Mubasher: Private entities in the Middle East are acknowledging the role of digitalization in business sustainability, however, digitalization investment plans remain limited, according to a recent report by PricewaterhouseCoopers International (PwC).
Around 78% of private business leaders believe digitalization has an important impact on business sustainability, as shown by a PwC survey that interviewed 200 private businesses from nine countries across the region.
Nevertheless, only 18% of private businesses intend to allocate more than 5% of their overall investments to increase their digital capabilities, the survey results showed, emphasizing a variation among industries.
While 34% of respondents from the service sector said they would spend more than 5% of investments on digitalization, the proportion drops in industry and manufacturing to 17% and to 12% in retail.
The report highlighted the gap between relevance and adoption levels of digital solutions, noting that management composition and a culture of change are key drivers for successfully instilling digitalization.
The current economic downturn is putting private businesses in the Middle East to the test. “A cooling business climate – and potentially reduced growth rates, or even falling revenues – will likely force leaders to review costs,” said Adnan Zaidi, PwC Middle East Entrepreneurial and Private Business Leader.
The top three reasons reported for this discrepancy are cost constraints (42%), resistance to change (42%), and lack of corporate vision (33%).
PwC identified eight key emerging technologies, dubbed the Essential Eight, including 3D Printing, Artificial Intelligence (AI), Augmented Reality (AR), Blockchain, Drones, Internet of Things (IoT), Robotics, and Virtual Reality (VR).
“In order to thrive during disruptive times, private businesses should employ a digital strategy that addresses every area of a company to meet present and future needs. If private business leaders don’t think strategically about how to transform their companies now, they risk being unprepared for any possible disruption to their business,” Zaidi added.
As for the solutions to bridge this gap, Zaidi concluded that private business leaders need to define their digital ambition though clearly developed and communicated strategies, ensure the commitment of the board and the senior leadership, choose the right digital technologies for their business, attract the right skillset, and develop a culture of change.
