Oracle building major cloud data centres in the UAE, Saudi Arabia

Digital transformation has been a buzzword in the GCC for some years now. And while most regional governments have been walking the talk, the pandemic this year has hastened the need for technological deployment across the board – for public and private sector entities.

With data emerging as the most valuable commodity in this new digitally driven economy, the need for secure cloud infrastructure has escalated.

There has been an explosion in public cloud spending across the GCC with the cloud now one of the fastest-growing segments within IT, expanding at a compound annual growth rate (CAGR) of over 25 per cent, according to data from tech consultancy IDC. The research firm predicts that by 2025, cloud spending by public and private organisations is going to reach $2.5bn. Behind this momentum is the fact that the cloud is even more relevant today than it ever was.

“This increased adoption is driven by an urgency in many organisations in both the public and private sectors to rationalise their spending. There’s a widespread need to shift from CAPEX (capital expenditure) spending to OPEX (operating expenditure), as well as a need to drive even more digital initiatives within the organisation. And this has become even more pronounced during the current pandemic,” explains Jyoti Lalchandani, group vice president and regional MD, Middle East, Turkey and Africa, at IDC.

“Through the current disruption, there’s a greater focus for organisations to move some of their initiatives to digital, and this is happening across industries, from the public sector to banks and financial services, retail, e-commerce and digital commerce, and others.”

In fact, the cloud may have reached an inflection point, especially in the last few months where the market environment has changed dramatically. “We think almost 40 to 50 per cent of products are going to be digitally delivered, or digitally created,” says Lalchandani. It is clear organisations need to do things differently compared to the last few years to keep up with changing demands.

“Organisations everywhere are rebuilding and recovering from this current disruption by re-configuring their supply chains, moving customer and employee engagements to a virtual world and closing their financial books remotely,” says Abdul Rahman Al Thehaiban, senior vice president – Technology, MEA and CEE at Oracle.

The pandemic is applying tremendous pressure on IT teams and business units to transform the way they deliver products and customer experience. Recent research in the second and early parts of the third quarter has revealed that the cloud has emerged as a crucial business enabler during the pandemic. According to a survey by IDC, 43 per cent of the GCC CIOs said they planned to spend more on public cloud software (SaaS) than they had originally planned pre-Covid. Another 32 per cent said they will spend more on infrastructure as a service (IaaS) than they had earlier planned.

“During any upheaval, it is critical to partner with a technology provider that can guarantee an ‘always on’ service. Oracle is well poised to be that partner for organisations in the Middle East,” states Al Thehaiban.

He cites the example of global video communications company Zoom, which saw usage spike dramatically during lockdowns earlier this year, when remote working and online learning became the norm across the globe. The use of Zoom’s software grew 30-fold in April, spiking to reach up to 300 million daily meeting participants at its peak. Zoom deployed Oracle Cloud to manage the situation and “within hours, Oracle Cloud infrastructure supported hundreds of thousands of concurrent Zoom meeting participants”.

In the region, Saudi Arabia’s Ministry of Health created a chatbot to respond to all Covid-19 queries, which was hosted on Oracle Cloud. The monthly usage for the MoH bot is more than a million hits a month. Also in the kingdom, Taibah University, one of the country’s largest educational institutions – which runs on Oracle Cloud, was able to offer an online learning platform to more than 70,000 students during the lockdown.

“Covid-19 won’t be the last of the disruptions that businesses must contend with. It’s important for them to re-evaluate and rebuild their business models to be more resilient. Yet resilience is no longer about having the cash reserves and resources to weather disruption right now – it’s about building an infrastructure that is flexible, cloud-based and automated to deal with constant, unrelenting change,” explains Al Thehaiban.

“Enterprise resilience comes in two parts. It’s about having the foresight to identify areas of risk and causes of disruption. But it’s also about having the agility to quickly transform operations to adapt to what’s coming down the track. The mantra is ‘expect the unexpected, respond and adapt’.

“The paradox of a resilient organisation is that it needs to be both flexible and firm under pressure. That’s at all levels – including the people and systems that make up the company. To accomplish this, companies need an empowered workforce supported by a flexible and integrated infrastructure – leveraging the cloud, big data, automation, AI and machine learning,” he adds.

Cloud calling
To further support regional organisations in their digital transformation strategies and leverage the increased need for cloud, Oracle last month announced the opening of the first of two planned second-generation cloud regions in the UAE. The addition of the Dubai cloud region is part of Oracle’s aggressive plan to have 36 cloud regions by July 2021. The new centre will offer all Oracle Cloud services, including Oracle Autonomous Database and other applications.

“The UAE’s Fourth Industrial Revolution strategy, the appointment of a federal minister to further the adoption of artificial intelligence, and the setting up of an entity like Smart Dubai, which focuses on leveraging latest digital technologies to deliver an excellent experience to citizens, residents and visitors, are clear indicators of the development of a national infrastructure for thriving in the digital economy,” says Al Thehaiban. The contribution of the digital economy to the UAE’s GDP stood at 4.3 per cent in 2019, with the country aiming to double the figure by enhancing its digital readiness.

