Digital Economy: A Way To The Future
The unstoppable rise of the digital economy is integral to Saudi Arabia’s future.
The proliferation of digital technologies in every aspect of daily life has given rise to the digital economy, where the majority of products and services are digitally augmented or based on a digital delivery model. In fact, research suggests that by 2022, digitally transformed products, services, and enterprises will account for 65% of global GDP.
Saudi Arabia identifies the digital economy as a critical component of the nation’s future. In 2020, the kingdom came up with a digital economy policy and has taken several steps across three key areas:
NATIONAL PROGRAMS: Saudi Arabia has created several vision realization programs such as the public sector-focused National Transformation Program; the National Transport and Logistics Strategy; the private sector stimulation program, Shareek; the ICT Sector Strategy 2023; and the Programme HQ initiative, to name a few. These initiatives stimulate sectoral growth and catalyze the evolution of the digital economy.
MEGA-PROJECTS: Saudi Arabia is building several mega-cities, including the flagship NEOM – a city fueled by data and run by artificial intelligence. These developments feature ultra-personalized services and sustainable models, creating a new global benchmark in smart city development.
DIGITAL-FOCUSED ENTITIES AND LEGISLATION:
Saudi Arabia has established several tech-focused entities and legislation to support the digital economy. These include the authority and strategy for data and artificial intelligence (SDAIA & NSDAI), the Cloud First Policy for government entities, and the Internet of Things (IoT) Regulatory Framework.
The rise of the digital economy in Saudi Arabia provides significant opportunities for private-sector enterprises. However, to play and compete in this new economic construct, organizations need to transform themselves into digital enterprises. Research demonstrates that digital enterprises realize twice the revenue and operating profits of conventional enterprises today. Such digital enterprises thrive on four key aspects:
EXPERIENCES: A digital enterprise provides consistent, personalized experiences to customers and employees. Employees are becoming more critical than ever due to the increase in work-from-home practices and the enhanced focus on acquiring and retaining talent.
OUTCOMES: Digital enterprises focus on outcomes achieved through digital business models and automation. For example, retailers that adopted e-commerce, digital supply chains, and warehouse automation were more resilient to COVID-19 disruption and adaptive to the new normal.
INSIGHTS: In a digital enterprise, data is considered critical in enabling experiences, automation, decision making, and product/service improvement. One survey reveals that 55% of organizations in Saudi Arabia plan to increase investments in big data analytics — the highest rate for any advanced tech.
COLLABORATIONS: Innovating with partners and participating in industry ecosystems is a key differentiating characteristic of digital enterprises. The bank– fintech collaboration to cater to a new generation of customers is an interesting example in this regard.
The Digital Economy and Its Primary Constituents In the post-pandemic world, business resiliency will be underpinned by the adoption of digital technologies. To thrive in the new normal, organizations need to move fast on their digital journeys, converting themselves into data-centric digital enterprises.