Cloud Computing Impacting Middle East’s Transformation Goals

Cloud Adoption in Middle East

Businesses are quickly adopting cloud computing services across the board, from BFSI and IT to energy and utility industries. The need for edge computing and data centres is also increasing as a result of smart cities initiatives in Saudi Arabia and the UAE.

The use of the Cloud in the Middle East has been exponentially increasing for the past decade, and we no longer see “non-cloud” IT environments. Given this rapid growth, it is not an exaggeration to state that most sectors might utilise one or more cloud computing methods in their day-to-day operations.

While no business is immune to this trend, the governments in the ME region are now catching up to cloud use. As a result, we now have cloud-based government data, app-driven government services, cloud-hosted online services, web interactions, and more. Well, the advantages of using the cloud range from enhanced efficiency and flexibility to considerable cost savings and scalability.

Initiatives such as Bahrain’s cloud-first policy and national strategic visions such as the UAE Vision 2021, Saudi Vision 2030, and New Kuwait Vision 2035 influence governments to adopt newer technologies, such as cloud computing, to achieve their transformation goals.

Many countries are now seen utilising cloud technology and infrastructure. Investments for the IT sector, especially in GCC countries, including Saudi Arabia, UAE, and Qatar, have been tremendous. These governments are keen to make all departments and services online, further improving their infrastructure and services, such as e-applications aiding in fast track government activities.

Saudi Arabia has experienced a 16 per cent positive growth rate in cloud services since 2019 when it introduced its Cloud First Policy to advance cloud adoption across the public and private sectors. Demand for cloud services in the Kingdom has been forecasted to reach a market opportunity of up to $10 billion by 2030.

In 2019, the Communication and Information Technology Commission, the telecom regulator in the Kingdom, published a document titled “KSA Cloud-First Policy” to accelerate the adoption of cloud computing services, mandating government entities to opt for cloud options when making newer technology investments.

The General Authority of Competition in Saudi Arabia approved a project between NEOM and FAS Energy Company to develop and operate data centres. The project’s scope of work involves the construction of sustainable ultra-large-scale data centres and associated facilities.

In the Kingdom, public cloud came to prominence when Amazon Web Services started its service a decade ago, and the industry seems to be growing ever since. Saudi Aramco partnered with Google to bring its cloud services to the Kingdom, and Saudi Telecom Co. struck a deal with Alibaba Cloud.

In 2008, Qatar published its National Vision 2030, a mission statement to become “an advanced society capable of sustaining its development and providing a high standard of living for its people.”

Smart Qatar is integral to realising this agenda, a five-year digital transformation initiative to improve every aspect of society – from transportation and logistics to healthcare. Critical to the success of these projects is the cloud; the arrival of a Microsoft Azure region in 2021 enabled users to run complex applications on Azure’s powerful servers – from virtual machines to machine learning applications.

Becoming an Azure region boosted the existing cloud capabilities in Qatar. Essentially, inculcating this new network increased the performance, reliability, and security of the cloud, to the extent where it could potentially replace on-premise IT architecture.

In short, the Azure region provided the infrastructure necessary to realise the ambitions of Smart Qatar, as smart health kiosks have been planned to provide access to telemedicine and remote diagnosis; a nationalised, data-driven control centre orchestrates logistics, and an intelligent energy grid optimising usage.

Future-ready infrastructure

The UAE has been spearheading digital transformation in the region,  developing a future-ready infrastructure by embracing fourth industrial revolution technologies. Technology giants such as AWS, Oracle, Microsoft, Alibaba, SAP and Google are investing in the country to boost digital transformation. More than 70 per cent of companies accelerated their digital transformation plans by at least a year, with cloud being a key driver of this.

Last year, Abu Dhabi Accountability Authority (ADAA) migrated its data centre to the G42 cloud and enhanced its AI capabilities across its digital operations.

What’s driving the cloud adoption in the region?

Cloud technology is at the forefront of digital transformation in the ME region. The cloud can offer a cost-effective approach to gain access to unparalleled processing and analysis capability, allowing for actionable analysis, insights, and better decision-making.