“Oracle’s second-generation cloud region in Dubai will help accelerate the digital transformation initiatives of organisations across the UAE government entities, large enterprise and SMEs, thus directly supporting the country’s economic vision,” he adds.

Locally-based cloud data centres allow customers to access the full range of public cloud for IaaS, PaaS and SaaS while also addressing some of the challenges associated with public cloud such as latency and data residency requirements. The latter is a legal requirement in some of the more regulated sectors like government and financial services.

From a strategic standpoint, the development addresses the proven demand for public cloud capabilities, regardless of the deployment model. Further, Oracle’s expansion in the region will make the cloud market more competitive, giving organisations more options. “This investment is great news for Oracle customers but will also help drive the overall public cloud market,” says IDC’s Lalchandani.

According to IDC research, nearly 40 per cent of the core IT spending within an organisation will be related to the cloud by 2022. And that ratio is going to increase to almost 80 per cent by 2028.

“The question for many organisations now is not ‘why cloud’, but ‘why not cloud,” says Lalchandani. “The investments in the region by Oracle and other hyperscalers is great news for customers, because they can then tap into these investments and infrastructure and to make a business case for their organisation,” he adds.

Oracle, whose regional clients include companies such as DP World, Damac and Abu Dhabi Customs, is also confident that its investments in the GCC will pay off. “Our planned cloud infrastructure footprint for the region, including two cloud regions in the UAE, and two in Saudi Arabia, is a direct response to the rapid adoption of Oracle Cloud in the region. Based on our deep knowledge of the market and backed up with our historical presence in the region, it gives us great confidence in the investments we have made in the region. We will see existing Oracle customers move their workloads on to the cloud and out of that, part will be hybrid cloud, cloud at customer and dedicated cloud at region, with new workloads also coming on to the cloud,” elaborates Al Thehaiban.

In safe hands
Confidence in the public cloud is growing in the region. Lalchandani says that in the last few quarters, a lot of organisations have moved their mission-critical applications and workloads on to the public cloud, overcoming traditional anxiety. “These large-scale investments being made by hyperscalers and other application providers like Oracle are boosting the level of confidence in organisations to move some of their mission-critical solutions onto the public platform,” he says.

There are some who still prefer a hybrid cloud model where certain workloads are shifted to the public cloud and others remain on their private cloud. “Concerns over connectivity, security and management in multi-cloud and hybrid environments will not derail the general public cloud momentum,” he opines.

Adds Al Thehaiban: “Businesses realise that using cloud can help them drive higher ROI, save costs, find new revenue streams, deliver exceptional customer experience, retain the best talent, and stay ahead of the competition. Most importantly, the cloud provides an unprecedented platform for innovation while also delivering robust security.”

In the past, security was one of the main concerns that hindered the move to the cloud. However, Al Thehaiban stresses that such worries no longer hold merit. “Oracle’s second-generation cloud infrastructure was conceived and architected with security as a primary design principle – even before the recent sudden move to remote work complicated cloud security even further,” he explains.

“For example, keeping operating systems patched and secure is another one of the biggest operational challenges that IT organisations can face. With Oracle autonomous Linux in Oracle Cloud, you can minimise the availability and security risks that stem from missed or incorrectly applied patches by using more automation like auto scaling, lifecycle management across pools, and monitoring. Oracle Cloud also uses customer isolation, data encryption, high availability, and a zero-trust architecture (which verifies anything and everything trying to connect to its systems before granting access) to protect data and prevent breaches.”

For those organisations that don’t want to migrate their data outside their firewall, due to whichever internal requirements they have on data sovereignty, Oracle even offers the ‘Cloud at Customer’ service where essentially, they build a cloud infrastructure at the client’s data centre.

Another challenge is one of costs. While savings are often cited as an important reason for companies to migrate some or all of their on-premise IT infrastructure to the cloud, pricing and cost structures can create hurdles. A recent IDG survey of more than 530 IT and business decision-makers conducted on behalf of Oracle found that 40 per cent of respondents identified controlling costs as their top public cloud challenge.

“That’s why we worked to address the economic as well as functional demands when we designed our cloud. Oracle Cloud is architected to minimise variable and hard-to-predict costs, deliver consistent pricing across regions, provide service and billing flexibility, and offer industry-leading price/performance and business value,” insists Al Thehaiban, adding that these services help Oracle Cloud provide customers with price advantages of “up to 65 per cent or more”.

Long-term view
Looking ahead, organisations need to rethink the way they leverage technologies, especially emerging technologies like AI and blockchain. In that context, cloud becomes a very important consideration, because it allows organisations to build more operationally-efficient infrastructures with the agility to scale up or scale down, observes Lalchandani. “I think this will be an exciting story for Oracle because some of the AI, machine learning and automation features are going to become critically important for organisations as they modernise their applications,” he says.

Al Thehaiban emphasises that the role of the company remains clear, especially in the current situation. “Oracle has been in business for decades doing the mission-critical work that keeps businesses and organisations around the world up and running. Ensuring business continuity for our customers is always a top priority for Oracle, and now more than ever, we are focused on helping our customers quickly respond to the unique demands they may be facing.”