Technology Growth

Text size +-
The growth of IT and particularly enterprise application software (EAS) is continuing apace in the Middle East and North Africa (MENA) region with the UAE positioning itself as a key regional market. Abu Dhabi, in particular, as the seat of the federal government and the centre for the country's oil and gas industry, is witnessing impressive IT growth.

According to a recent report by the market research firm IDC, spending on EAS in the region grew by 16% in 2005 totalling more than $187m. The two main drivers for this growth were Saudi Arabia and the UAE, with the Gulf Cooperation Council (GCC) countries as a whole accounting for 83% of the total spending.

This impressive growth is set to continue in 2006, albeit at a slightly more modest rate. IDC predicts that spending will increase by 12% this year fuelled by high oil prices and diversification programmes that require advanced IT.

However, this rather perversely seems to be favouring the buyer. As Vinjay Nair, senior analyst, Software, IDC Middle East and Africa says, "Although small and medium-sized organisations are now implementing EAS solutions and generating new demand, leading vendors are in a heated battle for clients. The primary arena has been the large enterprise segment and the replacement market, but the price slashing and aggressive sales approach have spilled into the SME segment, creating a buyer's market despite the high demand."

It is clear that there are still healthy profits to be made, however, with several leading Abu Dhabi-based suppliers and systems integrators telling OBG that they have recorded impressive profits in 2006 so far. It is also clear that Abu Dhabi is witnessing growth across all sectors from large-scale enterprises, to SMEs, to the consumer segment.

The CEO of one leading Abu Dhabi-based IT solutions provider told OBG that the Abu Dhabi market is outstripping that of Dubai. The size of the IT market in the UAE is $1.5-1.6 billion which can be broken down into its component parts with Software accounting for $260m, IT services for $540m, Computer hardware for $478m, and Data Communications for $320m. Abu Dhabi alone takes 47% of the software market, 42% of the hardware market, 48% of the IT services market and 45% of the Data Communication market.

Abu Dhabi is generating IT spending from its traditional areas of strength such as government services and the hydrocarbons sector. The local Systems Integrator Itqan has recently won awards for implementing solutions for Abu Dhabi government bodies transforming them from paper dependent entities to paperless operations with a strong electronic document management system. The e-contract was originally awarded in 2004 with the brief of improving working practices and speeding up business processes at different government departments. As part of this process, Itqan implemented eDiwan, the integrated framework for e-governments, and eKawader the localised version of the human resources and payroll modules in Microsoft's Great Plains enterprise resource planning suite.

The federal government has also been using developed IT solutions to consolidate data and improve efficiency. A prime example of this is the Emirates Identity card scheme being implemented under the Emirates Identity Authority. The scheme, which is currently being implemented amongst all residents in the UAE, both national and non-national, seeks to replace the labour card and driving licence as well as facilitating different financial transactions related to government services.

According to Mohammed Khalfan bin Kharbash, the minister of state for finance and industry, the project will be seminal in the development of planning and research in the country. He told local reporters, "The Population Register and ID Card Project is one of the most important projects being implemented in the UAE. It will play a major role in developing the government sector as it provides an accurate and unified database of the UAE's population. Obtaining accurate statistics for different sectors such as health, education and population is possible via this project, and this will directly impact services that the government provides."

Government contracts in the IT sector continue to be large-scale lucrative projects. A leading figure from another IT firm in Abu Dhabi told OBG that approximately 75% of their enterprise business was still with the public sector illustrating the broader trend across the IT sector. However, many of these projects involve public private partnerships and the growth of the private sector as an IT market is not insignificant.

Many leading analysts point to real estate, construction, healthcare and education as emerging areas in Abu Dhabi, where sophisticated IT solutions will be needed. For example, there is growing competition in the real estate sector to develop 'smart homes' and 'smart buildings'. Etisalat and South Korea's Samsung recently announced their partnership to develop 'smart homes' in Abu Dhabi featuring a range of devices and appliances linked by Samsung's HomeVita solution and Etisalat's voice and data network. The first homes are expected to be unveiled in the residential developments on Reem Island.

Integrated technology systems are also becoming increasingly important in less glamorous settings with heavy industry and manufacturing companies requiring more sophisticated technology systems. For example, the new industrial zones of Abu Dhabi both at the Khalifa Port and Industrial Zone at Taweelah and the Industrial Cities of Abu Dhabi will require integrated technology solutions.

As the economy of the emirate continues to expand and diversify, the requirements for technology systems for the whole trading environment will continue to rise. As some analysts point out, Abu Dhabi is well placed to take advantage of this, as it providing an environment conducive to innovation and technology penetration both at the enterprise and consumer level.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In UAE: Abu Dhabi

The Gulf looks to carbon capture and hydrogen to drive the energy...

As hydrocarbons producers reap sustained revenue from high global prices, national oil companies (NOCs) in the Gulf are accelerating investment in carbon capture, utilisation and storage (CCUS);...


Emerging markets lead uptake of cryptocurrency despite bear market

Despite global financial headwinds and significant declines in the value of cryptocurrencies this year, emerging markets are adopting the technology at a rapid pace.