The Middle East’s first computer was installed in 1947 by IBM. It was a first in terms of IBM’s global reach and a first for Saudi Aramco, the state-backed oil producer that would host, and use, the machine.
However, the Middle East region – and its businesses – have changed considerably since then and, in response, IBM has now added another string to its bow, supporting the inevitable public and private sector transition to a digital world.
In January, IBM Middle East opened its first two data centres in the Middle East and Africa (MEA) region, located in Abu Dhabi and Dubai, UAE.
A continuation of IBM’s ongoing MEA investment strategy, the two high-profile locations now each boast a multi-tenant facility, supporting organisations to shift to a hybrid cloud model and benefit from the flexibility of selected workloads, while also receiving data backup and protection services.
With clients across multiple industries it isn’t simply their user applications that require sophisticated and reliable cloud infrastructure. It’s all systems, specifically mission critical workloads.
The new facilities add to IBM’s portfolio of 60 data centres across 19 countries on six continents and draw on the capabilities acquired in the firm’s US$34 billion, 2019 takeover of Red Hat. In the UAE, the new data centres complement IBM’s two branch offices, two innovation centres and development sites in Dubai’s innovation centres, Area 2071 and D3.
“Our strategy is evolving,” says Hossam Seif El-Din, VP of enterprise and commercial for IBM Middle East and Africa.
“With our Red Hat acquisition and the strong Open Shift portfolio as well, we wanted to provide all clients in the UAE with flexibility and agility. If you think today, every organisation will need to undertake a hybrid cloud strategy and they will also need to be multi-cloud,” he adds.
Backing this outlook, a 2019 study published by Forbes predicted a typical organisation could require up to six different public clouds.
El-Din continues: “Some will work in private cloud, some in public, some of them will be mixed. With this fusion, at IBM, especially with Red Hat, we are enabling our clients to run the application anywhere, whether it’s public, private, IBM, non-IBM. We give them the ability to benefit from market conditions and not to be locked to one vendor.
“In order to do this, we need to have the wider relationship with different providers,” he adds.
The evolved strategy also promotes a heavy focus on R&D and innovation – and it has already brought gains. For example, before its data centres launched IBM was engaged in several landmark projects with Smart Dubai, the government-driven initiative to transform the emirate into a smart city.
In 2016, Dubai’s Department of Economic Development (DED) in collaboration with IBM, launched “Saad”, the first government service utilising AI and a localisation of the famous Watson assistant. This was followed by “Rashid”, an assistant for entrepreneurs completing online business registration.
Other projects with Smart Dubai saw the launch of “the first cognitive AI Lab” and a data science lab, with IBM providing skills and expertise on data science, AI and data analytics. And, as an official partner of Dubai’s Blockchain Strategy – which is on track to support a fully paperless government by next year – IBM powered the first government-endorsed blockchain platform in the Middle East.
Follow the money
Although providing cloud services for multiple industries, IBM has made significant gains in financial services.
Last year, the firm announced the development of IBM Cloud for Financial Services – a world first, financial services-ready public cloud, created in collaboration with Bank of America (BoA).
Designed to meet BoA’s requirements for regulatory compliance, security and resiliency, IBM says it is “the only industry-specific public cloud platform that can provide preventative and compensatory controls for financial services’ regulatory workloads”.
In addition, it offers multi-architecture support and proactive and automated security, to leverage “the industry's highest levels of encryption certification”.
“This is critical in the sense that it is tailored to a specific industry and I believe we will start seeing more of these kinds of cloud that, within a specific industry, can ensure that we are compliant with regulations, security and the resiliency required,” says El-Din.
Building on the capability, in the 10 months since the project’s launch more clients have been added, including BNP Paribas, one of Europe’s largest banks with nearly 33 million customers worldwide.
According to the UAE Banks Federation, financial services contribute around 10% of the country’s GDP and 12% of non-oil sector domestic product. However, it’s a sector that is prone to cybercrime and fraud.
