Can big data be the surprising savior of the ME’s sagging economy?

 

Region is looking to harness the gold mine of big data to bring back the economic prosperity

Big data is the new ‘oil’ for the Middle East and North Africa (MENA) region; a statement further cemented with every click in today’s digital age.

Spanning across all sectors of the economy, big data is huge, untapped and a commodity that holds the vast potential of transforming the way state and corporate machineries function globally. What oil did for the Gulf in the 20th century, big data is doing today for the Middle East.

As oil is no longer a stable revenue generator in the wake of dwindling crude prices and volatile markets, governments and companies in the region are looking to harness the gold mine of big data to bring back the economic prosperity that currently seems to be eluding them.

They are embracing the digital age and planning accordingly to reduce their operational costs and make optimal use of available resources. It, therefore, becomes imperative to understand how big data works and what economic potential it holds.

Smartphones, IoT-enabled (Internet of Things) devices, automated machines –virtually anything that is connected to the Internet – is creating a humongous amount of data in the region. For example, an automated driverless car can generate 100 gigabytes of data per second. Smart cities that feature embedded traffic sensors, environmental monitoring systems, smart power grids and more are generating and collecting vast amounts of data at a scale never imagined before.

From ten zettabytes (ten trillion gigabytes) in 2015, a whopping 180 zettabytes of data is expected to be generated the world over by 2025, as per analysis by the International Institute for Analytics and International Data Corporation (IDC).

And as technology grows, so does the amount of data. For example, Intel reveals that self-driving cars will soon create significantly more data than people – three billion people’s worth of data, in fact.

In the MENA region, a burgeoning online population, combined with mobile telephony, IoT, artificial intelligence (AI) and cloud computing, are propelling the data boom and ushering in the Fourth Industrial Revolution.

The GSM Association, a body representing telecom operators worldwide, says at least 64 percent of the MENA population (368 million people) have mobile phones, which accounts for 74 percent of web traffic. The current 218 million mobile 
broadband connections in the region will climb to more than 287 million by 2020. While the mobile industry’s contribution to the MENA economies is expected to touch $200 billion by 2020, the IoT market is forecast to grow at 19.6 percent in 2017 to reach $7.8 billion, thereby significantly contributing to the rise of new data in the region.

“Sectors such as telecommunications and oil and gas are steering big data growth in the Middle East countries. Big data will actually drive the business direction rather than simply reflect performance in 2017. The need to optimize the value of data collected by companies is undeniable,” Islam Zeidan, general manager UAE and MEAD at Teradata, tells TRENDS.

Big data revolution has just begun and it’s only going to get bigger

Cashing in on the rapid generation of big data in the region, corporate giants are aiming to harness the most out of it.

Hussein Hachem, CEO of Aramex, tells TRENDS: “Especially in the business of logistics and delivery, big data has enormous potential and it is positively impacting our industry. We have a dedicated team of data scientists to study the market and respond accordingly.”

Data monetization

The focus is now on ‘data monetization’ as the MENA industry is looking to get value out of the mountains of data that is available to it. By effectively capturing, storing, analyzing and disseminating data, companies can monetize and generate more revenue. This is where AI techniques and algorithms can help sift through data and predict customers’ purchasing habits or risk of diseases, machines’ requirement of maintenance, etc.

Worldwide revenues from big data and business analytics will grow from $130.1 billion to more than $203 billion between 2016 and 2020 at a compound annual growth rate (CAGR) of 11.7 percent. However, the MENA region has a lot of catching up to do to claim a share of this booming market.

“The businesses in the region are still in the nascent stages of adoption of big data and analytics technologies. Our survey suggests 51 percent of Chief Information Officers are in the planning stage to implement data analytics, including business intelligence software, as part of their IT transformational strategy. So the future use of big data in the region looks very promising,” Swapna Subramani, Senior Research Manager, Enterprise Technologies, IDC, tells TRENDS.

Data cartels

So far, high-technology companies have undisputedly dominated the ever-growing big data market. By investing heavily in data analytics, hardware, software and expertise, these giants develop new predictive algorithms to ensure their dominance, resulting in the so-called ‘cartelization’ of data.

