Digital arms: Government initiatives help drive digitisation across the economy

Saudi Arabia’s Vision 2030 strategy establishes ICT as a central pillar of the Kingdom’s future development. A number of Saudi ministries have been actively pursuing an ICT agenda for some years, and this work is set to accelerate as they strive to meet the shorter-term objectives recently defined by the National Transformation Programme (NTP). However, while to date the ministries’ efforts have often been carried out in isolation, recent developments suggest that a more connected approach may be taken by the government in the future as it seeks to meet its goals. “The NTP has laid the foundation for digital transformation-led innovation in Saudi Arabia,” Abdul Rahman Al Thehaiban, senior vice-president for Middle East and Africa at Oracle, told OBG. “However, with new technology there are conceptual barriers to overcome as change is difficult for many to adapt to. This requires awareness, speed and flexibility, and a disciplined approach to innovation.”

MINISTERIAL AMBITION: The digitisation of the Saudi economy has for the past decade or more been led by individual ministries and their “digital arms”, which they have either developed themselves or with companies operating in related fields. The Ministry of Commerce and Investment, for example, is known for its association with Thiqah Business Services, with which it has developed a range of e-services relating to commercial register data, making the retrieval of information a much simpler and less time-consuming process than it was previously.

Elm, meanwhile, is known for its work with the Ministry of Interior. Established in 1986 as a research company owned by the National Information Centre, it built its reputation in the field of information security before expanding into a wider range of IT support services. Now owned by the Public Investment Fund, it has more recently offered these services directly to the private sector, as well as government agencies. Its products are introducing the advantages of digitisation to numerous aspects of Saudi life, including: Efada, a secure electronic system for the recording and transferring of medical check results from health institutions; Kashef, a vehicle licence plate recognition system which is linked with governmental databases; and Muqueem, a service which allows organisations to explore resident workers’ data and execute passport procedures online. Elm has also moved beyond the provision of traditional electronic services to supply a number of other useful applications, such as resource and planning and project management software through its proprietary cloud service.

HUMAN RESOURCES: The Ministry of Labour and Social Development’s digital arm is Takamol, which aims to “boost the labour market and social development, empower human resources and improve the business infrastructure”. It runs a number of programmes for both employers and employees, ranging from skills-building initiatives such as Doroob, an e-learning platform, to a teleworking programme which aims to provide job opportunities for women and people with disabilities. The Ministry of Labour and Social Development has also used Takamol to develop its Mowaamah programme, which created an incentive scheme to encourage businesses to create work environments suitable for the disabled.

Tamkeen Technologies performs an equivalent function for the Human Resources Development Fund (HRDF), with the objective to allocate qualified manpower to work in the private sector. Established in 2013, Tamkeen Technologies provides valuable, dynamic and innovative IT solutions to the government sector, which has included the HRDF itself, the Technical and Vocational Training Corporation, and the General Organisation for Social Insurance.

The Ministry of Finance and the Ministry of Transport, meanwhile, are closely associated with IT company Tabadul, which was established in 2009 and charged with creating a data exchange system by which the private sector and government agencies could carry out import and export processes electronically. The system is utilised by numerous government bodies, such as the Saudi Customs, Saudi Ports Authority and Saudi Arabian Airlines. As well as continuing to develop the IT infrastructure to support the flow of goods across the Kingdom’s borders, Tabadul has branched out into other fields of activity, including the development of an e-procurement programme commissioned by the Ministry of Finance.

“Government contracts remain dominant in the ICT sector,” Mohammed Kehail, managing director of Qudra Tech, told OBG. “Historically, the application procedure for these has been opaque, but this process is changing. Aside from bureaucratic digitisation aiding in accountability measures, a drive for transparency in the Kingdom is increasing the attractiveness of these potentially lucrative projects.”

CENTRAL CONTROL: While ministries remain free to follow their digitisation road maps, the last year has seen the emergence of a new body which has been granted a broader strategic mandate. Established in 2017, the National Digitisation Unit (NDU) is a government entity which has been tasked with driving the digitisation of citizen services in partnership with the private sector. The new body is intended to act as a guiding force for the wide array of ministries and government departments which are in the process of implementing the objectives of Vision 2030. The NDU has been given a broad brief, which includes “playing the role of an enabler, disruptor, incubator and guardian of a portfolio of programmes.”

By the close of 2017 the NDU had already signed a memorandum of understanding (MoU) with NXN (formerly neXgen), a leading consulting and digital service provider in the MENA region, which aims to build on the progress the Kingdom has already made in open data. This effort has, until now, been centred on the government’s open data portal, which makes available to the public a series of open-format data-sets from ministries and government entities in the Kingdom. As well as allowing for greater oversight of government activity, the information provided by the portal has a practical application in research, reports, generating feedback, and developing web and smartphone applications and solutions.

One of the NDU’s most visible projects in 2017 was FekraTech, an interactive platform that enables citizens to participate in the national digital transformation by submitting ideas or projects for digital solutions to a series of challenges. The NDU collaborated with the Ministry of Health for the initiative’s first round, and participants submitted their solutions to a number of health-related issues throughout October and November 2017, with the winners selected in January 2018.

After the winners announcement, three more themes will be explored – education, smart cites and e-commerce, with each phase running for three months. The winners in each challenge will be given the opportunity to incubate their projects, during which they will benefit from seed money, mentoring and coaching, and/or office space, depending on the requirements of the project and the terms set out by the incubating partner. It is also possible that incubators will negotiate a percentage of ownership of the start-up in return for the resources provided.

PRIVATE SECTOR: The implementation of the NDU within the Kingdom’s electronic ecosystem promises to bring a useful degree of policy centralisation. While ministries have made some encouraging advances, there is still much to be done.

“Big opportunities are expected in automation hardware,” Sami S Saadi, president of Saudisoft, told OBG. “Many services have already been automated, such as CR, iqama and Abshir services, but many more are left. Government ‘back office’ processes are where real opportunities can be found, including in security and backup.” One of the most pertinent questions in 2018 is the degree to which the private sector will be involved in this process. The government’s digital arms have historically cooperated with private ICT entities, and many of them have a perceptibly private flavour themselves. Thiqah Business Services, for example, was founded in 2011 with SR1m ($266,600) of capital and has a market value of around SR16bn ($4.3bn). Despite being 100% government-owned, its Riyadh office is inhabited by key personnel with private sector backgrounds, and the solutions it delivers are generally implemented using a public-private partnership model in which Thiqah Business Services takes a revenue share.

However, despite the useful synergies that have sometimes been exploited by private and public joint ventures, some players in the industry feel that the government has been too active in the ICT market. According to this line of thought, while the use of digital arms by ministries has revolutionised the way many Saudis interact with the state, their dependence on these closely allied assets is bad for competition and stifles innovation. This view, therefore, sees the government-led digitisation drive as a having a distorting market effect rather than acting as a driver for sector growth.

While the government’s proactive stance means that it is likely to continue to spearhead the national digitisation effort, it is widely felt that its partnership and communication with the private sector remains a most crucial criterion. “It is important for the government to increase dialogue and collaboration with the private sector through discussing further digital measures with end-users and companies, which should also help streamline implementation,” Safwan M Al Khatib, managing director of Smart Link BPO Solutions, told OBG. Within the context of this debate, then, the significance of the NDU’s timely inauguration and its continued efforts to ease administrative processes and cooperate with the private sector in times to come is duly noted.