Market for IT services in Saudi Arabia grows 12-13% annually

Interview with Samir M. A. Noman, President of Microsoft

Saudi Arabia has one of Microsoft’s highest growth markets globally and Microsoft Arabia is their fastest growing market in the Middle East. How big is the market for IT services in Saudi Arabia? How fast is it growing?

Market for IT services in Saudi Arabia grows 12-13% annually. This year it is expected to grow at about 9%. These are figures from IDC and not from us. However from my perspective I think that the growth will probably be a bit higher from the software and services portion. If you break down the IT market into infrastructure, software and services, the infrastructure side will drop and that is why you see that drop in growth to 9%, but the software and services will increase because the goal that the government has is to be more efficient and citizen centric. Those two things clash directly with reducing the size of the software and services market because in order to be more efficient and customer or citizen centric you have to provide services. If you are not hiring people and building infrastructure you need to do it through IT. And so in my mind, and again this is my personal opinion which I have given at several events that I have been at, is that I believe we are in for a year of growth in software and services where Microsoft plays.

So does Microsoft views the Saudi market as one of the priorities in the region?

Yes. Not only is it a priority for the region but Microsoft is sort of broken up into regions and Saudi Arabia is part of the Middle East and Africa. Right now, the concentration with Microsoft´s shift to the cloud is in how to make people more efficient and productive. This is a driving goal that our government has announced recently again, and the company Microsoft sees that. We recently had an engagement where everyone from the CEO of the company all the way down were involved, and it was to the surprise of some in the market, that Microsoft always being driven by the business would do things within its own sphere. So here as the CEO, normally 80 to 90% of what we do is handled right here.

We bring in the support that we need. But on this specific engagement because it was the size that it was and it was with the highest echelons of government, everybody from the CEO, COO, etc. were all involved and our customers were actually really impressed that Microsoft would put that much attention to something like that in the Kingdom of Saudi Arabia. The reason they are doing it is not because of the deal or the size of the deal, it is because of that focused interest in this part of the world and Saudi Arabia being the biggest part. When you look at the size of the IT business in the Middle East and Africa, Saudi Arabia probably accounts for close to 50%. Again, these are not Microsoft numbers, they are IDC numbers. You are talking about a good portion of business, and a good amount of money to be made.

Saudi Arabia is trying to transform into a knowledge based economy and is trying to diversify its economy and foster innovation. How can Microsoft help Saudi Arabia with the transformation into a knowledge based economy?

Microsoft is a leader in productivity and platform in a mobile first, cloud first world. When we say mobile world we are not talking about mobile phones, we are talking about the mobility of the individual being able to do whatever they want to do wherever they are, on whatever device they have. That is where Microsoft pushes and innovates and continues to innovate. Microsoft has been working with the government on a lot of the e-government processes that are there, and we work on being able to do some of these processes right there on your phone.

If you look five years ago these were processes that needed a PRO, a government relation officer to go to the government and do the process for even something as simple as a visa for an exit/re-entry. It used to be a long process. It wasn’t long because of inefficiency, that wasn’t the issue. It was the time expenditure of a person getting on a road full of traffic, getting to a place, getting it done… so much time is wasted just in getting there and leaving there. Now imagine sitting at your desk and doing it from your phone. That is what Microsoft is all about in terms of enabling government to provide these kinds of services. Not only that, part of what Microsoft also does is to do with the cloud. When we talk about the cloud, there is the public cloud and there is the private cloud and that is per definition’s sake what is sitting at your side and the public cloud is what is sitting at Microsoft’s side, but Microsoft does something different than what the competition does, in that we do something called a hybrid cloud which enables you to actually federate or connect between your on premise datacentre and the Microsoft datacentre; so it looks like you are all in one place. You are then able to keep whatever data is sensitive or sovereign to yourself on your premises and the public data that is out there like your website, marketing etc. things that are in the public domain, in the public domain without having to build infrastructure to do that.

With regional developments and the slump in oil prices what is the outlook for IT projects in Saudi Arabia?