The five biggest tech giants – Google, Apple, Facebook and Amazon (collectively known as GAFAs in the region) –today control almost all of the data in the world. Be it an individual or a big company, everyone, in some way or the other, is sharing data with at least one of these enormous digital platforms.

Every time an individual downloads an app, shares some information on social networking sites or uses a search engine, or when a company uses an operating system, more data is doled out to the tech giants. By using data analytics, the GAFAs can virtually predict an individual’s next move or how a business or new start-up is going to fare. And that is where the real challenge begins.

This unparalleled exclusive access to data keeps these tech giants ahead of their rivals. For example, Amazon Web Services dominates the cloud supply market and, according to Search Engine Land, a leading publication on the search marketing industry, Alphabet’s Google is poised to claim close to 78 percent of the US search ad revenue this year. The GAFAs cartel, along with US IT giant Microsoft, have garnered more than $25 billion in profit in Q1 2017, reported The Economist in May this year. Their dominance has meant little room for new players.

“It is true that GAFAs has monopoly over managing the data of consumers. While this puts them in an advantageous position over rivals, this is only one aspect of big data. If businesses and start-ups come up with the right solutions to promote their own value, they can easily create space in the big data market,” Alain Joubert, Director of Analytics at Gulf Business Machines, tells TRENDS.

However, Qarar (the region’s leading decision analytics company) CEO Zaid Kamhawi believes otherwise. “There is no monopoly on big data and it cannot be controlled by any specific group of organizations. The tech giants’ access to greater volumes of data does not impede the value that private commerce and national economies can extract out of it,” Kamhawi stresses to TRENDS.

However, IDC’s Subramani feels that despite a few IT giants’ monopoly on big data, the end result depends on the exact usage. “The monopoly of some IT giants is driven by their utilization of data effectively. The digitally transforming world provides all businesses the chance to utilize their exponential growth of data and put it to more strategic use.

Big data and analytics tools, therefore, have to be leveraged to make informed business decisions, analyze customers’ spending behavior, launch new product lines, enhance supply chains, identify geographical trends and gain a competitive edge over other market players,” she points out.

Regional outlook

While the jury is out on the dominance of tech giants in the big data market, they are undoubtedly spreading their digital footprint across the world.

Amazon has already announced its arrival in the MENA region with the acquisition of Souq.com, the largest e-commerce website in the Middle East. The Gulf region’s e-commerce market is expected to grow from $5.3 billion in 2015 to $20 billion by 2020, says consultancy firm AT Kearney. The Souq takeover gives Amazon direct access to data assets of some 50 million consumers, some four million products, thousands of merchants in the region and a ready-made payment and fulfillment infrastructure of its Middle East clone.

Google, too, has its eyes set on the Arab world. And rightly so. The region alone is projected to post the world’s-fastest mobile data traffic growth rate by 2018, as per the Cisco Visual Networking Index Global Mobile Data Traffic (2016-2021). From apps to online videos and e-books, the Internet giant is encouraging more Arabic content, which grew by 40 percent last year. There are now more than 10,000 books in Arabic on the Google Play store. A designated Youtube studio is opening later this year, aimed at supporting the production of more Arabic videos.

So AI companies, through predictive analytics, need to come up with a better understanding of consumer behavior and changing values.

Middle East businesses are facing a massive flood of information as networks bear ever-increasing loads due to automation and the growing number of people and devices connected to the Internet. An average enterprise in the Middle East will need to manage 50 times more data by 2020, Cisco forecasts. Microsoft, which has 40 cloud regions around the world – more than any other cloud provider – is cashing in on the opportunity. It launched its largest Center of Excellence for Oil and Gas in Dubai last year, with the aim of supporting the energy sector through the use of big data and advanced analytics tools and various cloud services.

Meanwhile, industrial giants such as GE and Siemens are already selling themselves in the region as data firms, providing 
foolproof analytics solutions.

Making data work

Samina Rizwan, Senior Director (Business Analytics and Big Data), Oracle (MENA), believes that despite the tech giants’ dominance, the MENA data market is huge enough to give room to other players as well.

“Every company in the region must now be a ‘software and analytics’ company and apply data-driven innovation to their own organization and processes as well,” says Rizwan.

