UAE set for $5bn tech spending

With downturn receding UAE is expected to spend $5bn, making it one of the world's fastest-growing regions for IT expenditure.

DUBAI // The UAE is forecast to spend almost US$5 billion (Dh18.36bn) on technology this year, or about $1,000 per capita, making it one of the world's fastest-growing regions for IT expenditure. The US-based global technology consultancy IDC said the world's leading emerging markets were set to lead the recovery in global technology spending in the coming years with the Middle East and Africa at the forefront of the surge.

"The UAE stands out as a key hub in the Middle Eastern and Africa region," said Jyoti Lalchandani, who is the vice president and regional managing director at IDC's Middle East office. In the Gulf, significant growth would take place in Saudi Arabia, Qatar and the UAE, Mr Lalchandani said. The Emirates leads all the Middle Eastern and African countries with $983 in IT spending per capita. It is forecast to spend $4.79bn on IT this year, an increase of 12.4 per cent on last year.

Companies in the Middle East and Africa are set to spend $49.77bn this year, with the Gulf region expected to contribute about 25 per cent of the total, Mr Lalchandani said. "It will be the fastest growth region worldwide," he said. "The overall economic sentiment in the UAE and the region has greatly improved [on] one year ago." As a result of the global credit crisis, regional spending fell last year by about 5 per cent to $44bn, Mr Lalchandani said. But with rising consumer sentiment and demand for new public-sector infrastructure projects emerging in the fourth quarter of last year, technology spending appears to be on the rebound.

"In the last 12 months, this is the first time that GDP [has begun] to pick up," he said. "There's so much pent-up demand for infrastructure projects and the recovery we're seeing in the consumer [sector] will really drive a lot of the spend over the next 12 to 18 months." Still, the trends in the technology sector revealed by an IDC poll of chief information officers (CIOs) in the region indicates that there is a significant shift in conserving costs and getting IT departments to do more with less.

"Every CIO today is under a lot of pressure to produce an infrastructure that is more agile, dynamic [and efficient] and gives them the flexibility to adapt quickly to ongoing business requirements," said Haidi Nossair, the marketing manager for EMC², a global IT infrastructure company. The result has been an increased investment in managing computer data. Adding data capacity "virtually", without the need for new hardware, and moving data to online servers accessible from practically anywhere, which is referred to as "cloud computing", are two major trends that customers of companies such as EMC², Dell and Symantec are adopting.

The term "cloud" is used as a metaphor for the internet, based on the cloud drawing used to depict the internet in computer network diagrams. "One reason that cloud computing is attractive for companies is the ability to subscribe to new services without having to worry about upgrading their computer systems," said Omar Dajani, the regional director of systems engineering at Symantec. But integrating a company's entire technology base into the "cloud" is not as simple as flipping a switch.

While industry experts agree that cloud computing will be instrumental in shaping the future of all technology and telecommunications, businesses have to pay close attention to ensure that their data is protected and secure. "Cloud computing is a journey," Ms Nossair said. "No one is going to jump into it right away." Automating manual activities, especially in the small business community, is also set to be a significant driver of growth for IT spending as businesses in the region begin to computerise their manual systems.

"It's about reducing the manual workforce," said Leigh Hancock, a spokesman for Dell Computer. "We believe that 50 per cent of most organisations' cost structure is based on labour, so how do we reduce that to boost productivity?"