The potential benefit of migrating business operations to the public cloud is enormous. It could deliver IT cost efficiencies, boost revenues, and support new business models.
According to McKinsey’s report, it could generate as much as $183 billion by 2030—roughly 6% of the region’s current GDP.
Yet cloud adoption in the Middle East has been slower than elsewhere.
According to the report, expensive and poor-quality international connectivity in some countries and regulatory uncertainty, particularly regarding where different data types can be stored, have curtailed demand.
These issues, coupled with the fact that country populations in the region are relatively small and their economies concentrated, have limited the supply of cloud services by international companies.
The situation is fast changing, however. The region has increasing international cloud service providers (CSPs). In 2019, AWS commissioned its first Middle Eastern cloud center in Bahrain, and Microsoft entered the UAE.
In 2022, AWS expanded to the UAE, while Microsoft established data centers in Qatar. No less than five major international CSPs are expected to be operating in Saudi Arabia by 2030, providing a data center capacity of 1,300 megawatts in addition to what is available from local providers.
Against this backdrop, many more Middle Eastern companies are considering migration to the cloud.
Where value lies
According to the report, the public cloud’s value lies in the enablement of advanced services few organizations can afford to develop themselves—software as a service (SaaS) solutions, advanced analytics, and machine learning, for example—coupled with the provision of unlimited, on-demand, and scalable infrastructure capacity, storage, and computational power.
CSPs can also provide companies access to the latest technological and digitization solutions, helping to make core operations more productive and experiment with new applications, such as generative AI customer support,
The report stated that in the Middle East as elsewhere, by far the largest source of the cloud’s value-creation potential lies in its ability to accelerate product development and scale those products, accounting for about 73% of the total predicted value generated within companies by 2030 and about 71% of the value generated within the public sector.
The oil and gas industry could generate a potential value of as much as $82 billion, some 62% of the total estimated value for all companies in all sectors. The telecom and banking industries are the next largest beneficiaries, accounting for 6% of total value each.
Meanwhile, Gen AI can add 75 to 110 percentage points of incremental ROI to cloud programs through three key benefits: unlocking new business use cases, reducing the time and cost of application remediation and migration, and increasing the productivity of application development and infrastructure teams on the cloud.
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