Many enterprises, therefore, are capturing, managing and analyzing the deluge of data to stay steps ahead of their rivals. Data analytics helps them make their products more consumer-specific, attract more clients and generate even more data for continuous improvement.

Majid Al Futtaim, a retail giant in the MENA region, measures customer needs through a ‘Golden Customer Record’ across its 13 business units. With the power of data analytics, the company understands customer behavior better and improves its focus on marketing campaigns. Emirates NBD, named the ‘Best Digital Bank’ at the Euromoney Awards for Excellence in 2017, has announced a ‘future lab’ to use AI and data analytics to come up with breakthroughs in digital banking and payment technology.

Airlines are also using big data to create more personalized experiences for passengers on board.

Emirates, the world’s largest airline in terms of international traffic, uses big data, generated from 16 million members of its frequent flyer skywards program, in its customer interactions. Now it wants to access passengers’ social media platforms such as Facebook and Twitter to allow its AI to predict what the passenger wants. Turkish Airlines is planning to use IoT to connect with passengers’ smartphones to assist them and to help them navigate their way to lounges, F&B and retail outlets, and boarding gates.

The oil and gas industry continues to be the mainstay of regional economies and data analytics can help reduce the aftershocks 
of volatile prices and shrinking revenues. During the energy conference CERAWeek 2017 in Houston, the US, in March, energy industry leaders from ExxonMobil, Russia and the MENA region, said the adoption of data analytics can improve asset performance by up to 30 percent.

Refineries generate a wealth of data on equipment, maintenance frequency, unit performance and costs. Data analytics helps them in planning asset integrity and safer operations, mitigating hazards and risks, which results in fewer incidents, and optimizing performance and better regulatory compliance.

“The digital transformation is already taking place across the MENA region and cloud, big data, IoT and social media are helping governments gain new insights into how to improve the way they operate,” says Samer Abu Ltaif, President, of Microsoft’s MENA operation.

Market research site marketreportshub.com says that, in 2016, global big data market vendors earned more than $46 billion from hardware, software and professional service revenues. Big data investments are expected to grow at a CAGR of 12 percent over the next four years, eventually exceeding $72 billion by 2020, says SNS Research, a market intelligence and consultancy solutions firm.

According to research and data analysis firm Future Market Insights, the Middle East data storage market, valued at $1,475.9 million in 2014, is expected to register a CAGR of 14.4 percent till 2025.

In the region, while the consumer data storage devices segment, valued at $275.5 million, is poised to register a CAGR of 12.4 percent, the enterprise data storage segment is anticipated to expand at a CAGR of 14.8 percent during the forecast period in terms of revenue.

Call for strong anti-trust laws

This fast-growing and expanding data market needs the close attention of anti-trust authorities in the MENA region to ensure a level playing field for all, be it entrants or established giants.

On June 27, the European Union’s (EU) Competition Commission slapped its largest-ever anti-trust fine of $2.7 billion on Google for “abusing its power by promoting its own shopping comparison service at the top of search results and denying other companies the chance to compete on their merits and, most importantly, denying EU consumers the benefits of competition, genuine choice and innovation.” Meanwhile, several reports also state that Amazon and eBay have also been accused of influencing public’s spending habits.

This just goes to show that tech giants have arbitrary control over data, giving them far-reaching powers to stifle competition. Anti-trust authorities, therefore, have to evolve as the rules of the game change. Instead of the physical size of a company’s assets, they need to be concerned about data assets that may result from likely mergers or “shoot-out acquisitions” (which is taking over start-ups to ‘capture’ their niche market or indigenous products/services to ensure continuance of dominance or kill potential rivals).

For example, the Facebook–WhatsApp merger led to the creation of trove of personal data on people, raising an ethical question about how fair it is to let one firm have such control over information and edge out potential rivals. Besides, the acquisition price should also be in focus. Amazon’s takeover of Souq.com for ‘an undisclosed amount’ should have raised red flags as the deal gives the tech giant great control over the Middle East e-commerce market.

In addition, authorities need to be tech-savvy themselves to understand the dynamics of the data economy and frame laws accordingly to make companies liable towards consumers.