Again, I can’t speak for those that I am not in charge of but I can give you a personal opinion. I think there is probably going to be a slowdown in infrastructure but as I said in the beginning I think there is going to be an increase in software and services. It is essential; to be able to deliver on what citizens want from the government but more importantly on what the government wants to do for citizens. When you look at eservices, and you look at them as something that is done, it is not done, there is more to be done but let´s say they are finished with those, let’s look at health… how do you get an appointment for seeing a doctor today? Call a hospital and make an appointment… but what’s next?

Again, part of what the government wants to do is to simplify this. They want to be able to treat people and have a record of treatment because some people go to one hospital for treatment then they go and follow up in another hospital because either they feel that the treatment didn’t do what they needed or for some other reason they go somewhere else. The doctors don’t necessarily know what the other doctors have done. Again I know that there was a drive from the government several years ago to create a single patient file so that wherever your patient goes, you know what has already been dispensed, you know what tests have been done so that you don’t have to replicate, so if you need to go and do an MRI you don’t need to do 3 MRIs because you went to three different places to get opinions. One MRI carries itself all the way through. There is quite a bit of work to be done to simplify things and the drive to provide services for the citizens of the country is the main driver to get everything done and allow for IT and IT services to continue to grow.

How does Saudi Arabia compare to its regional peers when it comes to IT development?

It is difficult when you compare Saudi Arabia, and I don’t really wish to get into the details of the numbers, but again, a personal assessment is what I will give you. Saudi Arabia is developing, but if you look at Saudi Arabia as compared to any of the countries that surround it, Saudi Arabia is geographically bigger than any one of them or any five of them, or even ten of them put together! It is a big country geographically. So what you do in a country that is nearby, where you are talking about a travel time of 30 minutes maybe from end to end, is difficult to do when it takes you 10 to 12 hours to drive left to right and maybe 16 hours top to bottom in Saudi. It is a big country. It has a lot of coverage.

We also have a very harsh environment. We are in the middle of a dessert so it is not like you can just lay whatever you want to lay, wherever you want to lay it. It takes a lot of work and a lot of overheads to do that. Saudi Arabia as we said in the beginning has been growing on a year to year basis for the past 7 years from a Microsoft perspective at the highest rates in the world. We will continue to grow because as we use software and services more and more in the day to day life of everybody, we will continue to grow. Some countries have a jump on us because they are smaller and they are able to do a whole bunch of things but again we learn from the mistakes of others and make sure that we don’t make the same mistakes. It is not that others have made a lot of mistakes but we learn from what has been done and that is what Microsoft brings. Microsoft brings to the market the experiences that it has had worldwide and it brings them here. Some of the stuff we have done here has been done for the first time. So on some of the projects we have become the best practice to be followed outside as we are dealing with some issues that are unique to Saudi Arabia. We talked about weather, space but then you also look at things like Haj which is a unique event that happens in Saudi and you end up with 3 million people over a period of ten days trying to do a specific ritual that is the same for each one of them. The capacity of where they are at cannot handle 3 million at each one of those rituals. The country has gone through a big investment in infrastructure and I believe there is more to be done in services and IT to take it to the next level.

What are the major contributions of Microsoft to Saudi Arabia?

If you look at productivity in a platform company, we start by listening to what our customers want to do and we take what they want to do and build it on our tools and our platform. In that way we enable them to be more productive. We have done that on multiple occasions. As an example if you look at Saudia, the airline, it is no different than other airlines around the world; they have a whole bunch of processes. I was told that for a flight to take off there are about 140 different processes that need to be followed. The problem with that is that the processes were all different and some of them were being done by specific software that was running on a specific piece of hardware and it was independent of any other system. Saudia found that they had all of this data but they weren’t able to make decisions quickly because they couldn’t get the data on time. We worked with them on a BI project where we sat with them to understand what it was that they wanted to do, and under their guidance and with our technical team we sat and worked on one of the largest BI implementations that would sit on top of all of their infrastructure and take all of that data which was available.

