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Similar to many businesses globally, organisations in the Middle East are facing challenges with their digital transformation journeys. The recent pandemic has clarified the need for, and greatly accelerated, the move to digital. It has also magnified the risks and challenges. 

The impact of COVID-19 was felt across every business sector, with many companies grappling to  control their revenue and net income, while their digital  transformations are also falling short.

The challenges are manifold, and
many organisations are not prepared for the complexities of such a journey. 

Issues with business processes, governance, infrastructure and legacy technology are widespread and complicated further by the need to pivot to new, more agile ways of working and different 
organisation cultures, while moving away from traditional top-down hierarchical command and control structures.

The overall business drivers are clear, including digitisation for competitiveness, diversification from the oil economy and the ongoing pandemic. Yet, 
transformations are stymied by
insufficient funding and sponsorship, unclear return on investment (ROI), outdated working processes and practices, complex ownership structures,
and issues around acquiring, rewarding and retaining the right talent, while still achieving employee nationalisation goals.

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  and systems to support their
  businesses, however, many of
  these are now legacy and less
  efficient.

  Quite often, the reasons why these
  were created have been lost in the
  sands of time and disentangling
  them is difficult owing to a lack of
  documentation, resulting in a 
  major obstacle to becoming 
  automated, connected,
  omnichannel, data-driven and
  agile businesses.

  Technologies like robotic process
  automation (RPA), intelligent     
  automation (IA) and natural   
  language processing (NLP) can 
  help bridge the gap between
  legacy applications and modern
  ones, by automating certain
  manual, rule-based tasks done by
  the human workforce, as well as
  moving data between systems.
  It is important to understand if
  this is worthwhile, or whether it is
  just automating inefficiency and it
  would be better to start afresh.

  Businesses should consider
  creating something more attuned
  to the current digital business
  environment that optimises 
  technologies, processes and
  human resource capabilities, with
  the inbuilt agility to quickly evolve
  and address future challenges and
  opportunities.

  Culture, Resistance to 
  Change and Operating
  Models

  Digitisation shifts practices,   
  processes, technology and, of
  course, people, who inevitably     
  need to adapt to new working
  practices and dynamics. While line 
  staff are often (unfairly) identified
  as resistors, quite often the real
  culprits are managers and leaders.

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This is especially true of the Middle East where family ventures are still run by founding family members.  Traditionally, top-down command and control structures served these businesses well, but hierarchical models and cultures do not gel well with the matrixed structures required for agile organisations. The inevitable clash of these two cultures can result in transformation deceleration or even failure.

A parallel twin culture approach
may be appropriate for digital
transformation, that is, legacy
business as usual with a separate
agile, digitally focused initiative.
Businesses should consider
setting up an independent
Digital Transformation function
as a proof of concept (POC) and, perhaps, a separate business with digital resources, staffed
by people with a cross-functional digitisation mindset. 

Bahrain’s well-established
Bank ABC did just that, bypassing
its existing regional retail franchises when it set launched
its digital-only Ila Bank.

Organisations should also bring
some open-minded employees from key legacy functions to
work with these new teams, exposing them to doing things digitally while also leveraging their legacy skills and knowledge.

Experiment with small pilot initiatives: fail fast, adapt, learn and create feedback loops as competencies increase. 

This will enable employees, managers and leasers to
gradually evolve from command and control to a more open leadership style;

one where leaders and executives
provide resources, direction, advice
and some governance (through
KPIs and metrics) while
delegating much of the decision making, accountability and 
initiative to line management and staff.

Leadership Commitment to Full Digital Transformation

While Middle Eastern countries
and populations are embracing
the latest technologies and digital transformation initiatives, Boards and executive leaders in many organisations are either
reluctant to commit to fully-
fledged digital transformations
or their committment gradually declines, due to a lack of clarity around tangible benefits or ROI.

Tech is an enabling tool, but true   
digital transformation includes all
aspects of the organisation, from
its macro business environment
and customers to its internal 
people, process, practices and
culture.

  Enhancing digital literacy
  amongst Board members and
  executives  will broaden their
  understanding of digitisation
  opportunities, risks and the
  consequences of not committing.

  This can be further
  strengthened by appointing a
  digitally savvy business
  technology mentor as a non-
  executive director, or as a
  digital advisor to the Board and
  C- suite.

  Some legacy transformation can
  be achieved through applying
  emerging technologies to
  streamline and automate
  functions such as accounting 
  administration, HR, customer
  services, payroll and others. 

  Starting with small pilots and
  then scaling to an enterprise level
  will enable leaders to fully
  commit, approve realistic
  budgets and support an
  organisation-wide commitment
  to wider transformation.

  When creating a digital business   
  strategy and subsequent
  transformation roadmap,
  in addition to financial ROIs which
  may be long term, it is important
  to identify a broad range of clearly
  measurable KPIs. 

  Metrics should be produced at
  various milestones to show
  achievements in efficiency
  improvement, cost optimisation,
  speed and productivity gains,
  improved customer engagement
  and quality gains. These will
  maintain confidence and interest,
  while providing leaders with
  assurance that the digital
  transformation investment is on
  target.

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Addressing Digitisation
Skills and Expertise

In addition to digital literacy, tech
and digital skills will need to be
enhanced throughout the organisation. As Middle Eastern economies grow and compete,
there will be more demand
and competition for digitally capable resources, which may, in some cases, clash with employee nationalisation requirements. 

This risk can be reduced through training and employee benefits,
such as financial, remote working,
social engagement and commitment to environmental initiatives, all of which are increasingly important,
especially to younger employees.

As digitisation requires a broad range of specialist skills, organisations should consider alternative sourcing models
for some aspects of their  operations; for example, helpdesk and customer support as a service (HDaaS), supply chain as a service (SCaaS), replacing in-house tech infrastructure with cloud services, outsourcing cyber security for greater expertise, reduced
risk and economies of scale.

Partnerships and collaborations can
address some of the gaps; for example, early on in the pandemic, Emaar Malls set up a virtual Dubai Mall on noon.com and Majid Al Futtaim (MAF), the developer behind Mall of the Emirates,
rolled out an online marketplace
through carrefouruae.com.

Middle Eastern governments and
authorities can enact laws to support companies with their digitisation and sourcing models. 

A leader in this field is KSA’s eCommunications and Information Technology Commission (CITC), which over the last few years has enacted practical and well-thought-out laws governing online transactions, cloud computing, cyber crime and cyber security.

To level the playing field, governments should support the creation of small business hubs
for e-commerce, cross pollinating these with their fin tech and digital hubs resources, solving 
opportunity deserts and making online marketplaces easily accessible to SMEs.  

Integrating financing, B2B
services and platform
connections, similar to the
UAE’s B2B Tradeling platform,
can make a significant difference
to the potential success of new businesses.

  It is clear that digitisation and
  digital transformation is an
  imperative for most Middle
  Eastern business. This is a
  significant and
  disruptive challenge, as well as a
  big opportunity for competitive
  advantage, efficiency gain and
  higher-quality outputs.

  Spending on digitisation has
  accelerated significantly
  throughout the region, however,
  many companies are managing
  their digital transformation with a
  traditional operating model,
  thereby increasing the risks and
  failing to fully realise the benefits. 

  A well-handled, holistic digital
  transformation approach
  can streamline digital adoption
  and be rewarding, rather than
  overwhelming.

Contact Fin:
[email protected]