Ahead of the curve: The technology of tomorrow

CEOs have been asking questions about how their businesses can remain competitive in the era of disruption. More and more, the answer lies in a set of inter-related innovations commonly referred to as emerging technologies, although now increasingly mainstreamed.

The six technologies that lend themselves to the emerging technology definition – AI, IoT, blockchain, chatbot, 5G and AR – are important for economies and businesses looking to stay ahead of the competition and evolve. Gulf countries are some of the leading nations globally in adopting emerging technologies. This can be primarily credited to the ambitious national ICT strategies established by these countries very early on. The UAE, for instance, has developed the National AI Programme and appointed the world’s first minister for AI in 2017 to ensure further investment and application of artificial intelligence.

The Huawei Global Connectivity Index (GCI) 2020 positioned all the GCC countries in the ‘adopter’ cluster of the index, recognising them for commendable work in prioritising their IT budgets and investments.

Covid-19 has further accelerated digitisation across sectors like education and healthcare in GCC countries, observes Li Xiangyu, vice president of Huawei Middle East. “During the pandemic, 5G provided connectivity for remote offices and education to tens of thousands of families with little fibre coverage across the GCC. In Kuwait for example, more than 500 schools are connected by 5G to ensure the best learning experience for students and teachers,” Xiangyu adds.

Ambition and optimism are essential in embracing emerging technology, says Lars Littig, managing director and partner, BCG. The GCC is fortunately not lacking in both.

Apart from appointing the minister for AI, the UAE has pro-actively driven blockchain adoption via the Global Blockchain Council and UAE Blockchain Strategy. Saudi Arabia recently established a dedicated authority to drive the national data and AI agenda, and this commitment has led to the kingdom boosting its ranking on the Global AI Index from 29th to 22nd in one year alone. It’s also noteworthy that three GCC countries – Kuwait, the UAE, and Saudi Arabia – are on the top 10 list globally in terms of 5G coverage and speed, Littig observes.

However, GCC countries still have further progress to make before they unlock emerging technologies’ full potential and develop robust capabilities along the entire technology value chain. “With sustained success in this direction, they will move from being consumers of emerging technologies to technology producers for local, regional, and global markets,” says Littig.

These advanced technologies have proved crucial in helping to combat Covid-19. For example, 3D printing is being used to produce medical equipment, while scientists monitor the spread of the virus using big data tools, observes Wejdi Harzallah, partner and head of Digital Strategy, KPMG Lower Gulf.

But organisations find themselves squeezed between budget constraints triggered by Covid-19 on one end and the demand for digital transformation on the other. Governments and private sector companies adopt different approaches to mitigate budget constraints while pursuing their digital aspirations. Governments on the one hand are focusing increasingly on public-private partnership (PPP) and build-operate-transfer (BOT) type arrangements, notes Dr Houssem Jemili, partner at Bain & Company Dubai.

“Concepts we have seen in the past applied in large-scale public infrastructure projects are being increasingly applied also to digital infrastructure projects, in sectors like mobility, healthcare etc,” Jemili observes.

“In the private sector, on the other hand, organisations are adopting a startup like funding approach to digital endeavours (seed, series, A, B, C rounds).”

With the additional budget pressure caused by disruptive events, organisations might find it counter-intuitive to consider transformation activities as a luxury, observes Littig.

“This would be a consequential misjudgement because organisations that do not continuously transform their core operations and business lines will eventually find themselves less relevant in terms of new market conditions and more susceptible to disruption,” he adds.

While the pandemic has put a strain on revenue streams for many businesses, it has also proved that adopters of digital transformation are much better equipped to respond to changes quickly, observes Keirin Lee, partner at Kearney Middle East and Africa.

“Strapped-for-cash organisations need to take a hard look at all of their expenditures, including funding for those projects already in flight and re-prioritising all remaining resources to build flexible and simple business architecture. Organisations should double down on digitising business operations and improving customer experience to achieve transformational goals,” says Lee.

Skills gap
The world is in the middle of a major digital skills shortage.

Increased adoption of advanced technologies will only aggravate the situation.
Bain & Co research forecasts an acute shortage of highly- skilled talent in the 2020s as an investment in digital technologies takes off. Over time, workers will acquire new skills and migrate toward the jobs in demand. However, shifts of this nature take a considerable amount of time, Jemili observes.

