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Business leaders in Middle East urged to leverage the potential of fourth industrial revolution

(Image credit: Cisco)

Digital transformation and innovation are at the centre of business leaders’ and governments’ agenda in the Middle East today but they have been urged to leverage the potential of the fourth industrial revolution (4IR) to have a positive impact on GDP, innovation and the future of jobs.

According to findings from a new report from Economist Corporate Network (ECN), The Economist Intelligence Unit’s (EIU) advisory service for organisational leaders, and commissioned by Cisco, 78% of business leaders said that among all the macroeconomic and geopolitical factors affecting the Middle East today, digital transformation presents the greatest opportunity.

The first industrial revolution used water and steam in the late 18th century to mechanise production while the second industrial revolution used electric energy in the late 19th century to drive mass production and the third industrial revolution used electronics and information technology in late 20th century to automate production.

The fourth industrial revolution is powered by the cloud, social media, mobile computing, the internet of things (IoT) and artificial intelligence (AI), along with increased computing power and data.

Shukri Eid, Managing Director for Gulf region at Cisco, said that the Fourth Industrial Revolution presents a huge opportunity for organisations across the region, to utilise smart technologies, transforming their operations and creating new value.

For the Middle East to truly benefit from 4IR, he said: “Government and business decision-makers need to understand the impact that digital transformation will have on society as a whole.”

(Image credit: Cisco)

Startups lead digital transformation

The report highlighted that digital transformation may be a key driver for economic growth but startups are leading this growth as they are producing more disruptive technologies.

For countries to enjoy maximum growth, the report said that startups will need to be empowered and established enterprises will need to act more like startups or acquire startups to accelerate and innovate.

 The report suggests that organisations should adopt a more innovative stance, including becoming more agile and experimenting with technology to gain the most from 4IR rather than putting too much stake in large-scale technology-driven projects.

“While achieving this change to internal processes and mindset is one of the biggest challenges of digital transformation, changing culture will create more value than a narrow focus on one technology initiative.

“For regions like the Middle East, that are still catching up to technology leaders, organisations should also count incremental improvements as innovations, and look to digital transformation to create innovative products and services that can be delivered to neighbouring markets,” the report said.

Vijay Jaswal, Chief Technology Officer at Software AG for the Middle East and Turkey, said that digital transformation has to flow in every part of the organisation and should be naturally pushed by the CEO, CFO and CIO.

In the digital world, it is all about the customer, he said.

“We, as consumers, have all got smartphones and drop pins to get taxis and expect the taxis to come quickly. Whatever service we interact with, it has to be smart, simple, straight forward and fast. So, there is no question about it and organisations have to become digital,” he said.

“Digital is to get the combination of both front- and back-end processes right and fast,” he said.

Talent is the number one challenge

“To start a digital journey, the companies need to look at how much they are already digital. It all depends on where they are. But, regardless of where an organisation is, it is all about planning. We need to look at where the company is now and where it wants to get to and then plan the transformation journey,” Jaswal said.

The ECN report highlights that 4IR may create an increase in jobs, introduce more interesting and creative jobs, and may eliminate the need for humans to carry out some repetitive or risky jobs but retraining and reskilling of workforces are required to address the opportunities.

“Talent is the number one challenge in digital transformations, globally and locally. Culture is an essential factor in attracting, developing and retaining digital talent," Abdulkader Lamaa, Associate Partner at McKinsey & Company, said.

The Gulf has a digital skills gap in experienced software engineers, customer-experience designers, digital marketers, and data scientists. The limited number of individuals with these skills is looking to be part of a culture that many Gulf companies can’t yet offer.

“In the region, digital talent usually comes from global hubs with fierce competition. Many companies can attract experienced digital practitioners through ambitious missions, great lifestyle and tax-free compensation. However, retaining the talent continues to be a challenge without a conducive culture and operating model within the organisations,” Lamaa said.

However, he said the region has a very promising talent potential that is not realized and bridging this critical gap will require a joint effort among commercial enterprises, government and NGOs.

Large enterprises have a great opportunity to match “imported” experts with high potential youth to build sustainable local expertise, he said, adding that failing to do this systematically would undermine the digital transformation efforts across the region.

 “For the long-term, to safeguard its competitiveness, the Middle East needs to develop and cultivate homegrown digital talent as opposed to continuing to import experts. This means, shifting from digital talent importer to talent builder - and that requires endorsing a cultural shift and stamina.

“We have great talent potential, but we don’t have enough development arms in the region to help the talent grow their expertise. Companies need to embark on a digital reinvention journey to support the wider development of digital talent by designing their talent accelerator programmes. Collaborations between global and highly-motivated local talent can help build the next generation of well apprenticed, local, digital professionals,” he added.

The report said that 47% of the respondents cited high capital cost of new technology as being among the main impediment to adoption of advanced technology while data protection and cybersecurity concerns listed as an issue for 35% of respondents and shortage of in-house skills to implement and run advanced technology were a concern for 34% of respondents.