Competitive Governments - Global Competitiveness Forum Riyadh

Competitive
Governments
Information &
Communication
Technology (ICT) sector
in Saudi Arabia
Information and Communication Technology (ICT) sector in Saudi Arabia
Global context on the ICT Sector
ICT has had a significant impact in our daily lives over the last 20 years, and its transformation of our lives
will only accelerate in the near future. Following this trend, IT spending is expected to increase to US$ 3.9
trillion in 2015, representing a %3.7 increase in spend levels over 2014, according to Gartner.
The big data revolution, fueled by an astronomical growth in the creation and consumption of data, is
impacting key economic sectors, including key Saudi sectors such as Oil & Gas (through digital exploration),
Telecommunications (through global personal location data), and Manufacturing (through reductions in
working capital requirements and product development costs).
Cognitive applications or automation of knowledge work will soon perform an array of complex tasks
(e.g., complicated medical diagnostics), leaving humans to do value-added tasks rather than automated
tasks. Online platforms, on the other hand, are tapping into user-generated data and enabling e-business
models, which are no longer optional but a necessity for business survival.
Online ads make up %20 of global ad spend with growth rate of about %30 annually, and will soon overtake
TV and newspaper media. Online review forums with millions of customer reviews of retailers (e.g., hotels,
restaurants, etc.) and real time price-comparison sites are playing an even greater role in shaping consumers’
purchasing decisions.
Applications running on mobile operating systems have rapidly evolved into complex interrelated ecosystems with estimated +200 million mobile app users growing at %+40 annually. Currently there are three
quarters of a billion active iOS and Android smart devices across all countries in the world.
Opportunities in the Saudi ICT sector
Information and Communication Technology represents a historic opportunity for developed and developing countries. Opportunities and impact potential can be realized across the financial, social, and labor
market arenas.
• Financial impact, e.g., Bringing mobile broadband level in emerging markets to the same level seen in
mature markets adds, on average, ~350 Bn USD to the world’s GDP and creates 10 to 14 million new jobs.
• Social impact, e.g., Applications of digital technologies in education and healthcare, where the Middle
East and the Kingdom of Saudi Arabia are already achieving significant momentum. For example, Junnah a
Saudi-based Arabic online health platform, was launched in 2014, and, Xschool, a Saudi-based series of
science-related YouTube videos, was launched in 2012.
• Labor market impact, e.g., Digital marketing, social media presence, and customer relationship management moving online enables governments and businesses to increase rural and female employment as
well as consolidate services.
The ICT sector in Saudi Arabia, the largest in the Middle East, will continue to grow at a strong pace in the
next years across Mobile, Broadband, and Internet Services.
Mobile telecommunication market
Total number of mobile subscriptions reached 51 million by Q2014 2 and mobile penetration in Saudi Arabia
is %169.3 which is the second highest in the region and fifth globally. Smartphone penetration stands at
%73, ranking Saudi Arabia third globally (See Exhibit 1)
Exhibit 1
Broadband market
Demand for broadband has increased significantly compared to previous years, partially due to strong
government support for high tech projects and e-government services. However, most internet usage in
Saudi Arabia is targeted to social networking, business and enterprise applications, instant and social
messaging, and service providers offer tailored broadband packages targeting different consumer and
business segments
The simultaneous launch of Long Term Evolution (LTE) network by all three mobile operators in 2011 made
Saudi Arabia the first country in the region to offer widespread LTE services. Additionally, an increase of %28
of LTE shipments is expected in KSA by the end of 2015.
Mobile broadband subscribers increased to 20.7 million, and demand continues to increase given the
increased penetration of smart phones, and increased offerings of broadband packages by mobile operators
for different user segments.
Internet service market
Internet users in the Kingdom increased to 18.3 million by Q2014 2 and customers are seeking higher internet speeds and larger data-sized packages resulting in heavy data traffic on both mobile and fixed network.