Data storage that is easily available and has different access and communication routes are critical for creating a contemporary, uniform, and seamless experience for authorities and the general public. This strategy allows for public involvement while encouraging cooperative governance through inter-departmental collaboration, resulting in increased social inclusion.

The coronavirus outbreak prompted renewed interest in cloud-based technologies, with working remotely and the expansion of online services underscoring the importance of a robust digital infrastructure. In fact, through 2024, the Middle East data centre industry is expected to increase at a compound annual growth rate of roughly 7 per cent, with end-user needs motivating data centre developers like Equinix to support such an expansion.

As part of the digital transformation plan, businesses in the Middle East swiftly adopt modern technologies such as 5G, artificial intelligence, and machine learning.

Without cloud computing as the backbone, allowing enormous amounts of data to be handled extraordinarily fast and on-demand, the adoption of such technologies would not be conceivable at scale. As a result, more than 70 per cent of Middle East-based enterprises are expected to have multi-cloud setups in place over the next two years.

The cloud’s ability to deliver services efficiently over the network at low costs is also a factor for rising cloud adoption. Apart from the governments, the Banking, Financial Services, and Insurance (BFSI) and energy and utility verticals are using cloud computing services in the region.

Cloud computing has proved incredibly beneficial for the banking sector to store and manage customers’ confidential information, such as credit card details, transactions, and personal information.

The BFSI sector procured 16.1 per cent in terms of cloud computing market share in 2019, a growth attributable to the rising initiatives by the government to support data safety and integrity. Cloud adoption in the IT & telecommunications segment is likely to remain dominant in 2022 due to the increased usage of these services, aiding management and storage for vast amounts of data in the industry.

Azure has a 16 per cent share of the global cloud infrastructure market, making Microsoft the second-biggest provider of cloud services after Amazon Web Services (AWS), according to research firm Canalys. AWS, which is already seeing strong demand in the Middle East, has been catering to dozens of clients, including Careem, Emirates NBD, Fetchr, Opensooq, Dubai-based broadcaster MBC Group and Virgin Middle East.

The leading cloud provider also launched an AWS Edge Network Location in Dubai, bringing Amazon CloudFront, Amazon Route 53, AWS Shield, and AWS WAF. Currently, the three data centres are in Manama, Bahrain. Bahrain’s Information and eGovernment Authority works with AWS to store data and provide computing power for its websites and applications.

With Cloud Fast becoming the preferred digital transformation platform for private companies, public sector organisations, and tech startups in Saudi Arabia, Oracle launched a cloud region last year. Oracle plans to launch two more cloud regions in the UAE and one in Saudi Arabia.

There are worthy small players as well. The cloud computing arm of Chinese e-commerce giant Alibaba opened its first regional data centre in Dubai in 2016 and expected upcoming data centres in Saudi Arabia and Qatar region. Some of Alibaba’s clients within the region include prominent names like Khalifa University, Dubai Parks and Resorts, Arabic game developer Onemt and Mena Mobile. In 2018, Equinix announced a joint venture with Omani telco Omantel to develop a data centre in Muscat where carriers, content and cloud providers can house their IT infrastructure.

Other developments

G42 Cloud, the leading UAE-based cloud computing provider, announced a strategic collaboration with Kyndryl, the IT infrastructure services provider, to accelerate cloud adoption in the Middle East. Nutanix and Hewlett Packard Enterprise announced an expanded partnership to accelerate hybrid cloud and multi-cloud adoption by offering Nutanix Era, multi-database operations and management solution, bundled with HPE ProLiant servers a service through HPE GreenLake.

Although there are several challenges in cloud adoption, including data sovereignty regulations, skills gaps, and security, digital technologies are advancing. With the Middle East acting as a hub for innovation and technology, governments in the region are providing opportunities to businesses to embrace the benefits offered by cloud-based solutions to accelerate the uptake of cloud-based solutions in the next few years.

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