The emirate’s IT sector has shown promising growth over the previous decade, bolstered by rising levels of mobile broadband service offerings, smartphone penetration and internet usage. ICT development is a critical priority for the emirate and the UAE, as reflected in both national and emirate-level, long-term economic development strategies, which have significantly expanded e-government offerings and cybersecurity initiatives in recent years. Strong collaboration with industry and academia is pushing Abu Dhabi to the forefront of global cybersecurity innovation, while ICT spending across the UAE is being driven by software services, particularly cloud services. The outlook for the traditional hardware and telecoms markets across the UAE is less positive, according to the Middle East, Africa and Turkey unit of the US-based International Data Corporation (IDC), as an economic slowdown weighs on demand.
Sector Oversight
At the federal level, the ICT sector is overseen by the Telecommunications Regulatory Authority (TRA) and the National Electronic Security Authority (NESA). The TRA is the country’s telecoms regulator and watchdog, and oversees royalty collection and spectrum allocation, approves tariff changes and facilitates ongoing infrastructure-sharing arrangements. It carries out its mandate in line with the UAE Vision 2021 long-term economic development plan, which was developed by over 300 officials from 90 federal and local entities.
This comprehensive document aims, in broad terms, to move the UAE’s economy from its government-led, oil-dependent beginnings to one that is more knowledge-based and driven by an entrepreneurial culture and private sector capital. The TRA also supports IT development through its ICT Fund, which was launched in 2008 by the authority to boost the UAE’s digital transformation.
Ict Fund
The ICT Fund has invested in major IT projects, including: the UAE Advanced Network for Research and Education, offering connectivity between academic institutions and education networks in the UAE and globally; Dubai’s Mobile Government initiative, which was launched in 2013; and EBTIC, a research and innovation centre established under a joint partnership between British Telecom, local telecoms operator Etisalat and Khalifa University.
Meanwhile, NESA, established by the government under Federal Law No. 3 of 2012, is tasked with securing the country’s critical information infrastructure through the development and monitoring of technical and regulatory capabilities in the cybersecurity arena.
At the emirate level, Abu Dhabi Economic Vision 2030 targets further adoption of and investment in ICT infrastructure. Under the strategy, Abu Dhabi hopes to improve internet penetration and boost ICT spending to the same levels as in Singapore and New Zealand. More recently, the new Abu Dhabi Plan, revealed in June 2016, represents a comprehensive update to the Abu Dhabi Policy Agenda 2007-08, which aimed to achieve Abu Dhabi’s vision of “maintaining a safe and secure society, and building a sustainable, diversified and globally open economy”. The Abu Dhabi Plan lays out 25 objectives and 83 programmes, many of which will require advances in ICT infrastructure. In fact, developing and optimising ICT enablers is a key objective.
Adsic
The Abu Dhabi Systems and Information Centre (ADSIC) was established in 2005 to develop the Abu Dhabi government’s e-transformation strategy, with the objective of implementing a modern, user-centric e-government platform. ADSIC runs the e-Government Gateway, abudhabi.ae, which was launched in February 2007 and offers government services online. The platform was relaunched in September 2008 as a transactional portal, with the support of multiple government-related entities, and today offers a centralised electronic gateway and communication link between the emirate’s government and its residents, connecting users to more than 1000 services, of which many are available online, as well as a total of 260 general information pages and 98 department pages. Users are also able to register personal accounts on the My Abu Dhabi platform, which facilitates access to secure e-services. In the latter stages of 2015 ADSIC and Dubai-based telecoms operator du signed a memorandum of understanding for smart city and smart app development, as well as the deployment of the planned Wi-Fi UAE network, which will enable universal internet access across the country via any Wi-Fi-enabled device and a UAE mobile number.
E-Government Expansion
The federal government has been actively expanding its e-services over 2016 and early 2017. In October 2016, for example, the TRA launched the first phase of its SmartPass service, a single sign-on (SSO) initiative that will use unified data for online government transactions under a single access point. The SSO initiative is one of 22 under the current smart government development agenda, with its next phase expected to connect smart services at both the local and federal level, offering a unified portal for customers across the UAE. The service will initially enable access to transactions with four federal government departments: the Ministry of Human Resources and Emiratisation, the TRA, the Sheikh Zayed Housing Programme and the national postal service, Emirates Post Group.
