The GCC digital transformation story: What is next?Publish Date: October 11, 2019
GCC countries, or Gulf Cooperation Council countries, are now entering a new era of digital transformation, evolving inside-out due to increasing consumer-driven push, and the adoption of digital tools that are enabling enterprises to meet those consumer demands.
Moreover, with the median age in GCC countries being only 27, young consumers bring to the table a more integrated approach towards adoption and the use of technology. After all, almost 82% of GCC’s population owns smartphones. Given that the consumers are ready for advances in all aspects of technology – from deep learning, robotics to bioengineering and advanced analytics, the GCC region has the potential to lead the charge in digital transformation (DX) models that the world can learn from.
That said, as business organizations in the Middle East continue to tailor their consumer value proposition to their target segments. Optimization of technologies will become increasingly important to create useful case studies (in digitization and analytics) that will transform the future.
Hurdles along the way for GCC when implementing DX
Business decision-makers in the gulf are now feeling the urgency to act quickly and move their organizations to the next level before their competition achieves the edge in the market, and more importantly, to be relevant for years to come sustainably. This means GCC companies have to go beyond testing the waters and move aggressively towards scaling their transformation programs.
Regardless of where a company today stands in its transformation journey, GCC businesses have to plan their end goal where analytics informs and drives their decisions in everything they do. Agile operations and the culture of failing fast is increasingly becoming the norm in even large organizations, and a mature technology stack is crucial for businesses to meet their outcomes efficiently. Of course, it is quite understandable that businesses are reluctant to hit the ‘launch’ button immediately on digital transformations because these efforts are relatively new to the region, need significant capital expenses, and lead to different ways of working in the organization. Resultantly their spends are also cautiously little. For example, leading financial services, companies spend only more than 4% of their revenues on digital transformations. There are three significant risks (as per Mckinsey) GCC enterprises should consider:
- Standing still is a bigger risk
DX efforts often take at typically five years to implement, and a breakeven point can be a few years further. As industries try, fail, and succeed with new digital tools, their stance needs to be bold, directly focused on the outcome and predictive analytics capabilities to build confidence in their digital spends. A superior, sustainable, and scalable long-term digital strategy requires organizational shifts – such as imbibing an innovative risk-taking culture, an agile mindset, and a high-quality focus on grooming the talent. Doing nothing exacerbates the progress of human awareness and comfort with digital tools when the world around you is quickly adopting these powerful tools in their own lives in some way or the other (e.g., AI personal assistants in the form of Alexa, Siri or Cortana).
- Resistance to new tools is inevitable
Large companies are not typically accustomed to taking risks due to traditional mindsets. Not because there is resistance in the thoughts of decision leaders, but due to the lack of an organized change management (OCM) model within the organization. On the other hand, if the digital infrastructure becomes limited due to its legacy technology, it will inevitably end up limiting the growth of the business itself.
If a digital business or lab is founded within the structure of a legacy business, it inevitably inherits traditional ways of working and thinking that will limit its growth. To overcome and avoid resistance to disruption, a digital unit with a dedicated set of processes, people, and capabilities must be established so that the business can collectively minimize inefficiencies within the organization with the educated use of digital tools.
- Cultivating the right ecosystem
Given the talent gap in the GCC, businesses must partner with experienced vendors specializing in designing tailored IT capabilities for their organization. One of the biggest reasons DX initiatives fail is that executives lack adequate incentives to realize real changes. Leaders must have skin in the game if they require the rest to follow suit. There must be key performance indicators tied to empirical business outcomes, and that should motivate digital ways of working and improving on existing processes. Once digital initiatives are up and running, these KPIs with service partners can be evaluated to assess, infer, or design business decisions and new revenue streams.
The biggest and most decisive factors of digital success are in how people decide to use the digital tools and technology available at their disposal. We can see a very positive outlook of the future from the Gulf companies, whose CEOs, boards, and top stakeholders are genuinely committed to transforming themselves and unafraid to reinvent themselves with the capabilities necessary – to power and fuel economic prosperity.
 Demographics in the Middle East
 Mckinsey 2019
Managing Director @YASH Technologies