The highest-skilled and highest-paying jobs today, such as data architects or cybersecurity specialists, typically require at least four to eight years of tertiary education. To develop the skills and experience necessary for a mid-level or top position, graduates will need several years of work experience. More likely, the reskilling and retraining transition will require several decades, making the scarcity of highly-skilled workers a long-term challenge for employers.

“As competition grows for scarce talent, leading companies will invest more to attract, grow and retain scarcer tech talent and ensure that their workforce is as productive as possible. To increase their allure, employers may enhance existing incentives with monetary benefits, culture and flexible work arrangements. Businesses may need to offer millennials a higher sense of purpose in their work – a sense of mission that moves beyond delivering maximum value to shareholders,” says Jemili.

For businesses and investors, tech talent scarcity could create an opportunity to support the migration of workers toward new higher-skilled roles. “Such efforts would likely receive support not only from talent-starved private employers but also from governmental entities looking for solutions to rising unemployment, stagnating wages and growing income inequality,” he adds.

The future will certainly require more digital skills which, if not properly addressed through updated education and training systems, will lead to a wider skills mismatch in the region’s labour supply, says BCG’s Littig.

“It should be noted that the value of new emerging technologies cannot be realised without deep subject matter expertise to tailor technology solutions to solve real-life problems. With increased dependency on technology comes an increased need for advanced knowledge and deep specialisation in all sectors that impact and shape the future of humanity,” Littig adds.

The 2020 Harvey Nash KPMG CIO survey results indicate that cybersecurity, organisational change management and enterprise architecture remain the top three sought-after skills for technology leaders. “Unfortunately, there is no one-size-fits-all solution to enable businesses to future-proof their workforces. However, by making upskilling, reskilling and employee retention priorities and freeing up the resources needed to build a continuous learning culture, businesses will be well-positioned to thrive,” says Harzallah.

To address the shortage of these skills in the near future, education systems need to go beyond transferring content knowledge and help students to articulate cognitive skills and develop more emotional intelligence and creativity, says Rob Van Dale, partner at Kearney Middle East and Africa. “The capacity to be flexible, adaptable and learn quickly will be characteristics that we will need in the new era where humans and machines are interwoven in the running of the business,” he adds.

Jemili says employers must begin from scratch by developing these skills with their in-house talent, access overseas’ talent pools via offshoring, embrace non-traditional hiring/ non-traditional workforce (such as freelancers), automate certain tasks (robotic process automation [RPA], AI) or engage in partnerships with firms with complementary skillsets.
Xiangyu says revamping and enhancing current education models is crucial for further development of the global and regional ICT industry. “The Arab world has one of the high- est populations of youth globally. With the right education and skills training, we can empower them to join the ICT workforce and contribute directly to the region’s digital economy,” he adds.

Through initiatives like the Huawei ICT Competition, Seeds for the Future, and the ICT Academies, Huawei has provided more than 100,000 young people across the Middle East with ICT education and job opportunities.

Legacy
The transition to futuristic architectures is not without challenges. For one, organisations find themselves encumbered by legacy IT architectures worth millions of dollars that they cannot simply discard.

The challenges associated with legacy IT systems may force organisations with a large number of older systems to adopt a two-speed operating model, which implies a fast-speed, customer-centric front-end running on the new digital platforms alongside a slower, transaction-focused legacy back- end observes Harzallah. “New customers would be serviced through the new platforms while the existing user base continues with the legacy platforms with both segments receiving a standardised user experience. Over time, old customers can be migrated to the new platforms and the legacy architecture can be discarded,” he adds.

Lee of Kearney says legacy architectures are not the problem in and by themselves. “It is to the extent that they hinder the path to flexibility and simplicity, which requires a restructure in terms of technology and ways of working.”

The adoption of emerging technologies – coupled with low-cost sensors, higher computing power, increased mobile connectivity, and robotics – would lead to business processes becoming increasingly augmented, if not fully automated, says Lee. “Ultimately, the current business processes may need to be re-designed, but this would be best implemented by the principle of ‘start small and scale’,” he adds.

The legacy architectures and key processes have to undergo a digital readiness assessment, and potentially be transformed to enable the digital ambitions, recommends Jemili. “Under certain circumstances, some companies may be able to simply build on top of legacy architectures; sometimes the latter may be so constraining that a full overhaul or even core systems replacement may be necessary. Alternatively, some organisations choose to keep the core business widely unchanged and pursue a disruptive digital play in an autonomous ‘engine 2’ set-up, where IT and processes can be designed and implemented in an agile and digitally native fashion,” he adds.