The TRA also reported in October 2016 that the UAE’s remaining 42 federal entities planned to be connected within one year of the platform’s launch, starting with the UAE Ministry of Climate Change and Environment, the Emirates Identity Authority, the Federal Electricity & Water Authority, the Ministry of Culture and Knowledge Development, and the Ministry of Infrastructure Development in the UAE. In the same month the federal Ministry of Finance moved to expand its portfolio of online service offerings, announcing it had partnered with National Bank of Abu Dhabi (NBAD) to launch its eDebit and eDirect services. The eDebit option is a first for the UAE and allows users to pay service fees and make purchases through direct debit from their bank accounts, while eDirect enables customers to top-up the balance via the eD-Wallet app directly from their bank accounts.
Recent Growth
Internet usage in the UAE has spiked over the past decade, with the World Bank reporting internet usage as a percentage of the population rose from 52% in 2006 to 63% in 2008, 68% in 2010, 85% in 2012 and 90.4% in 2014, before rising further to reach 91.2% by the end of 2015. Smart-phone and mobile broadband adoption have been the primary growth driver (see Telecoms overview), although broadband subscriptions have also been on the rise in recent years.
According to TRA statistics, over the course of 2016 the total number of internet subscriptions in the UAE rose from 1.24m in January to 1.26m in June and 1.3m in December. Dial-up subscriptions contracted in the same year, falling from 1370 in January to 473 in June and 313 in December 2016. Broadband subscriptions rose from approximately 1.24m in January 2016 to some 1.3m in December 2016, with the broadband subscription penetration rate rising from 14.5% to nearly 15% over the year.
According to IDC data, telecoms services, which includes fixed and mobile telecoms, were the largest category of ICT spending in the UAE in 2016, accounting for 51% of the total, followed by hardware at 27%, IT services with 15% and packaged software at 7%. However, the UAE’s rankings dropped three places to 38th on the International Telecommunication Union’s 2016 ICT Development Index.
Software Shift
In October 2016 IDC reported that ICT spending was expected be flat in the UAE in 2016, reaching $16bn from $15.9bn in 2015, although the research company did project the country’s IT market would expand by 5% annually between 2016 and 2021. IDC also reported that government spending on ICT had been affected by lower global oil prices, with some organisations and ministries rationalising projects and expenditure on items that are considered most critical. Weaker consumer confidence is also affecting retail and device sales, further dampening the market outlook in the near term.
Software and services are forecast to outperform primary IT markets, as organisations move to boost efficiency through process optimisation and automation, with rising outsourcing demand supporting growth in managed services. Digital transformation offers significant financial rewards for companies undertaking the process, and an October 2016 report jointly conducted by the Global Manufacturing and Industrialisation Summit and PwC stated that the digital transformation industry could generate $16.9bn in additional revenue for firms in the Middle East between 2017 and 2021, as well as a further $17.3bn in annual cost savings due to improved efficiency. IDC estimates that spending on IT services will grow by 8.9% in the UAE in 2016, followed by software at 5.6% and telecoms services at 1.5%. Hardware spending, however, is forecast to contract by 6.7%. In February 2017 IDC reported that in 2014 total ICT spending was forecast at $15bn, up 5% from $14.3bn in 2013.
Cloud Solutions
In October 2016 IDC told local media that organisations are increasingly looking for applications that can streamline processes, such as software-defined solutions for infrastructure needs and cloud services for all non-core applications. IDC reported that these solutions are expected to be adopted for transformation projects within the banking, financial services, insurance, retail, health care and transport sectors, driving future uptake of cloud, big data and cognitive systems. Additional offerings will target optimising existing service delivery, as well as customer service platforms, with cost reduction standing as one of the most important drivers, and cloud services forecast to support growth in big data, the internet of things and smart cities initiatives.
The cloud segment has already attracted significant global players, including US-based, e-commerce giant Amazon Web Services. In December 2016 the company announced plans to open an office in Dubai in 2017, with the goal of accelerating adoption of cloud services in the UAE and across the wider GCC.
