Economic transformation has become a common theme for economies and enterprises around the world. Digital transformation is a manifestation of that, set in the context of a modern high-tech society. However, many entities – from national governments to the smallest business entrepreneurs – are struggling to formulate clear strategies for enabling such transformation to take place.
Saudi Arabia’s leadership has taken the unique step of articulating a clear vision for the country by drafting a comprehensive strategic plan to achieve those goals. The National Transformation Program is the Kingdom’s commitment to driving change, and has the potential to cement Saudi Arabia’s leading position long into the future, even as global markets continue to experience uncertainty.
A new 80-page report from International Data Corporation (IDC) provides an in-depth analysis of the program and its anticipated impact on the kingdom’s economy and broader society. Titled ‘Envisioning an ICT-Led Approach to the National Transformation Program for the Kingdom of Saudi Arabia’, the report also examines the global trends that are driving the goals of both the NTP and the kingdom’s overarching Vision 2030 initiative.
Saudi Arabia’s Vision 2030 initiative is a long-term economic blueprint designed to curtail the country’s dependence on oil. The initiative outlines the regulatory, budgetary, and policy changes that will have an impact on all major aspects of the Saudi economy.
The Vision 2030 initiative sets out plans for developing “a vibrant society, a thriving economy, and an ambitious nation”. At a macroeconomic level, Saudi Arabia aims to increase non-oil government revenues from SAR 163 billion ($43.5 billion) to SAR 1 trillion ($267 billion) by 2030, and to raise the share of non-oil exports in non-oil gross domestic product (GDP) from 16% to 50% over the same period.
Other key goals span economic acceleration and social development:
- Increase foreign direct investment from 3.8% to 5.7% of GDP in line with more developed economies.
- Increase the private sector’s GDP contribution from the current 40% to 65%.
- Increase small and medium-sized enterprise (SME) GDP contribution from 20% at present to 35%.
- Lower unemployment from 11.6% to 7%.
- Improve the participation of women in the workforce from 22% to 30%.
- Raise government effectiveness and efficiency and improve Saudi Arabia’s position in the Government Effectiveness Index published by the World Bank, from 80th place in 2015 to at least 20th by 2030.
- Improve Saudi Arabia’s position on the annual Global Competitive Index published by the World Economic Forum. The government aims to be listed as one of the top 10 countries by 2030, from its current ranking of 25th.
Where Vision 2030 describes the ambitious economic and societal goals for Saudi Arabia, the National Transformation Program (NTP) provides detailed roadmaps – based on milestones and targets – to get there. The NTP is one of several executive programs supporting Vision 2030; others include the Saudi Aramco Strategic Transformation Program, the Public Investment Fund Restructuring Program, the Human Capital Program, the Strategic Partnerships Program, the Privatization Program, and the Program for Strengthening Public Sector Governance.
Technology will be a key enabler and driver of the numerous changes envisaged by Vision 2030, with the goal of developing the nation’s digital infrastructure and stimulating the related economic sectors, industries, and private sector entities.
Digitization will also play a central role in achieving the milestones of the NTP. The program identifies a number of digital transformation areas to support the NTP’s initiatives, including five common digital platforms, 29 essential digital initiatives for key sectors, and a number of national digital assets that may be developed to support government digital transformation.
Countries around the world view digitization as an opportunity to enhance the lives of citizens and drive economic and social progress. Similarly, Saudi Arabia expects ICT usage and digitization to accelerate the execution of the programs and plans envisaged in the Vision 2030 blueprint and the NTP, and help drive economic and social development, promote good governance, and enhance national security.
To achieve these outcomes, telecommunications providers will need to provide a highly developed and resilient communications infrastructure, SMEs will need to rapidly embrace ICT solutions and services, and the local IT industry will need to innovate and develop more valuable products and services. The education system will also need to refocus its efforts on nurturing the existing ICT skills base.
The digitization of industries will ultimately lead to improved competitiveness, with ICT proving invaluable in automating end-to-end business processes across the entire value chain.
Manufacturing is one obvious beneficiary, where the Internet of things (IoT) will enable manufacturers to leverage a combination of software, sensors, and IP-enabled connectivity to drive innovation around their products and processes. ICT is vital in automating end-to-end business processes across the entire supply chain. Since a tremendous amount of data is created and captured by procurement, sales, shipping, and customs and regulations processes, ICT is key to improving supply chain performance. Government systems (e.g., customs and payment systems) can provide an open interface that facilitates integration with all private sector players in the supply chain ecosystem.
Saudi Arabia’s healthcare and tourism industries are also poised to embrace emerging technologies in order to enhance the services they offer. Integrating healthcare service delivery by enhancing collaboration across the ecosystem of formal and informal caregivers will deliver considerable benefits while reducing costs, particularly in long-term care. IoT could be a key driver in the development of remote health monitoring and personal wellness services, and it will improve access to healthcare. Such services and improvements will help the Saudi government to increase average life expectancy from 74 to 80 years of age, as outlined in Vision 2030.
Today, tourism authorities worldwide are embracing digital initiatives. Through location-based services, and with augmented reality on the horizon, the smartphone has become an indispensable tool that incentivizes tourists to spend more money during their stay and offers a wide range of entertainment irrespective of location, thereby creating opportunities to maximize tourist activity and revenue. An omnichannel tourism strategy that involves every major player in the ecosystem will encompass social networks as well as mobile technologies.
At present, SME contribution in Saudi Arabia lags behind comparative global markets, contributing only 20% of the GDP. Vision 2030 calls for this figure to increase to 35%, with the associated growth of business scope, employment, and opportunity. This will also be a major contributor to the goals of reducing Saudi unemployment and increasing women’s participation in the workforce.
Deputy Crown Prince Mohamed bin Salman visited Silicon Valley in 2016, highlighting the role that digital technology, and particularly entrepreneurs and startups, can play in a growing economy. Uber is an example of a modern champion of digital transformation, and is a recipient of funding from Saudi Arabia’s Public Investment Fund.
In summary, ICT can be a key enabler of the national programs outlined in Vision 2030, and described in detail in the NTP. Saudi Arabia is the largest spender on ICT in the Middle East, with spending estimated at $35 billion in 2015 and expected to surpass $39 billion by 2019. The adoption and use of ICT by individuals and enterprises in the public and private sectors has been rising rapidly in recent years.
The IDC report analyzes the progress of digital transformation in the kingdom and assesses the potential impact of technology on the new programs outlined by the NTP. It outlines the ways in which digitalization can enable the goals of the NTP, juxtaposing the current situation with the future possibilities. The report focuses on the visions, initiatives, and programs planned for key areas such as healthcare, tourism, logistics, and the SME segment, serving up a commentary on best practices from around the world and providing invaluable guidance for key stakeholders.
To download the full 80-page report from IDC, click here.
[Image: UAV technology developed at KAUST (King Abdullah University of Science and Technology) used to track and study flood evolution]