Six in 10 Middle East companies plan to invest in 5G networks

Organisations view the next-generation mobile standard as an accelerator to advance their digital transformation

The contribution of 5G applications in smart utilities management to global GDP is put at $330bn by 2030. Reuters
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Nearly 61 per cent of companies surveyed in the Middle East plan to invest in 5G-enabled campus networks as they seek to transform their businesses digitally, the latest research from Accenture and Microsoft shows.

They are demonstrating varying levels of interest and investment in new technologies, but 5G stands out as the one they consider will help them with digital transformation, the study said.

It revealed that major change is taking place across the Middle East as end-to-end digital transformation will happen through the convergence of 5G and technologies including the cloud, edge computing, artificial intelligence and the Internet of Things.

This will not be easy, however, because organisations have concerns about the complexity of associated technology integration, extracting return on investment and choosing the appropriate partner ecosystem and platform for solutioning.

“The Middle East is a fertile ground for enterprises to reap the benefits of next-gen networks and technologies. The region has emerged as a global forerunner in advanced connectivity ... today, regional governments are focusing extensively on the deployment of digital technologies as part of their economic diversification strategies, which are focused on harnessing knowledge-based digital economies with a thriving private sector," Giampiero Terzi, managing director of Accenture’s communications, media and technology practice in the Middle East, said.

5G technology has proved its viability in several sectors – most notably in transport, health care, education, energy, mission-critical communications, smart cities and even climate change – over the past few years, dispelling the perception that it is only for supporting faster communications and data downloads.

Mobile technology and services generated $4.4 trillion of economic value in 2020, equal to 5.1 per cent of global gross domestic product, according to Mobile Economy 2021 report by the GSM Association. That figure is expected grow by $480 billion to about $5tn by 2025.

Professional services network PricewaterhouseCoopers puts the contribution of 5G applications in smart utilities management at $330bn by 2030. The Progressive Policy Institute, meanwhile, projects that 5G will create 309,000 jobs in the next 15 years.

Quote
Regional governments are focusing extensively on the deployment of digital technologies as part of their economic diversification strategies, which are focused on harnessing knowledge-based digital economies with a thriving private sector
Giampiero Terzi, managing director of Accenture’s communications, media and technology practice in the Middle East,

Nearly 80 per cent of respondents polled by Microsoft and Accenture said that they are at various stages of adopting digital technologies.

Among those surveyed, 77 per cent claim they want to invest an incremental 3 to 10 per cent of their information and communications technology budgets on 5G networks.

The oil and gas industry showed strong commitment, with 64 per cent of respondents planning near-term investments. The manufacturing sector is also healthy with 45 per cent planning 5G investments.

Three factors are driving the region's companies to accelerate their investments: the post-pandemic way of working, the push for digital transformation and the need to explore innovation and disruptive opportunities, the research said.

The report also stressed that digital transformation is the key objective of government plans in the region, with "massive" investments in artificial intelligence, IoT and other such technologies, as part of national strategies like the UAE's Vision 2021, Saudi Arabia’s Vision 2030 and Qatar’s National Vision 2030 development plans.

"It is promising to see how organisations perceive 5G as an accelerator to advance their digital transformation journey and scale innovation. Next-gen technologies will have a significant impact on business outcomes, and leaders must plan ahead to make the most of them," said Amr Kamel, global partner solutions leader at Microsoft MEA.

More importantly, the combination of 5G, cloud and edge computing – a distributed computing framework that brings enterprise applications closer to data sources such as IoT devices or local edge servers – will have a huge impact on the development of AI and IoT technologies.

However, there are still barriers organisations need to overcome: 69 per cent of respondents feel that there is limited awareness on 5G's relationship with its peer technologies, while 68 per cent of executives cited the complexity of integration with legacy systems.

Seventy per cent said the lack of funding to support 5G investment is a "significant" challenge, while 72 per cent said they lack the adequate technology skills and expertise.

Quote
It is promising to see how organisations perceive 5G as an accelerator to advance their digital transformation journey and scale innovation. Next-gen technologies will have a significant impact on business outcomes, and leaders must plan ahead to make the most of them
Amr Kamel, global partner solutions leader at Microsoft MEA.

Those ahead of their peers in the region are what the study calls Tech Leaders, which are the organisations that are more likely to have invested higher in advanced networks such as 5G, innovation capabilities and the workforce and converging technologies, including the cloud, AI, edge and IoT.

They are also poised to create more value than others, with revenue expected to grow 2.1 times faster and margin to increase 1.6 times higher over the next three years.

"A strong C-level focus, deep understanding of technology convergence across the organisation and resource commitment is required to position solutions enabled by advanced networks as a part of a broader transformation and innovation agenda with the ultimate objective of achieving holistic value creation for the enterprise," the report said.

"Any persuasive business case must clearly classify the far-reaching, innovative outcomes emerging from these solutions. Those include the creation of new products and services, creating new revenue streams that wouldn’t have been possible without the advanced technology solutions."

Updated: January 19, 2022, 4:35 AM
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