Small and medium enterprises (SMEs) play a crucial role in the growth and sustainability of every economy in the world. Like other country, Saudi Arabia too has benefitted from its fast-growing SME sector which help the country to diversify and aim to establish itself as a non-oil-reliant economy in the longer run. SMEs not only generate employment opportunities, but also drive innovation. According to the latest report of the US-Saudi Arabian Business Council, almost 90% of the total businesses in Saudi Arabia comprise of SMEs which also contributes around 60% of total employment in the country.
Government initiatives to support development of SMEs
The Saudi Arabian government is playing a vital role in the development of the SME sector by establishing multiple initiatives and strategic programs to help the sector grow further. The government has outlined clear objectives in its long-term development plan, Vision 2030 which revolves around boosting the adoption and use of technology by SMEs. Currently, the SME sector contributes to only 20% of country’s overall GDP however the plan is to increase the contribution to 35% by the year 2030. The country has already established the ‘SME Authority’ which aims to review laws and regulations and clear roadblocks to accelerate growth. By facilitating investment in digital infrastructure, Vision 2030 strives to modernize the economy, transform the delivery of government services, and create new opportunities for foreign trade and investment which is poised to strengthen the SME sector.
The government lays-down its short-term development plans under the National Transformation Program (NTP) 2020 that outlines a detailed roadmap to achieve national objectives defined within Vision 2030. In order to increase SMEs’ contribution to the economy, NTP defined three strategic goals:
- Support the growth of enterprises by enabling them to access new markets and offering development programs to enterprises with growth potential
- Enhance SMEs access to diversified financial instruments through empowering them with both debt & equity financing systems
- Develop capacity and promote the culture of entrepreneurship and innovation by stimulating transformation and innovation in emerging enterprises, and developing human technical capabilities.
The Saudi government is making all the efforts necessary to design policies for SMEs that ease the procedure of registering new and innovative companies. At the same time, the government is also striving to provide direct and indirect financing through government financing, commercial banks, and the private sector to support SME development. Additionally, it’s also launching regional and sectoral development programs with aim to accelerate the development of under-developed regions in the Kingdom.
Use of technologies in general
The role of technology in realizing the government Vision 2030 and supporting the ongoing development of mega projects like Neom, Qiddiyah Entertainment City etc. is of paramount importance. Technologies such as cloud computing, big data analytics, mobility and social are driving digital transformation across the country. There is increasing use of emerging technologies like artificial intelligence (AI), internet of things (IoT), augmented and virtual reality (AR/VR), robotics and blockchain to efficiently transform business models, redesign customer engagement and improve operational efficiency.
The SME segment is largely focused on improving operational efficiencies and retention of customers, and also looking for innovative ways to grow revenue and increase employee productivity. Greater adoption of enterprise applications such as ERP and CRM will help them monitor and manage their resources effectively. Analytical tools can help them improve the decision making, especially as increasing volume and variety of data becomes available.
By adding AI and machine learning, they can automate some of their processes and augment others, thereby improving overall intelligence in the organization and enable employee to take proactive actions across functions.
State of Public Cloud Adoption by SMEs in Saudi Arabia
Cloud technology provides the foundation for all the digital transformation initiatives. Cloud not only provides scalability and agility, but it also proves to be a very cost-effective way to accelerate the pace of innovation which is one of the focal points of SMEs.
According to the latest IDC Saudi Arabia survey, almost 19% of respondents representing SMEs (employee size up to 250) are already using public cloud services whereas around 60% of the organizations are planning to implement the technology by 2020. Most of the SMEs in Saudi Arabia who are currently using public cloud services are using Content /Collaborative Solutions (22.3%) and one or more modules of an ERP application (15.7%). The survey also shows that a growing number of SMEs are planning to use cloud-based CRM and business intelligence (BI) and analytics tools. A growing number of SMEs are also planning to use cloud for website / web server hosting.
Benefit of Cloud for SMEs
One of the important factors that accelerate the growth of public cloud services in the Saudi SME sector is the cost attractiveness of software-as-a-cloud (SaaS) services. According to the IDC survey, 35% of SMEs segment say that cloud help them move IT specific spend from a Capex to an Opex model. For some (28%) cloud enables them to improve the quality of service they offer to business. Some of the most important benefits SMEs derive from public cloud are as follows:
Cost Effective Without Compromising Efficiency and Scalability:
Traditional IT solutions require substantial investment in IT infrastructure and skilled professionals to maintain and effectively run the technologies. With the cloud-based solutions, businesses can enjoy usage-based payment that means they will pay only for what they use. By using a subscription-based solution, SMEs can easily avoid the initial investment on the hardware and software and yet get highly advanced features at minimum initial cost. SMEs are thus able to spend less on IT administration and support when using SaaS-based solutions while simultaneously improving efficiency and business impact.
Greater Access and Collaboration results in increased flexibility and mobility:
SaaS based applications allows the employees to access the software applications anytime, anywhere, and on any device. This helps the mobile workforce to stay connected with the team and be productive. SaaS applications also helps the SMBs to get real-time updates on the work progress and also increases the collaboration where employees can easily perform the tasks in their workflow, interact among each other and share files and content.
Easier integration with multiple applications:
Many cloud-based applications offer simplified integration and interoperability with other cloud solutions. APIs (Application Programming Interface) are now available in many cases that allows the users to build and integrate application software and enable them to integrate new application components into an existing architecture. By greater and easier integration, SMEs can use multiple and specific software and can integrate various software such as operations, HR, finance and accounting on a single platform to have a consolidated view.
