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How digital transformation could aid Middle East’s industrial sector

October 2016

October 20, 2016 | 9:45 | Dubai

Digital transformation could generate US$16.9 billion in extra revenue each year for companies in the Middle East from 2017 to 2021, as well as a further US$17.3 billion in annual cost savings and efficiency gains, according to a new report published by the Global Manufacturing and Industrialisation Summit (GMIS) and conducted by PwC.

The PwC report, called ‘Industry 4.0: Building The Digital Industrial Enterprise’, is based on a survey of over 2,000 companies from 26 countries, including more than 50 companies in the Middle East from six key industries. Among the Middle East respondents, the report found that annual digital revenues are expected to rise by 3.8 per cent on average over the next five years – through additional customer benefits and new digital products and services –  with some companies expecting an overall increase of as much as 50 per cent over five years. This could yield US$16.9 billion in added revenues per year across the region.

This increase in revenues stands to be supplemented by a further US$17.3bn in annual cost and efficiency gains. The report finds that digitisation and integration, by shortening operational lead times and maximising product quality, could cut Middle East company costs by 3.8 per cent annually on average, above global expectations of 3.6 per cent. Demand for digital transformation is strong among companies in the region, with most planning to invest 4 per cent of annual revenues in solutions related to digital operations. That would amount to an investment of US$42 billion on average in digital transformation by companies in the region each year over the next five years.

In the Middle East, companies are expanding their digital portfolios. The report notes that four in 10 consider digitising their portfolios as critical to future revenue growth. However, more than half identified the absence of a digital culture and the right training as barriers to digital transformation. While companies recognise tools such as big data analytics as being very important, almost half believe they lack a structured approach to mining information for insight that could lead to efficiencies, and therefore greater competitiveness.

19-10-2016

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