Littig however feels that for organisations to truly benefit from embedding the newest technologies, they need to adopt “bionic” architectures. “Legacy IT architectures suffer from a spaghetti of disparate systems and long release cycles are needed to deploy and upgrade these systems. On the contrary, modern bionic architectures emphasise a ‘mental flip’ to generate value, starting from the data and business use cases – not from the IT systems – through decoupled, platform-based technology stacks and modularity. Unlike legacy architectures that lock data in vertical silos, bionic architectures liberate data from old, inflexible legacy core systems and build a strong digital platform,” Littig adds.

Cloud connection
Adoption of emerging technologies such as AI and IoT would not be possible at scale without cloud computing as the enabler and the digital backbone. “Cloud enables emerging technologies to compute large volumes of data at incredibly fast processing times, as and when required,” says Harzallah of KPMG.

“Providing the capability to store and process vast amounts of data also enables digital breakthroughs, such as smart cities. Cloud computing also drives innovation and competitive advantage at the enterprise level by making it possible for organisations to develop and test products in newer and faster ways,” he adds.

Bionic architectures are cloud-native by definition. “Cloud-native architectures enable the design and building of scalable, resilient, efficient, automated systems, ensuring a speedy delivery of business solutions in the form of containerised, dynamically-managed microservices. This architecture gives organisations much-needed speed and agility to deploy and scale new and emerging latest technologies,” says Littig.

“The virtual and containerised nature of the cloud architecture simplifies the integration between technologies of multiple vendors,” he adds.

Cloud giants such as AWS, Microsoft, Alibaba and Google have integrated innovation into their cloud infrastructure that can be activated easily and quickly for their customers, observes Dale of Kearney. “Organisations that use these services can now set up an AI-based chatbot or analyse millions of lines of text in seconds without machine learning experience,” he says.

Xiangyu of Huawei says cloud is now the best platform for unleashing computing power – it empowers digital transformation by harnessing the full potential of advanced technologies like big data, IoT, micro-service, container, and AI.

“Local computing requirements across the region are on the rise. Today governments and enterprises have diversified computing requirements, and a single architecture cannot meet all these requirements. We need to use diversified computing power collaboration to meet differentiated needs,” he adds.

The firm of the future
Businesses that adapt and take advantage of change will thrive – and those that rely on the stability of their sector and marketplace will not survive in the long term, warns Littig.

“Future businesses’ survival will depend on their ability to learn and adapt. The future of business hinges on the ability of humans and machines to co-learning and co-creating innovatively. In other words, in their ability to become bionic companies. That means crafting a new kind of enterprise, one that combines technology and people in ways that bring out the best in each,” he says.

“To achieve this, business leaders must invest in organisational restructuring and re-examine their approach to corporate culture and innovation. Fostering new ways of working and inspiring a strong sense of purpose will be vital. All this isn’t easy, but the result will be organisations that can learn faster than their rivals, thrive in the face of uncertainty, and continually evolve,” Littig adds.

As we look towards 2021 and beyond, there will be a massive convergence of opportunities across five tech domains: connectivity, cloud, AI, computing, and industrial applications. This will be propelled forward by the continued roll-out of 5G networks, says Xiangyu. “These five tech domains will create unprecedented opportunities for governments and enterprises in the region. The synergy among these five domains will enable more efficiency and productivity, bring- ing many industries into the Fourth Industrial Revolution and allowing them to thrive based on their digital capabilities. Governments, too, will benefit by becoming more accessible, with more streamlined operations that will increase safety, security, logistics, and more within their cities.”

For the GCC region, the biggest shift would be from the role of the adopter to that of the creator of these technologies, says Lee. “This shift will require a multi-faceted, comprehensive approach to address the domestic skills gap. Significant investment needs to continue in education reforms to uplift the quality of STEM research, and progressive immigration reforms to pave a path for skilled workers to put down roots and call this region home.”

The UAE citizenship law announced in late January 2021 seeks to address this shortage by attracting skilled professionals and those with special talents.

Looking to the future, failing to ride the current technology wave can cause businesses to lose their competitive edge. “Creating a modern digital backbone and technical capabilities will be key differentiators, to modernise customer channels, supply chains and mid-office systems,” says KPMG’s Harzallah.

“To be responsive to customer expectations and run at market speed, technology is likely to mature much faster than in the past with modern delivery solutions, shifting from projects to products, scaling agile ways of working, and committing to automating core IT processes across the technology life cycle,” he adds.

From providing a better consumer experience to improving data security and automation, emerging technologies are likely to play a crucial role in daily business functions in the future.