Eighty-five per cent of the companies in the Middle East have already embarked on their cloud journey, of which almost half are already capturing tangible value from the cloud
Cloud adoption across the Middle East has passed the initial adoption phase and is poised for accelerated growth, with a significant proportion of companies already capturing tangible value from the cloud, according to the latest report by Strategy& and PwC Middle East, titled “Cloud computing in the Middle East: New opportunities for companies and cloud providers.”
The survey questioned 420 technology and business leaders from various sectors in the region’s two largest cloud computing markets, Saudi Arabia and the United Arab Emirates. The analysis suggests that if the Middle East were to catch up with Europe regarding market maturity, cloud vendors could potentially secure around $5.6 billion in new revenue. If the region were to match North America in maturity, the new revenue potential could be closer to $14 billion.
Cloud adoption in the region
The Strategy& and PwC Middle East report finds that 85% of the companies have already embarked on their cloud journey – 32% of the companies in the region utilise the cloud in at least one area of operations, 35% have adopted cloud computing across multiple domains of their business and 18% already having scaled cloud throughout their business. Looking forward, 68% of Middle Eastern companies have the ambition to migrate almost all of their operations to the cloud within the next two years. 76% of companies intend to increase their cloud budget to fund these initiatives over the coming year.
Furthermore, 90% of organisations have moved beyond a simple “lift and shift” approach to cloud adoption, employing modernisation, cloud-native application development and business models built on the cloud to reap more benefits from their cloud initiatives.
“The Middle East is experiencing a significant transformation in its approach to cloud computing, rapidly closing the gap with international benchmarks. Thanks to proactive government investments and the growing presence of public cloud providers, both public and private entities now have an accelerated avenue to tap into the profound benefits of this technology,” said Nikolaos Lioulis, Principal with Strategy& Middle East, part of the PwC network.
The value of cloud computing
The report also finds that approximately 40% of companies already realised measurable value from their cloud initiatives, including improved decision-making (40%), increase in profitability (34%), or new revenue streams (30%), amongst others. The analysis indicated that despite their strong performance, cloud-powered companies in the Middle East have room for improvement in capturing value. By comparison, cloud-powered companies in the U.S. are more adept at extracting value in all areas.
According to the report, many challenges Middle Eastern companies typically face in realising measurable value are external and can be addressed through vendor support. For instance, 47% of cloud-powered companies said they experienced problems related to cloud providers, such as concerns about service quality. In contrast, non-cloud-powered companies were more inclined to attribute their challenges to internal factors: budget constraints, technological capability limitations, and leadership issues. Notably, 88% of cloud-powered companies reported increased revenue over the past six to nine months.
“Our findings illustrate the tangible benefits of cloud technology for businesses. Approximately 40% of the companies surveyed reported significant improvements across various dimensions. Interestingly, there is a direct link between cloud adoption and enhanced top-line performance. As organisations look to leverage this potential further, our report offers various recommendations drawing from the practical experiences of companies that have successfully harnessed the advantages of cloud computing,” said Achilles Drettas, Partner with Strategy& Middle East, part of the PwC network.
Capturing the full value of the cloud
“Our findings show that organisations can maximise the value of the cloud by taking a programmatic approach rooted in a meticulously planned cloud strategy. Moreover, it must be grounded on business priorities, strong cloud controls and governance, and follow a proactive program framework which engages the entire C-suite and key stakeholders from the outset,” added Rajat Chowdhary, Partner with PwC Middle East.
Specifically, the analysis revealed four key actions that successful cloud-powered businesses usually take to fully exploit value from the cloud:
1. Take a holistic approach
Cloud-powered companies adopt a holistic approach, driven by a well-defined vision and supported by a robust architectural roadmap and governance framework aligned with specific business goals. They are more likely to deploy the cloud for a combination of uses—enabling them to prioritise infrastructure strategies and migration methods on an application-by-application basis, ensuring effective value creation.
2. Build stronger alliances across the C-suite
Cloud-powered companies excel at building strong alliances within the C-suite, encompassing both business and technology roles. These companies ‘ chief information officers and technology teams recognise that transformation is a collective effort and collaborate closely at the earliest stages of planning, budgeting, and requirement gathering.
3. Emphasise cloud controls and governance
Cloud-powered companies are more advanced than others in adopting leading practices in cloud governance, risk, and controls. They are likelier to have resources dedicated to cloud governance, formal and distinct cloud controls, and robust evaluations of shared responsibility with Cloud professional and managed services providers.
4. Develop a formal data, analytics, and artificial intelligence strategy
Cloud-powered companies are much more likely to have an enterprise-wide data strategy than others (73% versus 42%). That means they typically develop a streamlined architecture to modernise data into an integrated view, create governance structures, and develop the necessary skills and operational changes to become data-driven organisations.
The report also discusses five key considerations for cloud professional and managed services providers that want to remain competitive and meet changing customer demands. The recommendations focused on embracing cloud-native technologies, differentiating through the industry cloud, promoting security as a core offering, partnering with public cloud providers, and focusing on unique strengths.