SMEs in Saudi Arabia Eye Ambitious Regional Growth

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Small- and medium-sized enterprises (SMEs) in Saudi Arabia are gearing up for ambitious, technology-fuelled expansion drives across the region, according to a new worldwide survey.

In the next Three Years, No Saudi SME Expects to Operate Solely in the Kingdom; Cloud, Mobile and Social Media Set to Play Influential Roles

Ahmed Al-Faifi MD SAP Saudi Arabia
Ahmed Al-Faifi MD SAP Saudi Arabia

To become more competitive and help drive job creation in the region, nearly two-thirds (63 per cent) of the Kingdom’s SMEs have either completed, are undergoing, or are planning a business transformation, according to the new Oxford Economics survey SMEs: Equipped to Compete.  Of those, about two-thirds (65 per cent) are planning to enter new geographic markets, nearly double the global average of 37 per cent. In three years, no SME in the Kingdom expects to be operating solely in the country, whereas the number operating in six or more countries will rise from 16 to 41 per cent.

Increasingly, such ambitions are likely to fuelled by a host of potentially game-changing technologies.

In the Kingdom, nearly one-third of SMEs (31 per cent) said they use cloud computing, but that is projected to skyrocket to 54 per cent in three years – a growth rate of 72.4 per cent. 57 per cent said that cloud would offer a distinct competitive advantage within three years.

In addition, 37 per cent said they used mobile technology now – a figure set to rise to 53 per cent in three years. Within three years, 52 per cent said mobile would deliver greater competitive advantage.

The importance of social media is also on the rise. 37 per cent said they use it now, and 43 said they would during the next three years. By 2016, 49 per cent of respondents said it would result in competitive advantage.

According to the survey, 66 per cent of Saudi SMEs claimed that they would only invest in technology when there is a clear return on investment (ROI).

The current investment priority for SMEs in the Kingdom is software related to business management (52 per cent), business analytics (45 per cent) and cloud computing (37 per cent).

“SMEs in the Kingdom of Saudi Arabia are not only growing in the country and creating vital new jobs, they’re increasingly looking to expand beyond the Kingdom’s borders to seize new regional opportunities,” said Ahmed Al-Faifi, Managing Director, SAP MENA.

“Clearly, much of this growth will be fuelled by technology that increases insight, flexibility and overall competitiveness. SMEs are vital economic engines and incubators of innovation, so the positive, progressive sentiments indicated in this study bode extremely well for the future.”

SMEs are expected to be key drivers for economic growth, as the Kingdom continues to diversify its economy in line with the Ninth Development Plan 2010-2014.

Part of the Ninth Development Plan calls for strengthening and developing SMEs, including providing them with specialised credit, technical assistance, and removing organisational and marketing barriers in some regions of the Kingdom.

SMEs are also expected to make a significant impact on lowering the unemployment rate, which stood at 5.8 per cent as of Q1 2013, according to the Kingdom’s Central Department of Statistics and Information.

The Kingdom of Saudi Arabia continues to grow its economy, posting a 2.7 per cent growth in GDP in Q2 2013, with the non-oil private sector growing by 4.2 per cent in April-June 2013, according to news analysis of government data.

“The survey shows that Saudi SMEs across various industries are making major changes to their business models, products and go-to-market strategies,“ said Sherif Hamoudah, Head of Ecosystem and Channels, SAP MENA.

“Globalisation, transformation, and technology will be the hallmarks of successful companies, and, with a commitment to enter new markets and willingness to adopt technology innovations, SMEs have never been better positioned to win. “

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