The GCC region is witnessing an increase in the adoption of cloud technology due to rising service provider investments and the need for remote working made vogue by the Covid-19 pandemic.
The region’s strong demand for cloud computing services is also driven by the efforts of the member states to diversify their economies, a young digital society, and the tendency of many industries toward digitization.
The benefits of moving to the cloud are many, the most significant of which is the decrease in infrastructure costs and the enhanced speed of access to servers, allowing businesses to move faster, from concept to implementation.
GOVERNMENT INITIATIVES
The UAE is the leading country regarding public and private sector adoption of cloud computing and yearly spending on these technologies.
Smart Dubai and Smart Abu Dhabi in the UAE and Saudi Arabia’s NEOM projects invest large amounts in cloud technology to serve IoT-managed smart cities initiatives.
Qatar’s local governments are also actively investing in e-government projects and the development of the ICT sector as part of Qatar’s National Vision 2030, which is expanding the cloud infrastructure market.
Bahrain launched a “Cloud-first” policy in 2017 to enhance the use of government information and communications technologies, encouraging the adoption of cloud computing services in all state institutions, and save IT operational costs by up to 90 percent.
DATA CENTERS
Over the last few years, major cloud providers such as Microsoft, Amazon Web Services (AWS), Oracle, and IBM have established data centers across the GCC region, following Alibaba, SAP and regional providers’ existing cloud presence.
This move is excellent for the region’s economy since cloud technology, with its low-cost processing and data storage capabilities, is essential to achieving emerging technologies like blockchain and artificial intelligence (AI).
In March 2021, Tencent, a Chinese technology company, announced its first data center in the region. According to an agreement signed with the Bahrain Economic Development Board, Tencent’s Bahrain data center is expected to be operational by the end of 2021.
Other global service providers are shifting their focus to the country.
In July 2019, Amazon Web Services (AWS) launched its first AWS Middle East Region in Bahrain and had subsequently signed deals with several government departments. The company is planning to open three more centers in the UAE by the middle of 2022.
Oracle is also on track to migrate all its 4,000 on-premises clients in the Middle East and Africa to the cloud in the next two years. In July 2020, the company opened its first regional hub for its cloud data center in the MENA region in Jeddah.
Saudi Arabia announced in 2020 a strategic partnership between Alibaba Group and Saudi STC Company, with a US$1 billion investment, to provide high-performance public cloud services in the country.
In addition, Riyadh has been chosen as a regional hub for the management and training of the Chinese company in the region as part of this collaboration.
Alibaba has also been providing cloud services in the MENA region since 2016. It constructed a data center in Dubai in what seemed to be a foresighted move to benefit an emerging market.
Microsoft opened data centers in Dubai and Abu Dhabi in June 2019. According to Microsoft, the decision was made to recognize the region’s “huge opportunity for digital transformation”.
Google announced in March 2020 that it would open its first cloud zone in the Middle East in cooperation with the Qatar Free Zones Authority in Doha and plans to open a second cloud zone in the GCC, specifically in Saudi Arabia.
GROWING MARKET
The data centers’ spread is unlikely to slow anytime shortly. The pandemic is one of the main reasons since it has helped contribute to the already growing cloud market.
According to Markets and Markets research firm, the Middle East cloud computing market is predicted to reach US$4.5 billion by 2024, with a compound annual growth rate of 17.5 percent, highlighting the region’s growth opportunities.
According to IDC, a global market intelligence firm, the value of the GCC public cloud technologies market is expected to more than double by 2024, with spending on professional cloud services expected to expand rapidly to US$1.6 billion in 2021 and continue to grow to US$2.35 billion in 2024.
IDC report said that the MENA region would be worth around US$5 billion to cloud suppliers by 2022, as technology vendors continue to be interested in the region’s potential for cloud expansion.
According to the annual IDC poll of Saudi CIOs, more than 25 percent of Saudi companies plan to use a combination of on-premises, dedicated private cloud, public cloud, and legacy platforms.
According to the International Research Foundation, the pandemic has generated increased demand for various technologies in which Saudi Arabia’s government agencies and businesses are investing, including mobile phone applications, government internet sites, and developing technology.
CHALLENGES AND LACK OF SKILLS
Although the cloud computing market in the region is expanding, there are still some obstacles to overcome.
The MENA region continues to have some of the weakest cloud spendings in the globe. The sharp skills gap, which is currently higher than the demand of workers with experience in cloud computing, is a significant factor limiting cloud expansion in the region.
This emphasizes the need for workers in jobs affected by automation and emerging technologies to reskill and requalify.
According to IDC and Microsoft research, more than half a million jobs could be created across industries and sectors in the Middle East by 2022 if the gap is addressed by governments, businesses and other stakeholders.
Other challenges faced include fear of security threats that could expose the clouds to hacking and the difficulty of migrating from a traditional system to cloud computing, which is an obstacle for many companies because it requires a change in management strategy.