Page 70 - SAMENA Trends - February 2020

REGIONAL & MEMBERS UPDATES SAMENA TRENDS

Digital Transformation Drives Public Cloud Spending in the Middle East and

North Africa

The movement of large organizations medium-sized businesses are migrating,” implementations that will allow faster
and small and medium enterprises to he said. Arun Khehar, senior vice president business analysis and artificial intelligence,
transform their businesses digitally is for Central and Eastern Europe, the Middle which are key growth engines for the public
driving public spending in the cloud in the East, Africa and India at Oracle, said the cloud in the region. In the public space in
Middle East and North Africa (Mena). Sid data center is a great catalyst for local the cloud, software as a service (SaaS) is
Nag, vice president of research at Gartner, customers to move to the cloud, as they expected to represent 53% of total revenue
said government initiatives such as Smart can expand beyond their geographies and from the service in the public cloud at $
Dubai, Smart Abu Dhabi, the 2019 Bahrain it can only be done through the internet and 1.6b this year compared to $ 1.3b a year
Cloud First Policy have fueled cloud the cloud. “The government sector is not a ago. “SaaS products are generally sold
adoption among large organizations in the problem, since we sold them three years by subscription, allowing companies to
region. Organizations are also increasingly ago. The problem is with the sensitive part avoid large upfront license fees and capital
moving their applications and workloads of the government, such as the finance costs. The profitability of SaaS is one of the
to the public cloud as security and department. This happened due to the Abu motivations for organizations to increase
governance concerns dissipate even more, Dhabi data center. Data sovereignty is a their expenses in the segment,” said Nag.
as many global technology companies key issue. Human resources and payroll Customer relationship management (CRM)
have opened data centers in the region are crucial and sensitive in this part of and enterprise resource planning (ERP)
for regulations on data residence Large the world, “he said. Security and privacy remain the two main segments that drive
technology companies have shown issues have been fixed due to the local data SaaS growth and will continue to increase
interest in the UAE to open data centers. center, he said and added that the cost of as companies continue to improve their
Amazon Web Services has a group of running a cloud is cheaper since there is customer experience. Nag said ERP will
data centers in Bahrain and the UAE. no infrastructure cost, no skills are needed, represent 12% of the overall revenue
Oracle has already opened its first data since Oracle has the skills and updates. forecast for public cloud services this year
center in the United Arab Emirates last Growth engines: CRM and ERP and this is because most independent
year in Abu Dhabi and plans to open one Khehar said that business problems software providers have converted their
more in Dubai this year, and two in Saudi have become critical and that digital ERP applications from local offers based
Arabia this year, one had already opened in transformation has become a much bigger on licenses to SaaS offers based on
Jeddah, while Microsoft opened its centers problem than where the data will reside. Cloud. While business intelligence (BI)
of data in Dubai and Abu Dhabi last year. Nag said the region’s collective economic applications are currently low in the region,
Alibaba Cloud, the cloud computing arm of goal to focus more on technology and he said it is the fastest growing segment
Chinese e-commerce giant Alibaba Group, data has been the cornerstone of this among SaaS offers and is on track to total
has already invested in a data center in the rapid acceptance of the public and private $ 29 million in 2020, an increase of 37%
UAE, while SAP opened its data centers in cloud. The regional market is expected to since 2019. “BI revenues are expected to
the UAE and Saudi Arabia last year. IBM increase 21% year-on-year to $ 3b this reach 30% growth over the next three years
opened two data centers, one in Dubai and year compared to $ 2.5b a year ago and as local businesses take advantage of BI-
Abu Dhabi, this year. Large cloud providers this figure is expected to increase to $ based analysis to make smarter decisions
need to have local data centers to serve 3.6b in 2021. Nag said SMEs in the region and optimize their business operations,”
governments, financial and banking are focusing their investments on cloud he said.
sectors for data residence regulations.
Necip Ozyucel, Leader of the Cloud and
Enterprise Group at Microsoft UAE, said
that cloud adoption was strong in the UAE
but that the challenge was the financial
and government industries due to data
redundancy and latency was also another
challenge for others. Industries too. After
the opening of data centers in the UAE, he
said there is a strong adoption of cloud
services in all industries and that it has
also unlocked all government problems.
“Governments and financial sectors are
moving mission-critical applications to
the cloud and many customers in retail,
construction, airlines and small and

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