IT service sales are poised to undergo significant growth, driven in part by rapid uptake of cloud computing technology. As companies look to modernise and cut costs by consolidating and streamlining IT operations, cloud computing has become one of the largest demand drivers in the IT services segment. Cloud computing in Kuwait has grown in recent years, with large systems implemented in the telecoms and aviation sectors, indicating cloud service providers are well positioned to capitalise on investments in IT infrastructure.
Path To Growth
In 2013 IT service sales grew by 4.3% to reach KD88m ($309.42m), according to market researcher Business Monitor International. Cloud computing, e-government and machine-to-machine services are expected to be key growth areas for the sector through 2017, with new infrastructure investments creating a wide variety of opportunities for cloud service providers. Indeed, cloud computing has taken off across the region, with tech research and advisory firm Gartner forecasting that the cloud services industry in MENA will grow by 105% to reach $1.1bn in annual spending by 2017, from $534m in 2013.
Cloud computing works by making software, operating systems and IT information available on a cloud platform, so-named because its one large “cloud” comprises many individual computers, negating the need for multiple software licences and individual programme installations. In a cloud system, local computers do not do any heavy lifting in running software; instead they run the cloud’s interface software, which can be as simple as opening a web browser.
As an emerging IT delivery model, cloud computing can significantly reduce IT costs and complexities, while improving service delivery and workload optimisation. Cloud computing also has the advantage of being highly scalable, and is characterised by internet-driven economics. In electricity-starved Kuwait, it also represents a chance to expand IT infrastructure at a lower cost.
One of the earliest success stories in Kuwait’s cloud computing is the National Bank of Kuwait (NBK), which introduced a cloud in 2009. This system allowed NBK to virtualise 30 physical hosts on 125 virtual machines, about 75% of its infrastructure, onto a private cloud system, reducing these infrastructure costs by 40%, with licensing costs dropping by 20% at the same time.
Since then, clouds have been emerging in other sectors. Telecoms operator Zajil Telecom introduced an agreement to share cloud-based product offerings with its partners in 2011, while researchers from the University of Kuwait recommended the Ministry of Education introduce cloud-based e-learning in the same year. However, one potential drag on cloud computing growth is the risks arising from cyber security, with critical infrastructure representing attractive targets for hackers. In a 2013 survey conducted by Gulf Business Machines, only 24.6% of Gulf IT professionals reported plans to outsource business applications in 2013 and 2014, owing to security concerns.
In light of such worries, private cloud systems have become an increasingly attractive option, with companies requiring less cyber security expenditure for internal cloud operations. In 2012 Kuwait Telecommunications Company (VIVA), the country’s third-largest telecoms operator, announced it was implementing the CloudSystem Matrix private cloud solution from HP under a three-year contract.
Private clouds are typically internally operated, and they offer businesses the opportunity to optimise costs on IT infrastructure, while also helping to ensure that asset lives are longer. Switching to a cloud system also positively affects power and space usage. Sharing processing power means that fewer servers are needed, which not only helps to lower costs, but also reduces emissions and power usage.
More recently, Kuwait Airways and Microsoft signed a three-year deal for cloud computing services in June 2013. Under the terms of the agreement, Microsoft is contracted to provide support and training services as it rolls out a cloud system including Lync, SharePoint, Exchange, Lync Plus and Office 365 for the airline.
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