This is caused by the increased usage of social networking application, video streaming, and gaming. Saudi
population shows high digital propensity. For instance, Saudi has the highest Twitter penetration (see
Exhibit 2) and the largest YouTube views per day with 90 million views daily
Exhibit 2
Public and private sector initiatives in ICT
The Saudi Government recognizes the importance of ICT development and has recently indicated unprecedented commitments on initiatives that will achieve leadership in ICT regionally if not internationally. These
investments are paying off, with KSA ranked 6th in government ICT usage according to the World Economic
Forum’s Network Readiness Index 2014
The Government of Saudi Arabia is focusing its ICT efforts to implement and launch the second phase of the
e-government initiative. Government entities are planning to integrate their portfolio of e-government
services with Yesser, the national e-government authority. Yesser includes more than 875 e-services offered
by 100 public sector agencies. Examples of public services agencies that are delivering full transactional
e-services include Abshir from Ministry of Interior (MOI), and Baladi from Ministry of Municipal and Rural
Affairs (MOMRA). Three major projects will be launched as part of the Yesser effort: Government Service Bus
(GSB), Government Security Network (GSN), and the Saudi Government Portal.
In support of Communication and Information Technology Commission (CITC)’s goal to improve the quality
and penetration of ICT services, encourage lower costs, improve customer care and increase job opportunities for citizens, CITC recently announced the licensing of MVNOs (Mobile Virtual Network Operators) to
be hosted on all mobile cellular networks in the Kingdom of Saudi Arabia. Two new MVNOs (Jawraa Lebara
,Virgin Mobile) entered the market during 2014.
In Education, the Saudi Government has allocated 56 Bn USD to be partially spent on technology focus
areas. All 25 public universities in the Kingdom have deployed student information systems and most have
deployed learning management systems. Additionally, the Ministry of Higher Education (MOHE) has invested in Safeer, a cloud-based system built to enhance the educational and administrative processes for Saudis
studying abroad.
In Healthcare, the Saudi Government has allocated ~29 Bn USD to be partially spent on the development
and execution of the KSA eHealth strategy including the digitalization of the healthcare management
systems, clinical automation, Electronic Health Records and in other areas (e-services, cloud, mobility, server
and desktop virtualization, picture archiving and communication system, telemedicine, patient monitoring
systems).
IT spending in the banking, financial services and insurance (BFSI) sector crossed 1 Bn USD in 2014. The
BFSI sector spending almost represents %10 of overall IT spending. Use of online and mobile banking services in the Kingdom is expected to surge as customers gain greater confidence with their usage. Growing
regulatory demands from authorities such as SAMA and CMA (e.g., for BASEL III) are driving Saudi banks to
adopt international best practices by improving processes, control and traceability capabilities. Compliance
requires deployment of more sophisticated ICT solutions including strengthening of existing banking
systems, security and risk management systems.
In the labor sector, the Saudi Human Resources Development Fund (HRDF) has recently invested heavily in
national electronic and internet-based initiative specifically targeting both job seekers and employers. For
instance, Doroob, an initiative launched this year, leverages the power of Blended learning technology in the
context of Technical and Vocational Education and Training (TVET) education and more broadly offers
e-learning and on the job training (OJT) to employers and job seekers alike. HRDF recently identified ICT
sector as high priority given high potential for Saudi employment.
In the oil and gas sector, a recent security breach was perceived as a big shock to the sector and as a result
IT security investments have picked up significantly in this industry.
Call to action
The digital economy in Saudi Arabia holds great promise, but requires careful planning and enhancement
at the national and industry levels. The Kingdom possesses the right set of ingredients to harvest to its
potential, but needs to create and maintain a clear vision, strategy and policy, to ensure productive investments are pursued with energy and momentum, in a way that builds and maintains trust between the
citizens, businesses and government.
The public and private sectors need to go hand in hand to further foster growth and innovation in ICT. In the
private sector, Saudi companies need to invest more heavily in their human capital, build a vibrant ecosystem through healthy partnerships with established global partners, rethink their business models to adapt
to the growing online trends, and engage in trust-based partnerships with the KSA Government
In parallel, the Saudi Government will constantly refresh its ICT strategy based on evolving trends, and with
set measurable goals to evaluate progress. It has a crucial role to subsidize and incentivize ICT-related
initiatives of all sizes, scale up the implementation of targeted public programs to foster world-class education and research, and to stimulate innovation growth. It can achieve these aspirations through public-private partnerships, and through effective public policies to protect privacy, consumer rights, data security,
and foster entrepreneurship in this critical sector.