Accenture estimates cybercrime will erode $5.2 trillion in expected cost savings and additional revenue over the next five years. Banks stand to lose $347 billion, insurers $305 billion and capital markets $47 billion.
“That takes me to the architecture – the right architecture can help you mitigate those risks and open hybrid clouds allow you to accelerate the delivery with speed, full agility and control. So you can run across any environment, as a client you can avoid lock in and you can manage within a secure and compliant framework,” El-Din says.
The bigger picture
In a rest of world context, accelerated cloud adoption follows the digital transformation trend influencing businesses on every continent. While some have embraced digitalisation for efficiency, in parts of the Middle East – much like at IBM – digitalisation is one element of a much bigger strategy.
Over recent years the UAE and its GCC neighbours have stepped up efforts to diversify their GDP from oil and gas revenues. Unveiled as Vision 2030, the UAE’s plan rests on creating a global hub for business, innovation, technology, tourism and finance. To bring its plans to fruition the country has built everything from free zones to theme parks, and it’s already paying off. Contributing 70% in 2018, private sector and non-oil activities have been driving GDP.
Vision 2030 isn’t just an economic plan. It is intended to bring tangible benefits, innovations and opportunities for those on the ground. However, to realise these businesses need to embrace digitalisation with the same level of ambition as the UAE itself.
In that respect, IBM’s new strategy isn’t just about its data centres delivering infrastructure as a service, platform as a service, or continuity as a service. It’s about delivering data centres as an economic driver.
As of the last pre-Covid tally in January 2019, there were 338,000 private companies operational in the UAE. But according to an IBM-commissioned study by McKinsey & Company, on a global average most enterprises are “only 20% of the way into their cloud journeys”.
“So 80% has potential to move,” says El-Din. The study concluded that the simplest workloads are in the process of migration, but the bulk remains on-premises. Why?
“It’s chapter one and chapter two. The first chapter is about experimentation. Clients wanted to experiment what to do with the cloud and how to do it. It was more user applications driving the cloud and that has contributed to the 20%,” he explains.
Events since January have accelerated the pace and, like businesses in every other territory, those in the UAE and wider Middle East are now moving into chapter two.
“Now things are shifting, and again with Covid-19 things are accelerating. Now we see that AI is no longer experimental it is now embedded in the business and every single process; whether it be a client centre interaction or a telco operation support system,” El-Din continues.
There’s another trend at play, too: instead of discussions focused solely on public cloud, El-Din has witnessed a simultaneous shift to talking about hybrid cloud.
“That’s why I believe there is huge potential when it comes to the opportunity in the UAE. We have seen many clients are reaching out to discuss what to move.
“With our service capabilities, that is why I believe we are well positioned to do this in two ways: we can help the clients and they do it by themselves, or we can run it on their behalf through our managed services offering,” El-Din adds.
Driving the market
IDC figures predict the Middle East and North Africa will be worth $5 billion to cloud vendors by 2022, and the research firm expects 90% of enterprises to embrace integrated hybrid cloud tools and strategies to support different applications and use cases by 2024.
For the UAE, the data centre space has multiple driving forces and as such several big-name operators have opened new facilities in recent years. Arriving in the region in 2018, SAP today operates data centres in Dubai, Riyadh and Dammam. In 2019, AWS opened three data centres in Bahrain, and Microsoft opened its first two centres in Dubai and Abu Dhabi.
However, the latest Gartner Peer Insights Customer Choice – published June 12 – reports IBM is leading them all in terms of customer satisfaction.
“After the launch in January, our priority now is to ensure we have the right take-up to meet our targets. Everything is positive and we are ahead of our plans, so we will continue to maintain this force and pace,” says El-Din.
He concludes: “We have a strategy in the region where we look at market conditions and we invest ahead of the curve when we believe there is a market opportunity. In due course we will announce more things, but we are committed to this region, we have always been investing and I believe we will continue that way.”