Ability to scale up and scale down the resources:
Scalability is the most important benefit that cloud has to offer to the SMEs. When SMEs grow their business, they need more compute, storage and application resources and need to scale up their IT infrastructure. Similarly, there are businesses such as ecommerce and online retail where the demand is cyclical in nature, causing surge in computing needs. In a SaaS-based solution, businesses get greater level of scalability which helps them to easily scale-up and scale-down as their business demands.
Access to more advanced and latest functionality:
Cloud provides access to latest feature and functionality updates. Cloud providers are constantly updating their services. Improvements on current functionality and new digital technologies such as AI, RPA and analytics are getting increasingly embedded or being made easily available for integration with software applications and tools. Many of the changing business requirements need new industry functionality – which cloud platforms can provide more readily. Being on top of security patching and updating software versions is often a challenge for on-premise software. Cloud takes cares of that and users need not worry about it.
Enables Self-Service for Improved Efficiency and Agility:
Self-service feature is one of the major benefits that businesses see today which helps IT and operations teams to bring more agility, eliminates the mundane and repetitive tasks and improves overall efficiency.
Bluvalt brief intro and value proposition:
Launched in 2017, Bluvalt is a Saudi based cloud services marketplace that strives to encourage and boost the SME ecosystem in the country. The marketplace which is built locally by utilizing Saudi based developers and software engineers, offers two key cloud services namely Cloud Applications (SaaS and PaaS) and Virtual Data Center solutions (IaaS).
Under its cloud applications, Bluvalt offers various cloud-based business application solutions which are locally hosted within the country. Solutions within the business applications range from various modules of ERP solutions such as accounting, order management, and material management as well as other business applications like HR & payroll, productivity applications, and unified communication and collaboration solutions.
Within its PaaS offerings, it leverages its pool of local software developers to offer custom-developed business applications that cater to the requirement of SME markets. In order to offer an advanced yet cost effective cloud solutions for the SMEs, Bluvalt runs a comprehensive technology partner ecosystem program where it collaborates with various cloud service providers, cloud integration providers as well as cloud technology providers.
With its self-service feature, Bluvalt makes the registration and subscription process very simple and user friendly where users can easily purchase the required cloud services just like any regular online shop and get the services initiated. This enables easy and accessible on-boarding for its customers to accelerate their cloud adoption and gives a kick-start to their innovation journey.
Usage based payment model also helps them avoid huge upfront costs. One of the main advantages of Bluvalt is its adherence to various standards, compliances and regulations which address the challenges and concerns around information security and data sovereignty for the customers in the Saudi Arabia. Headquartered in Saudi Arabia, Bluvalt has Tier 4 data centers and other certifications across multiple cities within the country and its cloud services are governed by Saudi laws and regulations which effectively protects customer’s data and addresses their regulations and compliance specific concerns.
The company follows the government’s Vision 2030 by promoting the local content, empowering Saudi based IT talents to help in job creation and bolstering the SME segment which would result in an increased contribution to the country’s GDP in the longer run. Bluvalt continues to invest in developing the digital workforce and required ICT skillsets and improving its evolving IT infrastructure in order to accelerate the adoption of cloud and support the ongoing wave of digital transformation momentum in Saudi Arabia where cloud is seen as a foundation.
Recommendations:
Below are some of the ways where SMEs can think of while planning their cloud journey.
Develop a cloud strategy: Every business operating in different sectors has different requirements and therefore their cloud need would also vary. The idea scenario to plan the cloud strategy is to start evaluating the current IT environment and prepare a desired framework to examine various use-case scenario where cloud deployment can bring better results. Businesses don’t need to migrate all at once to the cloud rather they can start with initial deployments.
Prioritize and Evaluate the business objectives: Once the organization define their cloud strategy, they need to identify and prioritize the business objectives that they want to achieve. Data classification becomes critical while using a SaaS based applications that helps the businesses identify the high-risk and low-risk factors associated with the workloads and enable them to begin with non-critical workloads with low-risk environment to start their cloud journey.
Ensure the cloud service provider adheres to the country data governance and regulations: While selecting the cloud services from any third-party solution providers, SMEs need to ensure that their data is protected, highly secured and backed-up at multiple availability zones eliminating the risk of data doss at the time of natural disaster or calamity. Apart from these, the businesses also need to ensure that the selected cloud provider also adheres to the country’s data regulations which further protects their rights.
Be selective in choosing a cloud service provider: Finding the most appropriate cloud solutions for SMEs are also critical. Businesses need to evaluate the service level agreement, ensure the cloud offering is secure and reliable, and offers greater support functionality.
Conclusion:
Cloud is the underlying technology that is transforming the way businesses are done today. Not only large enterprises, even small and medium enterprise are leveraging the benefits that cloud has to offer. However, before making the move to embrace cloud, SMEs need to determine the key drivers for their businesses that is causing the cloud-shift and accordingly define their cloud-migration roadmap to reap its benefits. Also, data privacy and locality could be a concern. Local cloud datacenters and local cloud marketplaces (such as Bluvalt) are now available in KSA which could alleviate these concerns. If the organization needs to use cloud services being delivered from a datacenter outside KSA, consider placing low risk data and data that’s not stipulated by regulation to be placed in the country on the that public cloud.