Data economy in the Gulf Cooperation Council (GCC) is estimated to be worth $4.7 billion — representing 0.3 per cent of regional GDP in 2018, notably lower than 1.9 per cent in the European Union three years earlier — according to a joint study by the Ideation Center, the leading think tank for Strategy&, part of the PwC network and INSEAD, the Business School for the World. Although data economy is still in its early stages, there is an opportunity for GCC governments to develop the sector by creating favourable conditions through a variety of approaches.
According to the latest report, governments can offer incentives to private-sector companies, such as infrastructure or solution providers, or data traders that might consider setting up a business in the local markets. Furthermore, regional governments could invest in startups that support data democratisation such as encryption solution providers; distributed ledger technologies such as blockchain; data marketplaces; cryptocurrencies; and data analysis and classification solution providers.
Data create two-fold value and it’s imperative that organisations grasp the value it represents. Companies can use data to improve internal operations and productivity, along with products and services and customer experience. Secondly, organisations can sell the data they produce, either in raw or analysed form. This will provide a boost to regional GDP and help the GCC fully realise the value data can deliver.
Jad Hajj, partner with Strategy& Middle East said: “A move toward data-driven technologies as artificial Intelligence (AI), will further increase the economic value of data. However, despite the GCC countries producing increasing amounts of data, the economic return remains small. We estimate that the GCC data economy is worth $4.7 billion (around 0.3 per cent of regional GDP), a smaller proportion than in the European Union, where it is estimated at 1.9 per cent of GDP. GCC countries have lagged behind because stakeholders lack awareness of the value of their data, and do not sufficiently understand their data’s commercial potential”.
Pierre Péladeau, a leading practitioner in digital transformations for Strategy& said: “Regulations and technology to safeguard the privacy, ownership, authenticity, and quality of data are critical. Given the emerging nature of this market, and the fact that it will remain in continuous change, governments should establish regulatory testing environments (so-called sandboxes) to examine new regulations, such as tacit collusion or mandatory data sharing. In addition, governments should strive to develop the sector by creating favourable conditions for individuals and companies to become more knowledgeable about their data”.
Theodoros Evgeniou, Professor of Decision Sciences and Technology Management at INSEAD, added: “The economic contribution of the data economy is even greater when considering that it is the main enabler for the proliferation of AI applications. In practice, there is no AI without data. So the more data that devices capture, exchange, and analyse, the greater the value that AI creates. We believe that data-driven technologies and machine learning will radically improve and even transform business processes and decisions.”
According to the Strategy& report, there are five roadblocks hindering the development of a full-fledged data economy, both globally and in the GCC. These are related to ownership, accountability, benefit, privacy, and security.
The Ideation Center at Strategy& has outlined how the GCC can unleash its data economy. The data economy in the GCC will start realising its full potential when:
n Regulators can guarantee that the rights of actors are well protected and actors are compensated fairly
n Companies identify opportunities and then shift their focus to building their data-driven culture and undergoing the required organisational changes
n Individuals become more comfortable sharing their data.
In the GCC, telecom operators and large retailers are playing an important role in leveraging customer data. For example, telecom operators in the GCC have employed several use cases, such as improving their sales footprint, proactive maintenance, call centre workforce planning, and network planning.
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