Market Trends of KSA Cloud Computing Industry
Robust Shift Towards Digital Transformation Across the Country
- Cloud computing fostered innovation by providing access to advanced technologies, such as artificial intelligence (AI), machine learning (ML), and big data analytics. Organizations experimented and innovated without significant upfront investments. Saudi Arabia's Ministry of Commerce reported a 40% year-on-year surge in cloud computing permit issuances, totaling 1,759 permits from October to December 2023. This marks an increase from 1,252 permits during the same timeframe in 2022. Furthermore, the ministry highlighted that the majority of these registrations were concentrated in Riyadh (1,062 permits) and Makkah (346 permits).
- In parallel to this, numerous banking and fintech entities steadily transitioned to cloud technology since its inception. The financial sector experienced rapid growth in data creation and utilization. This transition enhanced transparency and gave consumers greater control over auditing processes and data management. Additionally, it offered a more flexible method for data classification.
- Furthermore, as organizations digitized their operations, ensuring data security and regulatory compliance became a priority. Many cloud providers offer robust security measures and compliance with regulations, making them attractive to organizations handling sensitive data.
- For instance, in March 2024, Amazon Web Services (AWS), a subsidiary of Amazon.com, announced plans to establish an AWS infrastructure Region in the Kingdom of Saudi Arabia by 2026. This new AWS Region will empower developers, startups, entrepreneurs, enterprises, and organizations in sectors like healthcare, education, gaming, and nonprofits to run applications and serve end users from local data centers. This ensures that customers wishing to keep their content within the Kingdom can do so. Demonstrating its long-term commitment, AWS has pledged an investment exceeding USD 5.3 billion (approximately 19.88 billion Saudi riyal) in the Kingdom.
- In August 2024, Oracle, responding to the surging demand for its AI and cloud services, unveiled its second public cloud region in Saudi Arabia. The newly established Riyadh cloud region will assist public and private sector entities transition diverse workloads to Oracle Cloud Infrastructure (OCI). This transition grants them access to an extensive suite of cloud services, enabling application modernization and innovation in data, analytics, and AI. Center3 has partnered with Oracle to host the new Riyadh cloud region.
- Additionally, cloud computing enhanced digital transformation by evolving it from merely adopting new technology to a comprehensive restructuring of processes, tools, and experiences in a remote, virtual environment. Cloud solutions improve security, enhance user experience, and protect data integrity. Consequently, businesses increasingly incorporated cloud technologies into their operations, driving the growth of the cloud computing market.
Understand The Key Trends Shaping This Market
Download PDF
Telecom is Expected to Grow at a Significant Rate
- Firstly, Saudi Arabia's ambitious investments in 5G are beginning to pay off, fueling a rising demand for cloud-based solutions. These networks, which require substantial computational resources, are crucial for managing increased data traffic and enabling new applications. For instance, CITC (Communications, Space and Technology Commission) anticipates that the contributions of 5G and Wi-Fi 6E to the country's GDP will surge from a recent USD 4.7 billion to over USD 18 billion by 2030. The Gulf region has been at the forefront of global 5G adoption, with most countries achieving nationwide coverage by 2023. Moreover, the number of mobile users accessing 5G services has seen a significant uptick since early 2023.
- In addition, in March 2024, Saudi telco Zain announced its plans to expedite the rollout of 5G-Advanced (5G-A) services. Zain's roadmap for 2027-2030 encompasses the second phase of its 5G-A initiative, targeting coverage for 5G-A technology in the nation's 18 primary cities.
- Furthermore, telecommunications firms are leveraging cloud-based tools to enhance their network infrastructure, improve performance, and reduce costs. By embracing cloud technologies, these operators can optimize network management, harness data analytics, and quickly address potential issues. For example, in March 2024, during LEAP 2024, Saudi Arabia's premier technology event in Riyadh, Ericsson and Etihad Etisalat (Mobily) inked an MoU. This agreement focuses on advancing Saudi Arabia's network using open radio access network (RAN) principles, emphasizing increased network flexibility. The collaboration, a pivotal step in Mobily's network evolution, will investigate diverse 5G deployment strategies within a versatile network framework, catering to both purpose-built RAN and Cloud RAN.
- Moreover, cloud computing plays a crucial role for telecoms aiming to enhance customer experiences. These platforms enable service personalization, immediate support, and behavioral analytics to identify trends and preferences. For instance, in November 2023, Devoteam, a Saudi-based IT consulting firm, is set to provide regional clients with access to Google Cloud's offerings and cutting-edge technological solutions. This follows Google Cloud's official service launch and establishment of local data centers in Saudi Arabia.
- As competition intensifies in the telecommunications sector, companies are actively seeking ways to stand out and achieve profitability. In this landscape, cloud computing stands out as a vital tool, enabling telecom operators to roll out innovative services, reduce costs, and enhance operational efficiency.