Cloud Growth
In Abu Dhabi Etisalat announced in July 2016 that it had activated its first live network functions virtualisation (NFV) telco cloud in the emirate, as part of its efforts to become a regional and international tech leader (see Telecoms overview). Then, in November 2016 Chinese telecoms manufacturer Huawei announced that it had launched its Cloud Ready Data Centre in partnership with the UAE’s largest offshore oil producer, the Abu Dhabi Marine Operating Company. The centre is expected to help the oil giant address its long-distance communication and data transmission needs, processing high volumes of data during exploration and production. The centre will also serve to enhance the company’s data security mechanisms.
Significantly, in 2016 California-based IT firm Oracle also announced plans to build a cloud data centre in Abu Dhabi, which is expected to be operational in the third quarter of 2017. The centre will employ 250 new staff, tapping rising demand for cloud storage solutions, with hiring to begin immediately from the company’s joint programme with ADSIC that was launched in 2015 to train Emirati nationals in IT.
Injazat Data Systems, which is a subsidiary of Mubadala, is another major player in the growing cloud computing services sector. Founded in 2005, Injazat offers a broad range of IT services ranging from systems integration to comprehensive outsourcing. In 2009 the firm established the region’s Tier IV data centre at Mohammed Bin Zayed City, covering 6660 sq metres. Since 2009, Injazat has provided telco du with managed collocation services. Also in 2009 Injazat and Abu Dhabi Commercial Bank signed a deal under which the former will provide the lender with a secure and reliable environment for its IT infrastructure and systems.
Cybersecurity
Spending on cybersecurity is also forecast to rise significantly, both in the public and private spheres, fuelled by rising incidence of cybercrime in the UAE. Associated costs have been growing, and Norton Middle East told local media in November 2016 that cybercrime had cost the country over Dh5bn ($1.4bn) in the first 11 months of 2016 alone, with Tamim Taufiq, the head of Norton Middle East, adding that the UAE is particularly vulnerable to cyberattacks owing to high levels of smartphone penetration, rapid adoption of new technology and the nation’s high international profile (see analysis). Norton Middle East also reported that over a fifth of residents in the UAE were cybercrime victims in the first 11 months of 2016, with victims losing an average of 31.5 hours per incident and each incident costing the victim Dh2030 ($626) on average. In November 2016 listed software firm Trend Micro reported that the UAE has the highest number of malware detections in the GCC, averaging 91,956 per month, followed by Saudi Arabia (87,876), Qatar (21,293) and Oman (10,173).
Nesa Responsibilities
In a bid to address the rising incidence of cybercrime, in 2012 the UAE government established NESA. The agency is mandated to protect the UAE’s ICT infrastructure and secure its cyberspace through the development of technical and regulatory capabilities. NESA is also responsible for developing and monitoring cybersecurity strategies, policies and standards for all critical information infrastructure in the UAE, and all UAE government bodies and businesses must comply with NESA standards for critical information infrastructure. Irene Corpuz, a local IT expert, told OBG, “We are talking about security infrastructure and critical data. Breaches could cause damage to reputations and severe financial and investment losses. The government has also become increasingly concerned with cyberwar, considering that politically motivated attacks are happening all over the world, and the Middle East is not exempted from these.”
Legal Protection
Article 2(1) of Federal Law No. 5 of 2012, also known as the Cybercrime Law, imposes stiff penalties for online criminals. It provides that any person entering an electronic system without permission, or in excess of authorised limits, will be sentenced to imprisonment and a fine in the range of Dh100,000-300,000 ($27,200-81,700). The penalty is further increased if the person deletes, discloses, damages, changes, copies or publishes any information accessed during the course of the crime, with a minimum imprisonment of six months and fines from Dh150,000-750,000 ($40,800-204,000).
In the case of committing the crime of accessing private personal information, the punishment is elevated to a minimum one-year prison term and fines of Dh250,000-1m ($68,100-272,000). If a non-UAE citizen commits the crime, they are subject to deportation after completing their punishment.
