Page 67 - SAMENA Trends - November-December 2019

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Digitalization Seen as a Competitive Advantage by Middle East Private

Businesses

Private businesses in the Middle East the market in times of disruption: “Private theory and implementation when it comes
recognize the potential for growth businesses in the Middle East increasingly to digitalization: While looking at eight key
that comes with building their digital recognize the importance of having a emerging technologies - PwC’s “Essential
capabilities, according to the 2019 Middle strategy for digital transformation, however Eight” which include 3D Printing, Artificial
East Private Business Survey, released many are still just at the initial stages Intelligence (AI), Augmented Reality (AR),
today by PwC, for which 200 private of digitalization. The current economic Blockchain, Drones, the Internet of Things,
businesses across nine Middle East downturn is putting ME private businesses (IoT), Robotics and Virtual Reality (VR)
countries were interviewed. However, the to the test. A cooling business climate – -, it becomes apparent that Middle East
levels of investment and implementation and potentially reduced growth rates, or private business leaders acknowledge
when it comes to digital technologies even falling revenues – will likely force their importance in future-proofing their
are still far from being advanced when leaders to review costs... Private business businesses, however implementation is
compared to European counterparts and leaders need to plan ahead and carefully still lagging. The top three reasons reported
there is much work to be done. A critical balance potential cost savings with digital for this discrepancy are cost constraints
factor that may urge private businesses investment needs”, Adnan Zaidi continues. (42 per cent), resistance to change (42
to act is the changing economic “In order to thrive during disruptive times, per cent), and lack of corporate vision
environment. Although half of the survey private businesses should employ a (33 per cent). In fact, corporate vision
respondents report that they expect their digital strategy that addresses every area and championing digital transformation
companies’ revenues to improve over of a company to meet present and future from the top throughout the ranks of the
the next twelve months, there is concern needs. If private business leaders don’t organization are essential to achieve
about the general business climate. “The think strategically about how to transform sustainable change. Similarly important is
cautious mood in the Middle East echoes their companies now, they risk being finding the right skillset, particularly as the
the global sentiment that the pace of unprepared for any possible disruption to digital era in particular asks for increased
economic activity has been weak. Many their business.” While private businesses specialization. Thirty-nine percent of
note clear evidence of a global slowdown recognize the value of digitalization, they private business leaders reported that skill
in 2019, which looks set to continue, driven are still reluctant to commit to large related shortages are costing those 5% or more
largely by declining growth in China and investments. Only 18 per cent of companies in potential revenue growth. Adnan Zaidi
uncertainty caused by the US-China trade intend to allocate more than five per cent concludes: “Private business leaders need
war – and trade friction between the US of their overall investment to building to a) define their digital ambition though
and India and Mexico too. And in October, their digital capabilities. This allocation clearly developed and communicated
the International Monetary Fund cut its varies by industry. The service sector strategies, b) ensure the commitment of
growth forecasts for the Middle East and stands out with 34 per cent of respondents the board and the senior leadership, c)
Central Asia to 0.9 per cent, compared to saying they would spend more than five choose the right digital technologies for
1.9 per cent in 2018.” Peter Englisch, PwC per cent of investments on digitalization, their business, d) attract the right skillset
EMEA entrepreneurial and private business compared with 17 per cent in industry and e) develop a culture of change. The
leader, said. However, downturns often and manufacturing and just 12 per cent in combination of these factors is what will
bring opportunities, and companies that retail. There is also a discrepancy between help them be competitive in the future.
prepare early – and advance rather than
retreat – can benefit enormously during
difficult times and beyond. Companies
that see digital transformation as the key
to unlocking the next stage of growth –
and get the implementation right- have
a fighting chance of growing faster when
the next upturn comes.” According to
PwC’s survey, 78 per cent of Middle
East private businesses acknowledge
that digitalization will impact the long-
term viability of their business. Adnan
Zaidi, PwC Middle East Entrepreneurial
& Private Business Leader, emphasizes
on the importance of developing a digital
strategy and following through with the
right implementation in order to win in

67 NOVEMBER 2019