Bridging the digital divide

Absence of skilled manpower, the lack of economies of scale and an overwhelming dependence on the government sector are holding back Oman’s IT industry from realising its full potential. A report by Mayank Singh

BankMuscat inaugurated its new headquarters at Airport Heights in December 2010. The 32,000 sq mtrs office built at an estimated cost of RO50mn combines modern and traditional Omani architecture and interior design with a view to enhance the working environment. The custom made building incorporates the latest technology and trends, meeting the key requisites in terms of functionality, security and business continuity planning. IMTAC, working with its business partners, implemented the technology solutions for the new building by installing the network, data centre, structured cabling, IP telephony, IP Television etc. Says Fareed Al Hinai, vice chairman, IMTAC, “BankMuscat has set a benchmark and seeing the benefits that the bank has derived in terms of customer goodwill and functionality other organisations are sure to deploy a similar infrastructure.”

The state-of-the art technological prowess of the new office reflects the strength of the IT services industry in Oman. While the sector may not be in your face, IT companies in the Sultanate have been doing cutting edge work in the region and beyond. Looking for a state-of-the-art centralised payment and collection platform to replace its legacy systems, the Government of Egypt was faced with the challenge of implementing a solution that was capable of managing seven million pension payments and six million plus salary payments per month. In addition, the system had to handle 20 million tax and custom transactions annually. The solution needed to be scalable, secure, improve citizen services, increase operational efficiency, reduce turnaround time and bring about speedy administration.

Bahwan CyberTek developed CUECENT ePay -- a National Payment Gateway Solution, to address these specific requirements and deliver on what the government of Egypt was looking for. The CUECENT ePay National Payment Hub provides an end-to-end ePayment solution for the Ministry of Finance and other government entities in Egypt. It has multi-language capability and supports multiple currency, organisation and location operations for payment of any defined services. The gateway facilitates the collection of taxes of over $220mn and custom collection of $190mn plus annually. Says Mahmoud El-Gamal director (operations), eFinance, Egypt, “We are pleased to find IT players from this region attain international acclaim and that too in creating valuable intellectual property.”

Bahwan CyberTek Group has emerged as one of the largest IT software products and services companies in the GCC region. An SEI CMMI Level 5 company, BCT employs over 1,300 knowledge professionals, spread across the USA, Middle East, Africa and India. BCT has over 300 customers globally, including Fortune 500 companies and clocked a turnover of over $101mn in 2010.

The growth has not been restricted to tier 1 companies but has also helped small and mid-sized companies. Integrated Systems, which defines itself as a systems integrator and solutions provider grew by 15 per cent in 2009 and 2010. The headcount of the company has grown from 24 to 42 over the last two years. Al Kay’s International which started in 2006 has recorded a year-on-year growth of 35 per cent since inception. An impressive feat even after factorising the small base effect. Al Kay’s has implemented a smart card system at an oil major’s offshore fields. The card enables the client to monitor the number of meals served by the contractor in the canteen on an ongoing basis. The oil company has reportedly recovered the cost of implementing the solution within four and a half months.

 

ITA driven initiatives

A large part of the credit for fostering a digital culture in the Sultanate rests with the Information Technology Authority (ITA). The Authority was established in 2006 as a part of a national strategy regarding e-governance and building a digital strategy. Since then, ITA has undertaken a number of IT related infrastructure projects, helped the government to provide its services online and has equipped public sector employees with the right skills to benefit from technology. Says S Jayakumar, general manager, International Information Technology Company (IITC), “ITA has brought about a focus on the industry as a standard driving entity. It is encouraging the usage of IT and bringing in an ICT culture.”

As a part of its mandate ITA is undertaking a number of ICT related initiatives. As a part of the National IT Training and Awareness Framework (NITTA), it is working on a nation-wide eOman initiative which aims to develop ICT awareness, skills and capability within the government and the community. The Government IT Training and Certification (GITC) project under NITTA aims to provide internationally recognised digital literacy certification to all civil service employees in a phased manner during the period 2008- 2011.

The Authority is training 100,000 government employees as a part of GITC programme. Replacement tests for 40,000 employees have been completely recently and over 23,000 civil service employees have finished training. Community Knowledge Centres (CKC) are being established throughout Oman to provide free training of basic IT skills. Anyone from the community who is literate and above the age of 15 is eligible to join these centres. These centres also double up as places where people can access the Internet or use government services online.

To facilitate public access to government services through a single entry point an official eGovernment Services Portal has been launched. The portal serves as the main gateway to electronic services offered by the government leading to convenience and cost savings. A National e-Payment Gateway (ePG) allows secure online payments (e-payments). The ePG will operate as a critical shared service within the e-governance architecture along with Oman’s forthcoming Government eServices Portal. The gateway is expected to increase the adoption of e-Services along with electronic payments, particularly Internet-enabled payments which are easy and efficient.

