An intelligent, alert, and discerning investor, be they local or foreign, who grasps the potential of the digital infrastructure sector is poised to generate substantial economic value and significantly influence the digital economy.
Dr. Ahmed Al-Yamani, the head of ‘Takamul’, a Saudi government enterprise originating from the initiatives of the Ministry of Human Resources, shared insights on the digital treasure trove of the future in Saudi Arabia. Al-Yamani highlighted that major projects like ‘NEOM’ and their digital transformation counterparts in both the government and private sectors have spurred a heightened demand for digital services in various forms, from delivery to infrastructure, capturing the attention of leading global cloud service providers.
Al-Yamani discussed giants like Google, Amazon, Microsoft, and Oracle, noting that their investment in Saudi Arabia has escalated in the past two years, with Amazon Web Services announcing a $5.3 billion investment in cloud services at the ‘LEAP’ conference in Riyadh in March 2024.
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Indicators point to a steady rise in investments from major companies in digital services and infrastructure in Saudi Arabia. A report by Arizton predicts that the Saudi data center market, valued at $1.78 billion in 2023, is expected to reach $3.18 billion by 2029, with an annual compound growth rate of 10.13% during the forecast period.
The digital pie won’t be limited to big corporations; emerging startups have promising opportunities awaiting them and will become influential players.
Al-Yamani believes in the transformative economic impact startups investing in digital infrastructure will experience. The Saudi official noted that the Saudi economy hasn’t overlooked this, especially over the past two years. He pointed out that the country has moved from one of the smallest markets for startups to the forefront in the Middle East, with investments surpassing $1.38 billion in 2023.
Salman Fakieh, director of ‘Cisco’ Saudi Arabia, underscored the government’s commitment to establishing a robust digital economy, which has resulted in substantial investments in technology. These include the deployment of 5G networks and the development of cognitive cities like ‘NEOM’, aiming to enhance connectivity, service delivery, and attract foreign investments.
Fakieh identified four key challenges faced by the Saudi sector: addressing connectivity issues, cybersecurity, integrating artificial intelligence, and overcoming hybrid work challenges. He emphasized the importance of addressing these to fully capitalize on this promising market.
According to Fakieh, the Saudi market offers ample opportunities in digital infrastructure, with ‘Saudi Vision 2030’ serving as the cornerstone of this transformation. He highlighted initiatives focused on bolstering technological progress and digital infrastructure across various sectors such as healthcare, education, and finance. He also took pride in the country’s 99% internet penetration rate, as reported by the Saudi Internet Report 2023, which is among the highest globally.
Before ‘Vision 2030,’ an e-commerce and retail company in Saudi Arabia recorded 5% of its transactions online. Post the vision’s launch and the subsequent economic surge, the same company now processes 85% of its transactions electronically. Mazen Al-Darrab, founder of Saudi e-retail company ‘Zid’, reflected on this shift, noting that companies have moved from chasing government tenders to aligning with the vision’s objectives, which serve them beyond short-term goals, shaping the country’s strategic direction towards 2030.
Businesses heavily rely on government spending, and the clarity provided by ‘Vision 2030’ has enabled companies to tailor their strategies accordingly, leveraging the demand created in various sectors. Al-Darrab mentioned that many companies have strategically grown by placing their investments early and are now reaping the benefits.
Abdulrahman Al-Thaiban, General Manager for ‘Google Cloud’ in the Middle East, Turkey, and Africa, shared via email the ‘Google for Startups’ program designed to assist early-stage startups to thrive in the cloud. The program offers a combination of compute credits, mentorship, acceleration programs, and other benefits, often ‘primed’ by a cohort of Series A startups.
- Start small and scale as needed, leveraging cloud flexibility to expand resources as your startup grows while avoiding overspending on unnecessary services.
- Utilize cloud providers’ cost-optimization tools, such as committed use discounts, sustained use discounts, and appropriately sized virtual machines.
- Focus on developing your core product by leveraging managed services and serverless computing architectures.
- Take advantage of cloud programs for startups, like ‘Google for Startups’, offering valuable services including credits, technical support, and training resources.
- Make data security a top priority from the start.
- Select cloud solutions that best match your startup’s needs and budget, allowing you to focus on innovation and growth.
