Middle East IT Spending to Reach $214.7 Billion In 2015

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Middle East IT Spending to Reach $214.7 Billion In 2015: Gartner

Middle East IT spending

Analysts Say Every Business Unit is Becoming a “Technology Startup” During Gartner Symposium/ITxpo 2014, May 19-21, in Dubai 

Middle East (ME) IT spending is projected to reach $214.7 billion in 2015 a 5.2 percent increase from 2014, according to the latest forecast by Gartner, Inc.

Peter Sondergaard, senior vice president and global head of research at Gartner, provided the latest outlook for the IT industry today to an audience of more than 500 CIOs and IT leaders at Gartner Symposium/ITxpo, which is taking place here through May 21.

“Business intelligence and analytics, infrastructure and data center, and cloud are the Top 3 CIO technology priorities in the Middle East region,” said Mr. Sondergaard. “Sensor/Internet of Things (IoT) are on the radar with no action planned and/or is in the medium to long term planning. Robotics and 3D printing are not priorities in the Middle East in 2015.”

ME spending on devices is forecast to reach $36 billion in 2015, up 16 percent from 2014 (see Table 1). Devices are represented by mobile phones, media tablets, PCs, and printers. Telecom services continues to be the largest segment, accounting for 74 percent of ME IT spending in 2015.

Table 1. Middle East – IT Spending Estimates (Billions of U.S. Dollars)

201420152016201720182019
Devices31,15536,15741,11445,28648,48852,379
Data Center Systems3,8814,0394,0914,1864,2004,187
Software4,3804,7965,2505,7296,2536,836
IT Services10,10710,43010,76711,16911,61812,103
Telecom Services154,520159,272162,465167,182172,592176,045
Total Market204,043214,695223,686233,553243,149251,548

(Gartner, May 2015)

“The impact that the digital business economy is having on the IT industry is dramatic. Since 2013, 650 million new physical objects have come online. 3D printers became a billion dollar market; 10 percent of automobiles became connected; and the number of Chief Data Officers and Chief Digital Officer positions have doubled. In 2015, all of these things will double again,” said Mr. Sondergaard.

Gartner defines digital business as new business designs that blend the virtual world and the physical worlds, changing how processes and industries work through the Internet of Things.

“This year enterprises will spend over $40 billion designing, implementing and operating the Internet of Things,” Mr. Sondergaard said. “Every piece of equipment, anything of value, will have embedded sensors. This means leading asset-intensive enterprises will have over half a million IP addressable objects in 2020.”

Every Business Unit is a “Technology Startup”

There is a dramatic shift in IT spending power. Mr. Sondergaard said there is a shift of demand and control away from IT and toward digital business units closer to the customer.

“Thirty-eight percent of the total IT spend is outside of IT already, with a disproportionate amount in digital. By 2017, it will be over 50 percent,” Mr. Sondergaard said. “Digital startups sit inside your own organization, in your marketing department, in HR, in logistics and in sales. Your business units are acting as technology startups.”

Gartner estimates that 50 percent of all technology sales people are actively selling direct to business units, not IT departments. Millions of sales people and hundreds of thousands of resellers and channel partners are looking for new money flows in the fluid digital world, and they are finding eager buyers.

Become a Bimodal Organization

Bimodal IT fills the digital divide between what IT provides and what the enterprise really needs. Mode 1 is traditional, and the systems that support them must be reliable, predictable, and safe (like a great IT organization). Mode 2 is nonsequential, emphasizing agility and speed (like a startup) because disruption can occur at anytime.

Mr. Sondergaard used the example of smart machines to highlight the disruption caused in digital business. Smart machines are an emerging “super class” of technologies that perform a wide variety of work, of both the physical and the intellectual kind. For example, school computers have been grading multiple tests for many years, and now they are grading essays, unstructured tests that require analysis.

“Not is the grading more accurate, but students actually worked harder on their essays when they are graded by a smart machine,” Mr. Sondergaard said. “Other professional tasks won’t be far behind: financial analysts, medical diagnostics, and data analytics jobs will be impacted. Knowledge work will be automated.

Smart robots will appear not just on the manufacturing floor, where they do physical work, but in the workplace and even in the home. Smart machines will automate decision making. Therefore, they will not only affect jobs based on physical labor, but they will also impact jobs based on complex knowledge worker tasks.

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