A Data Centre has been conceived as a part of the Digital Oman Strategy. The Data Centre will enable government organisations to provide better business continuity and more effective risk management. Says Fareed, “ITA is rolling out a number of national level infrastructure projects and focussing on security in a big way.” An Innovation and Support Center (ISC) has been established to provide ICT incubators for local entrepreneurs, nurture skill and to transfer knowledge. The first centre, established in association with Microsoft Corporation, houses consultants who work with a local team to identify, design and implement innovative solutions to benefit the government of Oman.

 

Fillip to IT business

The Digital Oman Strategy has come as a shot in the arm for IT companies due to its business potential. And a number of players have been quick to seize on the attendant opportunities. Exceed IT Services and Training, a Microsoft certified gold partner and Microsoft authorised large account reseller has signed an agreement with Oman’s government to provide 22 services like capacity building, knowledge transfer, implementation, deployment etc. The company works with ITA to promote digital literacy across the country. Exceed has trained 1,000 people making them computer literate. In addition, it is providing specialised training to 400 Omanis. These people are being imparted programming skills and a knowledge of applications.

The company signed an agreement with the government to deploy Microsoft’s Windows 7 operating system on 60 per cent of the 31,000 desktops being used by the government in the country from December 2009-June 2012. This works out to 18,000 plus desktops in 70 plus government entities. Says Fawzi Al Harrassy, managing director, Exceed, “We follow an approved methodology in which we run a health check on computers, scanners and printers to see where they stand and what needs to be done to upgrade their capabilities.” The company chose 60 Omanis from over 1,000 candidates and put them through a rigorous 12 month IT course. These Microsoft certified professionals have been deploying Windows 7 OS across various organisations. “As of today we have deployed over 14,000 desktops and we will reach over 18,000 desktops by June 2012,” adds Fawzi.

Given the sweep of government led initiatives it is hardly surprising that business from the public sector remains the mainstay of business for most Omani companies. The dependence on government led projects increased as private sector clients have become more cautious about spending in the wake of the global financial crisis. Says Haitham Abu Nasser, general manager/partner, Integrated Systems, “2008 was a big year in terms of business. In 2009 and 2010 though the private sector got hit, but the government kept spending on projects. Since February 2011 business has been slow as people have become cautious and decision’s are taking longer.”

Faced with a slowdown a number of IT companies are innovating to stay ahead of the curve. Bhawan CyberTek has over the years spread its operations to countries like US, India, the Far East and in the Middle East region. This geographical diversification has stood it in good stead. The company acquired 21 new customers in 2010 in the US. These include Fortune 500 companies like Webster Bank, Biogin, SAIC etc. The subprime crisis forced a number of US based companies to look for small and medium sized partners which could deliver the same or better quality of products and services as large vendors at a more reasonable cost. This worked in favour of companies like Bahwan CyberTek.

Says S Durgaprasad, director and CEO, Bahwan CyberTek, “What has enabled us to maintain growth is that we played the game differently. We believed that we need to play the super competition role, while others competed for the run of the mill business. We made some investment in our product initiative and that has paid good dividends. The company built solutions for mission critical application environment in the government, banking and corporates and that’s a sustained growth model. We also went in for thought leadership contracts in the oil and gas sector with PDO.” As a part of the thought leadership programme BahwanCyberTek became the first IT company in the region to offer an outcome based contract. As a part of the contract, the deliverables and outcome are measured by a balanced scorecard method and the company’s earnings are proportionate to the value generated for the client.

IITC has tried to control costs by hiring less people and outsourcing some of its work. The company has outsourced ERP related work to Wipro, the Indian IT company. It also worked on bringing in new efficiencies in its workspace by using less resources to deliver more. Says Jayakumar, “We diversified into areas like managed services, converged infrastructure implementation, portal implementation, virtualisation and went in for specialised services to meet demands from our customers and to differentiate ourselves from competition.”

New trends in the market

“Oman is equivalent if not better in terms of IT preparedness to other countries in the region,” says Ashok Sardiwal, CEO, IMTAC. The fact that global trends like Cloud Computing, Virtualisation and Convergence are making inroads into the market underscores the point. Says Eyad Shihabi, managing director and enterprise business leader for HP Middle East, “We are focussing on bringing in technological innovations to Oman and are offering Cloud Computing solutions with this in mind. HP has come up with a bundle of offerings that is focussed on private cloud and this will bring significant value and benefit to organisations.”

Gulf IT which has been selling Google’s Cloud Computing solutions in the market since April 2009, has notched up 60 clients in Oman. Says Rahul Bhavsar, business head – Middle East, Gulf IT, “Business was slow in 2009 and 2010, but 2011 looks promising. A number of large customers are talking to us as group companies want consolidation and a single view of various transactions.” The company recently signed a deal with the Khimji Ramdas group.

Cloud Computing offers clients a number of advantages. A study done by Gulf IT shows that a company with 100 employees would spend RO7,000-8,000 annually on running a conventional IT system (excluding the cost of buying hardware) while on a Cloud platform it would cost RO2,500. Apart from a price advantage Cloud offers enhanced capabilities, scalability and business continuity. So a company can start with five users and upgrade to 5,000 overnight. Tareq Hijazi, country manager, Microsoft Bahrain and Oman says, “With Cloud you can expand your requirements dramatically. When the demand goes up for your product or services you can expand and vice versa. So you pay as you use.” The fact that the data is stored in large data centres minimises the risk of a breakdown and loss.

