moreover, 40 per cent of UAE companies have a strategy for going digital, compared to 31 per cent in Qatar.

Some companies have bucked this trend. Julphar, the first pharmaceutical manufacturer in the GCC, implemented a fully digitalized automation system for the production of insulin. Dubai Electricity and Water Authority employs drones for topographic surveys, thermal inspection and early detection, and thermal imaging to inspect overhead power lines. Damas, the jewellery retailer, has a Dubai factory applying 3D printing techniques for design and manufacturing, supported by laser capabilities.

To match such efforts other GCC companies need to lay six foundations.

First, have a business strategy. This should assess the impact of digitalisation on the relevant industry, decide how advanced the company wants its digitalisation to be, then integrate those objectives into its business goals.

Second, identify those business areas which can benefit the most from digitalisation. Many companies could benefit from big data and analytics, moving to the cloud and digitalising the customer experience

Third, have committed leadership. A senior level sponsor, such as a chief digital officer, should have the authority to assemble and lead people from across the company. This engine for driving the digital transformation should upgrade cyber-security measures, promote collaboration between IT and the business units and create an agile environment where ideas are generated.

Fourth, secure the necessary skills through internal development and external recruiting. Companies can digitally train employees through social learning platforms or exchange programmes with tech companies.

Fifth, companies need partnerships with government entities, digital players or academia to learn about innovations or to collaborate in developing those ideas. Some GCC companies are creating venture capital companies, while others are acquiring tech players.

Sixth, invest wisely, not necessarily more, in digital. To minimise the risks from investing in digital, companies should adopt a venture capitalist approach for these investments, run pilot projects and partner with other stakeholders whenever possible.

Sevag Papazian is a senior principal with Strategy& and Dietmar Siersdorfer is the chief executive of Siemens Midd le East and UAE

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