“We release data about our lives every day with no idea who is acquiring it and what is being done with it. Do we ever read an iTunes terms and conditions message before agreeing to it? No. We produce huge amount of data for tech companies. They either use it or re-sell it, who knows,” says Khalil Sehnaoui, founder, Krypton Security.

Therefore, companies should be made to reveal their data assets and whether they are using consumers’ information for commercial purposes and how much money they are generating out of it.

Diana Mullenex, head of Global Telecoms Practice at law firm Pinsent Masons, says: “Strong data protection regulations as well as anti-trust policies can help regulate market tendencies.”

Regulations upholding transparency and an open environment have become quintessential for the data economy. Governments can also step in and manage data, which is as critical to national security and welfare as public property or infrastructure.

Security concerns

The ever-expanding universe of data, facilitated by increasing Internet coverage and the interconnectivity of devices, calls for strong cybersecurity measures. The WannaCry ransomware, which infected more than 200,000 computers in 150 countries, locked out critical data of hospitals, banks and government offices in no time. The attack just exposed how vulnerable data assets are to hackers.

According to cybersecurity firm Symantec, Saudi Arabia is the 20th most targeted country for ransomware attacks globally, while the UAE ranks 26th. The Kroll Annual Global Fraud and Risk Report says 60 percent of Gulf executives reported virus infections and data deletion and 20 percent reported data breaches in 2016-17.

At the Gulf Information Security Expo and Conference (GISEC) in Dubai in May, experts warned of cyber attacks on critical data assets of airports, oil installations, banks and tourism networks.

“If an attack such as WannaCry infects the airport systems of passenger flow monitoring and passport control, posting all passenger data online, the results could be devastating. All kinds of automated systems in a smart city can be exposed to such a collapse,” said Natalya Kaspersky, president of InfoWatch Group, at the conference.

The GCC, therefore, needs to make concerted efforts to secure its critical IT infrastructure. The first thing it needs to do is to be part of the Council of Europe Convention on Cybercrime, which has been ratified by 52 countries. Second, Gulf states must get into inter-state collaboration on cybercrime.

“Data doesn’t sit still. It moves around from systems to people to enterprises outside. Thus, established authorization, access, auditing and encryption – for data both at rest and in motion – must extend to the entire data-capital computing environment to ensure data-capital security,” says Paul Sonderegger, Big Data Strategist, Oracle.

Stepping stone to smart data

Despite security and market regulation challenges, the big data industry in the region is evolving at breakneck speed. While big data is helping industries such as banking and finance, healthcare and retail get the best of the digital age, it is also creating new jobs.

A Microsoft-sponsored IDC whitepaper reveals that as many as seven million cloud-related jobs, including data scientists and data engineers, will be created worldwide by 2020.

As companies focus on the collection and storage of data and Gulf states bring services online, implement the concept of smart cities and digitize their economies, there will be a growing requirement for coders, analysts, cybersecurity experts and technology pros. Industry analysts estimate that two-thirds of such careers of the future do not yet exist.

According to the Workforce 2020 report by Oxford Economics and SAP SE data, 88 percent of UAE-based employers say they need employees with analytics skills. Meanwhile, a recent survey conducted by Microsoft found that 37 percent of organizations in the Middle East and Africa believe a skills gap is the main barrier to cloud adoption, forcing many firms to train their staff in-house to meet the growing challenges.

Dietmar Siersdorfer, CEO, Siemens (Middle East), termed big data as a stepping stone to smart data. Speaking to TRENDS, Siersdorfer says: “Big data has become an extremely important asset for any business or nation. It’s important to view big data as a stepping stone to smart data. Analyzed intelligently, this data can make operating systems smarter, efficient and reliable. For the Middle East, which is focusing on building industrial capability and greater economic diversification, smart data holds the key to unlock the new road to prosperity.”

Bigger and better

The big data revolution has just begun and it’s only going to get bigger. There will be no escaping it, especially as more and more people are getting connected to the virtual world for all their needs, cities are becoming smarter with new technological advances and companies are looking to create new markets and services. Knowingly or unknowingly, everyone will be a part of the booming data universe, wherein lies the next scientific breakthrough, industry-changing innovation and life-altering technology.

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