Guidelines
In 2014 NESA created a new range of strategies, policies and standards to align and direct national security efforts. The authority unveiled the first edition of its National Cyber Security Strategy in June 2014, which contains a roadmap for protecting national infrastructure, including a framework outlining entity-, sector- and national-level approaches to information asset protection. Currently, there are 188 information assurance standards in place for all public and private organisations overseeing critical information or data, spanning areas including strategy and planning, information security risk management, awareness and training, human resources security, operations management, communications, access control and third-party security.
Root Certificate Programme
Private firms are set to play an important role in new cybersecurity initiatives. In March 2016, for example, international cybersecurity firm DarkMatter, which is headquartered in Abu Dhabi, announced it would be intensifying its efforts to expand the company’s public key infrastructure (PKI) activities in the area of identity management. This will be done through the deployment of root certification authority services. Root certificates are a kind of digital authentication stamp, telling users whether a website or network has been verified. In terms of PKI, a root certification authority establishes the foundation and basic rules governing certificate issuance, which is used to establish secure connections for the entire infrastructure. The root certificate defines standards for what is permitted in the PKI hierarchy and acts as a digital signature.
The UAE has already put some PKI policies in place, according to DarkMatter, enabling online identity authentication for citizens using their Emirates ID cards. Through its PKI activities, DarkMatter hopes to improve confidentiality and document-signing capabilities not currently being leveraged by the government. The firm aims to expand PKI activities nationwide, a first for any country, which will in turn serve as a key business enabler in the IT sector, propelling the country and the GCC to the forefront of global identity management. On making the announcement of a new appointment to a PKI-specific role in the firm, DarkMatter also reported that it will expand client service offerings in implementation and improvement of their managed PKI projects.
E-Commerce
With cybersecurity ramping up in the public and private spheres, the UAE’s nascent e-commerce sector is poised for growth. “In this region, Arabic-speaking people do not generally like to share their credit card information online, so the online sales phenomenon has not taken off at the same levels of magnitude you would find elsewhere. Over the next five to 10 years, however, people may finally determine that it is safer than they once thought,” David Macadam, CEO and vice-chairman of the Middle East Council of Shopping Centres, told OBG.
The UAE’s e-commerce industry is forecast to reach Dh36.7bn ($10bn) in value by 2018, a more than 200% increase from Dh9.2bn ($2.5bn) in 2014, according to Frost & Sullivan, and e-commerce activities are already on the rise. Developers are moving to invest in online grocery retailing platforms, while larger retailers have started to expand their online presence. Dubai-based Landmark Group, for example, announced in November 2016 plans to retool its online strategy through the launch of dedicated portals for each of its brands (see Retail chapter).
Start-Ups
Fostering commercialisation of digital innovation is another important IT priority for the government of Abu Dhabi, and the emirate has made strides in developing new platforms to support its start-up community, with the entrance of start-up accelerator Flat6Labs to its twofour54 media free zone in 2014. The Middle East’s largest accelerator, Flat6Labs is set for significant near-term growth after IDC announced in October 2016 that it would invest $1m-2m in the company’s Cairo office. The company also has a centre in Jeddah and plans to open new locations in Tunis and Beirut, with each office benefitting from venture capital funding of between $10m and $30m.
A total of 100 start-ups have completed Flat6Labs programmes as of October 2016, benefitting from investments ranging from $70,000-90,000 upon graduation, of which $30,000-50,000 is awarded in cash. Upon opening in Abu Dhabi, the company said it planned to launch more than 80 local companies between 2014 and 2018. Meanwhile, twofour54 created its own start-up scheme in June 2014 that allows small businesses to obtain a media zone licence without renting office space by utilising its business centre facility’s single physical work stations.
Outlook
Although the oil price slump has affected ICT growth, as it has most other sectors, a rising emphasis on cost-cutting and efficiency improvements could actually be a boon to some ICT stakeholders, particularly in the areas of software solutions and automation. While ICT spending at the national level wavered in 2016, Abu Dhabi remains well positioned to benefit from rising interest and investment in cybersecurity, cloud services and start-ups, keeping the sector on a strong growth path in 2017 and ahead.
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