Oracle plans significant investment in Middle East as cloud competition intensifies

US technology company Oracle considers the Middle East and Africa region one of its top growth markets for cloud adoption and aims to invest “significant capital” in the region as competes with the likes of Microsoft, Amazon and Google for market share.

While offering its local customers more flexibility across public, private and hybrid cloud environments, Oracle said it intends to safeguard the data sovereignty that is a high-priority matter, the company’s senior executive in the region told The National in an interview.

“We are extremely active in the region and continuously looking at new growth and investment opportunities. Every country [in the region] is different, so we take a lot of time to understand their individual needs and make investment to ensure we are compliant with local regulations and offer customised cloud solutions,” Richard Smith, Oracle's executive vice president — technology — for Europe, Middle East and Africa, said.

“Cloud adoption rate [in Middle East and Africa] is extremely high … it is driven by government directions, strong emphasis on data sovereignty and support towards digitisation. Data sovereignty is a level of concern everywhere, but in the Middle East, it’s a very high-priority issue,” said Mr Smith, who did not disclose the scale of Oracle's investment in the region.

Data sovereignty regulations require businesses to develop solutions that ensure they conform with the country’s individual data privacy and security laws. Not abiding by the regulations in the areas where they collect, process or store customers' data can lead to significant fines or other legal action.

“Cloud drives interconnectivity, not just at an enterprise level but across the whole marketplace. So, if you do not participate, the risk is you will become isolated. It helps companies to innovate more effectively and differentiate their services,” Mr Smith said.

Government sectors, financial industry and health care are driving rapid cloud adoption across the region, he added.

In July 2020, the Texas-based technology company opened the Middle East’s first cloud region, in Jeddah, Saudi Arabia, which was followed by another in Dubai in October that same year. Its third went live in Abu Dhabi in November last year.

In October last year, the company said it planned to open a cloud region in Saudi Arabia’s coming futuristic city Neom, but say when.

A cloud region is a complex that houses at least two data centres.

Overall, Oracle operates 40 commercial and government cloud regions across 22 countries on five continents.

It has introduced 10 public cloud regions over the past year and plans to add six commercial regions in Chicago, Serbia, Colombia, Chile, Saudi Arabia and Mexico in the coming months.

“We plan to open new data regions in the Middle East — the number will continue to grow, certainly to match the growing demand. Without any doubt, I see numerous expansion and investment opportunities here,” Mr Smith said.

“Besides government directions, there is also a commercial element to the rapid adoption of cloud. For example, every country wants to differentiate itself and act as an enabler of growth through cloud.”

Oracle’s local clients include DP World, Abu Dhabi Customs, Dubai Investments, Saudi Railways, Neom, Saudi Arabia Tourism Development Fund, Mashreq, Qatar Airways, Emirates Post and Saudi Arabia Mining Company.

For businesses, moving to a cloud system hosted by a specialised company — such as Oracle, Amazon Web Services or SAP — is more efficient than creating their own infrastructure of servers, hardware and security networks, industry experts said. It also brings down the overall cost of ownership.

In the cloud industry, businesses pay only for those services or resources that they use.

In September, Oracle announced an 18 per cent annual jump in its fiscal 2023 first-quarter revenue to more than $11.4 billion.

Cloud services and licence support revenue surged 14 per cent year-on-year to $8.4bn, accounting for nearly three quarters of the total sales.

Globally, the cloud industry is booming. The spending on public cloud services is expected to rise 20.4 per cent annually to $495bn this year, as businesses expedite the pace of their digital transformation in the post-Covid era, US researcher Gartner said.

Total spending is about $84bn more than in 2020 and is expected to surge nearly 21.3 per cent yearly to almost $600bn next year.

In September, Oracle also opened a technology collaboration centre in Abu Dhabi that aims to help public and private sector organisations capitalise on emerging technology to boost their bottom lines.

The Al Mustaqbal Oracle Innovation Hub on Reem Island will focus on artificial intelligence, machine learning and the Internet of Things, as well as supporting the development of the UAE capital’s knowledge economy.

The hub is part of Oracle’s continued investment in the UAE and the second after the Zayed Innovation Hub in Dubai. The company declined to disclose the investment in the centre.

“Being a part of the local community is extremely important for us. It is about developing skills and creating local expertise … we are confident that many innovations will come out of the Abu Dhabi hub that will be utilised on a global scale,” Mr Smith said.