How public cloud technology ignites opportunities and value in the Middle East?
A new report titled “The Middle East Public Cloud: A multi-billion-dollar prize waiting to be captured” was released by McKinsey & Company. The study describes the Middle Eastern public cloud integration market’s substantial potential as well as the actions businesses in the region should take to seize the opportunity as soon as possible.
To fully grasp the enormous potential impact that public cloud adoption could have on the region, McKinsey performed research and analysis on over 700 public cloud use cases spanning 600 firms and the public sector.
Report highlights include the following:
- The cloud can help grow digital infrastructure and processing power in the area for improved resilience and possibly new business models. It can also enable advanced services like machine learning, which few businesses can afford to build themselves. By 2030, this might add $130 billion in value to the top 600 privately held and publicly traded companies based just on revenue.
- By 2030, use cases in the public sector—which presently accounts for 20% of the GDP in the region—could generate value worth up to $50 billion.
- Approximately 70% of the overall projected value generated in the Middle East and beyond comes from the cloud’s capacity to speed product development and scale those goods, rather than from its ability to optimize IT spending.
- Businesses nowadays face both financial and non-financial challenges. In a global study of 450 CIOs and IT decision makers, 75% of participants stated the cost of moving to the cloud went above their allotted budget, and 38% said the migration process took longer than expected.
- Through three primary benefits—unlocking new business use cases, cutting down on the time and expense of application remediation and migration, and raising the productivity of application development and infrastructure teams working on cloud programs—generative AI can add 75 to 110 percentage points of incremental ROI to cloud programs.
We have identified strategies for Middle Eastern enterprises to tackle these obstacles and realize the potential benefits based on our research and experience. These include putting high-value use cases first, switching to an agile product operating model to enable teams to profit from cloud computing, and developing a scalable cloud platform that can safely support an organization’s goals.
The study identifies three critical actions that Middle Eastern businesses should take to swiftly and efficiently realize the full potential of the cloud:
- To fully grasp the promise of technologies, develop a cloud migration strategy that prioritizes value creation above cost reduction and treats technology as a business priority rather than merely an IT one.
- Develop and upgrade local talent to ensure long-term sustainability.
- Handle cloud expenses differently. Instill a P&L mentality in the technical teams.
About the research
The article “Cloud’s trillion-dollar prize is up for grabs,” which examined the global worth of about 700 use cases across 19 different industries, goes into detail on the technique used to determine the value of the cloud to Middle Eastern businesses. Based on the revenue generated in each industry in the Middle East compared to the worldwide revenue of that industry, the value of the use cases that were evaluated was determined. To project 2030 sales, we used historical real-revenue growth rates in the Middle East at the industry level. The average wage by industry and other assumptions made during the global survey were also examined. We made use of ILOSTAT data for this.
The public sector’s revenue projection for 2030 is based on historical revenue growth and statistics from the International Monetary Fund regarding government revenues in the area. The sector’s use cases’ value is derived from research conducted by the McKinsey Global Institute (MGI), namely from the MGI’s automation diagnostic, which evaluates technical automatability and adoption.
