Internal process efficiency driving force behind digital transformation in Mideast

Internal process efficiency driving force behind digital transformation in Mideast


JEDDAH — A new research revealed major differences in digital maturity across industries, with aviation as the most progressive, while oil and gas lags behind.

IFS research showed findings from its Digital Change Survey that polled 750 decision-makers from 16 countries, including 38 from the Middle East.
Big Data, ERP and IoT were noted as top investment areas for digital transformation, but one in three companies are unprepared due to talent deficiency.

Nearly 90 percent of firms surveyed (87 percent in the Middle East) have ‘adequate’ or ‘advantageous’ funding for digital transformation, indicating a strong willingness to invest and an appetite to evolve their business in order to stay competitive and grow. When asked about prioritized investment areas, the top three choices were IoT, ERP and Big Data & Analytics. These are reflected by the Middle East respondents with Big data & Analytics leading with 52 percent followed by ERP and IoT (39.5 percent each). “It is apparent that companies today understand the urgency of focusing on digital transformation.” IFS VP of global industry solutions, Antony Bourne said. “Technologies such as big data and analytics, enterprise resource planning and internet of things are paramount to transforming a business. Companies need to apply innovative technologies hand in hand with their relevant industry expertise to succeed and gain a competitive edge. It is this combination that makes digital transformation both meaningful and powerful.”

“In the Middle East, we are seeing a heightened awareness for digital transformation in the GCC especially UAE, Saudi Arabia, and Qatar who have begun implementing Smart City strategies but there is still a large gap between awareness and implementation,” said Luis Ortega, Managing Director for MEASA (Middle East, Africa and South Asia) at IFS. “We are seeing a lot of changes being driven from the top down, especially in the UAE where there is an ambitious strategy to be paper-free by 2020.”

Alarmingly, more than a third of companies including those in the Middle East (34 percent) feel either slightly or totally unprepared to deal with digital transformation due to talent deficiency. When asked to name the areas that will experience the greatest deficit in talented staff, 40 percent cited “business intelligence” and 39 percent “cyber security”. Other areas of concern are “AI and robotics” (30 percent), “big data/analytics” (24 percent), and “cloud” (21 percent).

In the Middle East, cyber security ranked higher with 44.7 percent followed by business intelligence (31.6 percent), AI and robotics” (23.7 percent), “big data/analytics” (26.3 percent), and “cloud” (23.7 percent).

Antony Bourne added: “Although new technology is key to digital transformation, it is clear that change communications and access to the right talent are principal catalysts to succeed. It is alarming that more than one in three companies are not staffed to manage digital transformation. These organizations need to focus on concrete talent investment plans to make sure that they establish what roles are critical to success in their industries. After that the key is both to find and attract new talent as well as training and re-skilling existing staff.”

“Industrial IoT investments offer excellent ROI which is driving adoption,” stated ARC Advisory Group, VP Enterprise Software, Ralph Rio.  He added “but, talent is a constraint as the IFS survey shows. Hence, IoT users partner with companies like IFS that offer leadership IoT solutions.”

Ortega pointed out «in this region, talent is a particular challenge because of the transient expat population that make up most of the workforce in the GCC, making investment in talent a challenge for a lot of companies in the private sector. The governments in these countries are now tackling this with investment in their own citizens. We work with our customers and local partners to bridge this gap.»

When asked about the digital transformation maturity level of their organizations, meaning actual progress, 31 percent (43 percent in the Middle East) of the respondents consider their business to be in the two highest levels of maturity on a five-graded scale. The aviation industry is the most progressive with 44 percent of respondents considering themselves advanced in their ability to leverage digital transformation. Runner up is the construction and contracting industry, 39 percent of whom identified themselves as mature. At the other end of the spectrum is the oil and gas sector, where only 19 percent of the respondents consider themselves able to benefit from digital transformation.

“The differences in digital maturity levels across industries are notable. The highly competitive nature of the aviation industry, together with its rapid adoption rate of new technologies such as predictive maintenance and 3D printing for spare part manufacturing, are key drivers of its successful digitalization”, Antony Bourne said.

Forty three percent (44.7 percent in Middle East) of respondents identified “internal process efficiency” as the number one driving force behind digital transformation. “Accelerating innovation” (29 percent – 34.2 percent in Middle East) and “growth opportunity in new markets” (28 percent – 34.2 percent in Middle East) were recognized as the second and third most significant drivers.

Despite the practical and technical complexities of digital transformation, the number one barrier to change is on the human side: “aversion to change” (42 percent). The second and third largest barriers are the more concrete “security threats/concerns” (39 percent) and “absence of the right organizational and governance model” (38 percent). In the Middle East, “security threats/concerns” (39.5 percent) topped the list followed by “aversion to change” (36.8 percent) and “legislation and compliance” (36.8 percent).

When asked what technologies will be the most disruptive, Big Data tops the list with a score of 7.2 out of 10. Second is Automation (7.0) and third is IoT (6.6). In the Middle East, the technologies that ranked in the top three were Big Data (100 percent scoring this 7 and above), Automaton (68 percent giving it a score of 7 and above) and IoT with 57.9 percent.

Although Big Data is ranked the highest overall, there is a significant minority who feel that automation will have the most dramatic impact. Over 40 percent rated the level of disruption by Automation as 8 or more out of 10, while only 32 percent gave such high ratings to Big Data. In the Middle East, Virtual Reality (55.2 percent) and Robotics (55.3 percent) scored 7 and above.

In the construction, aviation and manufacturing industries 48 percent, 48 percent and 50 percent respectively consider the automation disruption score 8/10, which makes it the highest rated technology for those industries. — SG