Despite such assurances there have been security concerns about Cloud Computing. Says Eyad, “We have a fully integrated solution with security at all levels. HP has invested $40bn in R&D and acquisitions in the last three years and a lot of these acquisitions have been in enhancing the security features of our portfolio.” Companies like Google have gone in for international quality certifications and audits like SAS 70 Type II and FISMA to reassure clients about security. Analysts feel that companies in Oman will adopt private cloud over the next three years, but it will take a while before the market gets comfortable with public cloud. Says Fareed, “Cloud computing compresses deployment time, but since it is a new idea it will take sometime for clients to buy in.”

Converged Infrastructure is the other big theme that is making inroads into the market. In layman terms it means the convergence of various technologies in a data centre. Jayakumar explains, “Earlier you had different systems such as hardware, network, and applications coming from multiple vendors. This is changing as companies are now offering complete solutions into a converged infrastructure in a data centre, thus enabling efficient use of technology and cost savings for the customer.” HP, Cisco, IBM etc. offer clients a converged managed infrastructure in one console. This console manages the converged infrastructure which includes network, server, software, peripherals, storage etc. Virtualisation is another way of reducing infrastructure costs. If a company wishes to virtualise its server environment it can use a software application to divide one physical server into multiple isolated virtual environments in order to run different applications. So if there were 10 servers running five applications earlier, the same applications can be run on five or less servers via virtualisation.

New regional entrants

The debt problems that Dubai faced in 2009 and its fallout across the region has led to enhanced competition as companies like CNS, InterTech, IDS have come to Oman looking for business. Even Indian companies like Wipro, Infosys and Tata Consultancy Services have joined the fray. New entrants have led to aggressive price cutting and eroding margins. A CEO that did not wish to be quoted on the issue says, “It is not that we are averse to competition and our history is a testament to this, but we should be given a fair chance. If UAE based companies are coming and winning big projects in Oman then we should be given projects in the UAE on merit, but sadly that is not the case as the preference there always goes to their local companies.”

There is also a feeling that foreign companies winning business in the Sultanate are not committed to creating jobs for nationals and if the government is keen on promoting Omanisation, then it should strengthen home grown companies. Says Rogeh Hajj, chief information officer, The Zubair Corporation, “In the long term it is a matter of sustainability. Regional companies will not offer delivery or after sales support that well connected local companies can extend.”

Small and medium sized enterprises are also sore about the government’s predilection towards established names. Says Sunil Gandhi, chief operating officer, Al Kay’s International, “ There is no proper rating or evaluation of the top ten companies in Oman and as a result any contract above RO20,000 always goes to the bigger companies though our solutions and prices may be better.” SME’s feel that if they are not given a fair chance then they will never grow in the market. Others though are more optimistic – “The government has started considering new technology partners and things are changing,” says Haitham.

Undeterred by these challenges, SME’s are adopting best practices. Kay’s IT (a part of Al Kay’s International) recently implemented a Quality Management System ISO 9001:2008. Says Baby Sam, its director marketing, “We strive to create long-term relationships with organisations by mapping their current processes and providing technology driven solutions for better profitability and bringing about a new dimension in the way people work together.” The Al Madina Group of Companies has similarly received an ISO 9001:2008 certification and it is working on introducing leading web based solutions and services.

 

The lack of skilled IT professionals

in the country remains another major deterrent to growth. Though the government mandates a 35 per cent Omanisation level for IT companies a number of them struggle to meet these targets. Says Mohammad Sweidan, branch manager, Exceed IT, “Finding the right candidates with the right competencies remains a major challenge.”

Fawzi recommends incubation programmes for innovation and development to stimulate the industry. He feel that Oman endowed with the right resources but they have not been utilised properly. “Young Omanis are ready to work in the IT sector as it is seen as a comfortable and glamorous sector. The country can be a base for call centres in the region as the Sultanate offers a cost effective environment and good atmosphere,” he adds. Eng. Sheila H. Jamal, CEO, Al Madina Group of Companies says, “The private sector is not generating business like the public sector and the lack of knowledge centres in Oman remains a problem area.”

Durgaprasad adds, “Skill upgradation is the key. The government should insist on companies that do product development rather than trading of software products, as that the only way to grow the industry and generate employment.” He suggests that 4-5 IT companies in Oman should look at neighbouring countries and build competencies (in verticals like auto, oil and gas, banking etc) that can serve the regional market. This will create critical mass as the solutions can be replicated in other countries.

Looking ahead

Despite such imponderables Oman remains an attractive market for MNC, regional and local companies. Says Tareq, “Oman is a stable market without large fluctuations and we see a lot of potential in Oman.” The government’s thrust on creating a digital society and a growing economy are the other factors contributing to this confidence. Says Rogeh, “We are very optimistic about ICT in Oman. There will be steady growth as the government is investing heavily in infrastructure and IT literacy is increasing in the Sultanate.” Like BankMuscat’s new headquarters , it’s probably an opportune time for local companies to start establishing new benchmarks in the region.
 

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