The Internet of Things (IoT) is creeping into various sectors across the Middle East and Africa, from energy to manufacturing, and with it companies such as Schneider Electric of France and Germany’s Siemens are racing to increase operations throughout the region to support its adoption.
Caspar Herzberg, Schneider Electric’s regional president, said that amid expectations of an increase in business activity, it will add headcount, and manufacturing and research and development capabilities over the next five years, without giving figures.
“We expect to lay the foundations for a decade of growth,” he said “We have some cities like Dubai that are taking off in the IoT, and it’s here that you’ll probably have the prototype for the smart city.”
The UAE ranks first in digital adoption among Middle East countries and in Dubai an increase in smart services has resulted in cost savings of Dh4.3 billion over a 12-year period to 2015, according to the emirate’s Government.
Only 6 per cent of the region’s population lives under a “smart” government, according to a report by McKinsey.
The consultancy said that this gap held huge potential to the tune of US$95bn or the equivalent of 3.8 per cent of the region’s annual GDP.
“Manufacturing is taking a major focus [for digitisation],” said Assem Khalaili, the executive vice president of industry services at Siemens Middle East. “And most of the countries that haven’t been identified as a strong manufacturing base are looking at this.”
Budget constraints as a result of low oil prices will also push crude producers to improve and increase efficiencies in general, said Mr Khalaili.
“With this pressure on the cost side, [oil companies] try to see how this technology will enable them, such as with unmanned oilfields. These are discussions that will bring the technology and increase productivity,” he said.
Yet challenges persist in terms of the pace of the overall transformation, including the allocation of corporate budgets towards increasing interconnectivity.
“Digitisation is an economy enabler, but there needs to be a change in spending behaviour,” Mr Khalaili said.
Follow The National's Business section on Twitter