BMI View: Sau di Arabia offers compelling growth opportunities for IT solution providers across multiple industry verticals owing to the kingdom's strong macro fundamentals and the government's economic diversification plan . We believe that global IT firms with considerable local presence will benefit the most from this opportunity . Local players will also benefit as global vendors look to form partnerships to ease market access . A number of major IT firms have already taken steps in recent years to ramp up their operations in the country, usually through partnerships with local system integrators. The macroeconomic and policy environment is driving IT market growth and investment in the private sector , however there is downside from a prolonged period of depressed oil prices and regional security tensions .
Headline Expenditure Projections
Computer Hardware Sales: SAR10.04bn in 2014 to SAR10.03bn in 2015, -0.1% in local currency terms. Desktop and notebook demand expected to continue recovery after cannibalisation during the tablet boom, but a slowdown in tablet demand will be a drag on overall hardware spending, resulting in contraction in 2015.
Software Sales: SAR4.4bn in 2014 to SAR4.7bn in 2015, +8.5% in local currency terms. Enterprise software adoption will continue to deepen among small- and medium-sized enterprises as Software-as-a-Service (SaaS) becomes more widely available and awareness levels increase.
IT Services Sales: SAR5.6bn in 2014 to SAR6.1bn in 2015, +10.3% in local currency terms. Adoption of cloud computing infrastructure and platform services will be the fastest area of growth, but smart infrastructure deployment is also an emerging growth area.
Key Trends And Developments
BMI believes that through its partnership with Meraas, Aliyun (the datacentres and cloud computing arm of China-based e-commerce giant Alibaba) is well placed to benefit from the emergence of smart cities and related infrastructure over the next decade in the Gulf Cooperation Council (GCC) states. The as yet unnamed joint venture will be based in Dubai and will create new applications, cloud computing architecture and 'big data' tools for local and multinational organisations operating out of the UAE initially, but targeting the GCC region where smart city initiatives are underway in Saudi Arabia, UAE, Qatar and Bahrain. Smart services solutions will be integrated into next-generation transportation, communications, infrastructure, power, government services and urban planning projects as authorities orchestrate the development of smart cities. Aliyun's proven capabilities in processing complex 'big data' systems will make it an attractive partner for players across multiple verticals and, potentially, give parent Alibaba access to a relatively underserved e-commerce market.A combination of BMI's bullish outlook for SME enterprise adoption potential in Saudi Arabia, and the significance of SaaS provision in unlocking the market, was evident in the March 2015 announcement from Saudi Arabian mobile operator Etihad Etisalat (Mobily). It launched a Cloud Business Intelligence service in association with Arabian Business Intelligence Solutions. The service enables SMEs to obtain advanced reports and provides a comprehensive information dashboard. Additionally, it integrates different departmental information to provide thorough analysis and flexibility. Mobily has recently unveiled a number of cloud computing services in collaboration with specialised partners, to cut the cost of both hardware and software in management expenses.