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The Middle East and North Africa IT spending are projected to reach $155 billion in 2018, a 3.4 percent increase from 2017, research firm Gartner predicts. Speaking at the Gartner Symposium ITxpo in Dubai on March 5, Smart Dubai's Dr. Aisha Bin Bishr highlighted the challenges in making confident decisions in an "increasingly indispensable" and disruptive ICT sector.

In 2018, the Middle East and Africa will show its highest IT spending increase in the last three years, according to Gartner. Spending on communication services (mobile voice and data primarily), mostly by consumers, is the segment that will largely contribute to the rise in IT spending in the region this year. Dubai is a prime example of this growth, having embraced digital innovation and disruption.

Smart Dubai, a government entity charged with overseeing Dubai's citywide smart transformation, including coordinating public and private sector efforts, is leading the city through this tumultuous period of digital disruption. At the entity's helm, Director-General Dr. Aisha Bin Bishr feels confident that Dubai will become the happiest city on Earth, by embracing digital, not turning a blind eye to it.

Dr. Aisha delivered the keynote speech at the Gartner Symposium ITxpo, where she spoke on the importance of industry communication. She emphasized how crucial it is to understand the perspectives of CIOs, IT executives, and analysts, to navigate the "critical challenges" facing all industries today, underpinned by the "increasingly indispensable field of ICT."

Hosting the event in Dubai made it "all the more meaningful for us," Dr. Aisha said, highlighting the UAE's ambitions and vision for 2021 which places significant importance on emerging technologies, particularly in the ICT sector. Network readiness is a primary performance indicator, she said, measuring how ready the country is to capture the opportunities provided by ICT advancements to increase competitiveness.

"This is what inspired our vision here at Smart Dubai," Dr. Aisha said, touting the entity's mandate to embrace disruptive technologies and tailoring them to the needs of residents and visitors to "transform Dubai into the happiest and smartest city on Earth."

"Our hard work in emerging technologies is becoming increasingly visible globally," she added. "The United Nations has selected Dubai as a regional hub for city data in the Middle East, North Africa, and South Asia region. Tesla has established their regional office in Dubai, and globally successful blockchain ventures are setting up in Dubai. This underlines the progress the emirate has made towards smart and sustainable transformation."

Peter Sondergaard, executive vice president and global head of research at Gartner, praised the Middle East and North Africa's continued focus on technology initiatives and improvements, which will hold the region in good stead as digital disruption increases. In 2018, Gartner predicts the leading segments driving IT spending growth in the region will be banking and securities.

"IT spending in the banking sector is driven by its move into digital business and the corresponding investments in technologies such as analytics, blockchain, and artificial intelligence," said Sondergaard. "For the insurance sector, IT spending is led by investment in software applications."

But not all categories of IT spending in the Middle East and North Africa will surpass the regional total average in 2018. Cloud spending in the region is among the lowest in the world when measured as a percentage of total IT spending.

Digital reshaping industries
The theme of Gartner's Symposium ITxpo was clear: digital is here and digital disruptors are emerging in all industries. Expectations are at their peak, while industries are being reshaped, with unexpected winners popping up all over the globe - those who were willing to embrace digital disruption instead of clinging on to legacy business practices.

Rather than being a random event beyond business leaders' control, digital disruption has a pattern that's identified, understood, and prepared for. Sondergaard said organizations that are not creating new digital business models, or new ways to engage constituents or customers, will begin to lag.

"[The Middle East and Africa] CIOs must embrace digital transformation," he said. "They need to build the momentum to scale and create value by amplifying the power of their people, their organization culture, and their technology platform to deliver breakthrough value."

Private and public executives are frustrated with the slow pace of digital transformation, Sondergaard claimed. "Even as they watch competitors capture new opportunities, they're unable to create the urgency to move," he said. "They believe if you don't create new efficiencies, new value, and new ways to positively engage citizens, you're destined to fall off the tracks."

Sondergaard focused on how digital is reshaping industries, starting with something everyone needs: clothing. Back in 2005, traditional stores were in denial. They said, 'Nobody will buy clothing online', assuming everybody would want to try on items before first. But they were wrong. Customers flocked to online stores like Alibaba or Amazon, and to more nimble supply chain optimized brick and mortar stores like H&M and Zara.

Last year, Amazon became the largest clothing retailer in the United States. The incremental growth of its clothing lines alone will dwarf the revenues of its major competitors, according to Gartner. The latter uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecasts.

"It's clear that e-commerce and digitization are affecting the retail sector, and a clear pattern has emerged: once digital revenues for a sector hit 20% of total revenue, the digital shake-out begins," Sondergaard said. "This has been seen with books, clothing, and it's even moving through the fresh food sector."

With the acquisition of Whole Foods Market by Amazon in June 2017 for $13.7 billion, Amazon is set to accelerate this transition. "Watch out for that 20% mark," Sondergaard advised the Symposium audience, highlighting an important lesson in retail that applies to "every industry, everywhere", that no matter what industry you are in, 20% is "the point of no return".

Understanding digital disruption
To understand digital disruption, Sondergaard said it's important to know what successful disruptors do: they find new opportunities and attack the weakness of incumbents. They serve unmet customer demands, find ways to use excess capacity in the supply chain, exploit new platforms for awareness and marketing, and capitalize on new distribution channels.

Digital also exposes the weakness of incumbents, he added. For example, in customer demand, when prices rise faster than the rate of inflation, new entrants offer more choices and a better experience, at a lower price, using digital; or when consumers move from brand search (looking for a specific company name) to category search, digitally driven organizations exploit and threaten those who act as analog brand-focused organizations.

In the supply chain, companies that have invested in more nimble end-to-end analytics and faster inventory management have succeeded, while traditional organizations struggle. In customer awareness and marketing, brands that focus and use Instagram, Facebook and other non-traditional marketing channels are accelerating their transformation.

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