The problem was how to get it to the people. This BI tool that Microsoft put on top allowed all of that data to become available to the executives to be able to make on time decisions rather than batching them and getting the report at the end of the day, or at the middle of the day and looking at them to try and figure out what to do. Because all of that detail is now in software, you can now start doing all sorts of ‘what if’ analysis, which allowed the airline to save millions of dollars by using this solution because in their own words “if a plane is delayed for x amount of time, it costs them money. If a plane doesn’t get filled, it costs them money.” Unless they are able to make the decisions in an immediate online fashion, they were losing money on everything that they were doing. We do not in any way, shape or form claim our responsibility for anything except helping them put this BI tool that they have found has saved them money from a maintenance perspective for software services contracts with their contractors. It has been saving them money that they were able to take and reinvest back into their company in order to compete in the global market.

What are your strategic goals for 2016 and 2016? What is your approach to education and CSR?

Education to us as Microsoft has always been an investment; it is the future. Enabling our next generation with tools and skills that will make them the future leaders has always been a driving factor within Microsoft. There is a big debate going on right now in the Kingdom saying that Saudi needs to elevate itself to the next level. What we as Microsoft try to do is we try to bring the experiences of others and the 21st century education skills that are part of the UN’s charter in terms of education and how they want to drive it, to the fore. Microsoft has adopted that.

We are not the education people; we are the technology people who will help enable education. We do quite a bit with universities as well, so the major universities in Saudi Arabia are running Live@Edu which is our program of providing email for every student. This is part of what we are doing in education. Again all of our tools are available. We have different investments that we make. We have something we call DreamSpark which is a catalogue of about 10,000 dollars’ worth of software that the universities who are signed up with us have available for their students free of charge. So although it is a 10,000 dollar package of software for developing and working, we give it to them for free because it is an investment perspective.

From a CSR perspective, we have been fairly active and actually have been invited to be key note speakers at quite a few of the CSR events that happen around the Kingdom. Over the past 7 years Microsoft has felt very strongly about giving back to the community so we do work with the likes of the DCS Disabled Children’s Society and a women’s society. There are so many philanthropic societies that we work with and again, they are an investment. It is not that we sell them software or services, the services and the software, once we go through an eligibility process, we actually provide for free. Again, the pillars that we work on are the disabled and disadvantaged, and also the females and teens. These are the pillars that we stand on with our CSR so that we don’t try to do everything for everybody which no company would ever be able to do. We try to concentrate on these groups and work with them to make them a more productive part of society. We are not doing the whole thing; we are doing a very small part of it which is enabling them through IT.

Is there anything you would like to add?

The only thing that I would add is that as a country or a society when we look at cloud, cloud always has this scary connotation of where is my information? What we try to do is that we try to dispel some of the fear by saying that you can classify your data, so there is personal data and non-personal data. Even as an individual some of your personal stuff you would never put up on your email which is hosted up in the cloud. If you are using Microsoft Hotmail or Outlook live, or any of our email products, your email is sitting on the cloud and today quite a bit of your information is there but then there is also some information that you keep in your back pocket or your safe which is the same thing as you talk about when you talk about it from a business perspective. There is certain data that you will keep with you and there is certain data that whether it is publically available or not, is not a big issue. Keep in mind that Microsoft’s cloud abides by and works with all of the certifications; we have FISA which is the financial certification and we have a health certification amongst others.

We follow all of these standards to make sure that people understand that with regards to safety, security or privacy there is a certain level that Microsoft´s contract with you has and lets you know what your own rights are. If you look at your own email and you look at the service, you will find exactly what Microsoft will or will not do with your email. We don’t scan your emails and we don’t use them for advertising or anything like that. That works for students and that is why students and universities are very happy using our service. It also works for companies. I think it will take time for people to be more comfortable. If you look a few years back, people were not comfortable doing their banking through a phone or laptop, they needed to go to a bank. Today, people are becoming more comfortable with it. I think the same applies for the cloud. Microsoft is one of the biggest players in the cloud and will continue to provide that sort of service for our citizens and for the country, region and the world as well.