IT in Saudi Arabia:
Status & Trends
Dr. Sadiq M. Sait
College of Computer Sciences & Engineering
King Fahd University of Petroleum & Minerals
Dhahran, Saudi Arabia
October 2002
Outline
Introduction
Infrastructure
IT Industry
Human Resources Development
eReadiness (eBusiness & eCommerce)
eGovernment
eLearning
Comparative Status
2
Introduction
IT in Saudi Arabia is in its developing stages.
Government in working in certain directions to
ameliorate the status of IT in the country.
These directions will help in making ICT
(Information & Communication Technologies) a
major contributor to GDP (Gross Domestic
Product) as well as moving Saudi Arabia from an
IT-consumer to IT-producer country in the region.
3
Directions
Developing a feasible Infrastructure
Managing the IT Industry
Improving Human Resources
Integrating IT in education
Expanding eCommerce & eBusiness
4
Vision
To envision the Kingdom of Saudi Arabia at the
forefront in the development and exploitation
of Information Technology (IT), and the
adoption of IT as the basis and the drive for the
development of industry, commerce, education,
public sector, and the society-at-large in
accordance with Islamic values.
5
Infrastructure
Infrastructure is one of the major factors that affects IT and
its growth.
It comprises issues like
Easy and affordable access
Regulations
Security aspects, and
Required human resources
Investment in IT infrastructure will aid
the development of industry and commerce
provide opportunities in areas such as education and training
6
Current IT Infrastructure
Dimensions for analyzing the development and status of the
Internet infrastructure within the Kingdom are (on a scale of 0-4
with 4 being the best):
Pervasiveness (number of users per capita)
Geographic Dispersion (physical dispersion of infrastructure &
access)
Sectoral Absorption (connectivity in various social sectors)
Sophistication of Use (integration and innovation)
Connectivity Infrastructure (capacity and robustness)
Organizational Infrastructure (degree of competition)
Source: Global Information Technology Assessment Group (formerly MOSAIC group)
7
Comparison of IT Infrastructure
Source: ITU, 2001
8
Status of Infrastructure
STC (Saudi Telecom Co.) says that Saudi Arabia’s
telecommunication infrastructure will be capable
of supporting potentially 1.3 Million Internet users
by the end of this year.
In recent months, STC secured a $657 Million
loan from a consortium of Saudi Arabia’s banks
that will help finance the work.
Source: ITP
9
Infrastructure: Access
Presently the most common telecommunication access
method in the Kingdom is the fixed telephone line
The number of fixed access lines stood at 3.2 Million at the
end of second quarter of 2001 (i.e., 15.2% of the
population) and is expected to reach around 5 Million in
2005.
The increase in the size of the PSTNs (Public Switched
Telephone Network) is a direct result of a double-digit
compound annual growth since 1996.
Source: STC Data, 2001
10
Infrastructure: Teledensity
Teledensity (number of standard access lines per 100
inhabitants) started out with about 7 in 1990 and
progressed to 13 in 2001. The graph shows the growth and
its prediction
Standard access lines per 100
inhabitants
25
20
15
10
5
0
1990
1997
Source: STC Data, US Census Bureau
1998
1999
2000
2001*
2003*
2005*
11
Infrastructure: Mobile Services
The number of subscribers to mobile services in the
Kingdom reached 2.5 Million in 2001 and is expected to
reach around 6 Million by 2003. The graph below shows
the number of mobile subscribers per 100 inhabitants.
Year 1999
Year 2000
50
40
30
20
Yemen
UAE
Syria
Sudan
Saudi Arabia
Qatar
Oman
Morocco
Lebanon
Kuwait
Jordan
Iran
Egypt
0
Bahrain
10
Algeria
Mobile Subscribers per 100
inhabitants
60
12
Infrastructure: Other Statistics
The number of Internet subscribers (those paying for
access to the Internet) rather than users is a precise
indicator of access
Until March 2001, the number of Internet subscribers was
275,000 (user to subscriber ratio is estimated to be 2.5)
A measure of the Internet user market is the Internet
coverage - the portion of the population of a country within
easy access of the Internet. Coverage in Saudi Arabia is
low and stands at 3-4%.
Over 75% of the Internet users are male, and most of them
are under the age of 35 years.
Source: Saudi Network Information Center, Paul Budde Communication Report, March 2001
13
Infrastructure: Tariffs
In Saudi Arabia, current
Internet dial-up access prices
for 30 hours range from SR
175 ($45) to SR 280 ($75).
The relative increase in cost
is attributed to the adoption
of pricing model that includes
both ISP charges and call
usage charges.
Moreover, the charges of
international bandwidth are
very high. This is reflected in
the monthly charges for a 2
Mbps connection to ISP that
costs SR 274,860 ($73,296)
per month.
Internet dial-up access prices in some OECD countries
Source: ITU
14
Infrastructure: Security
Strong encryption servers use
encryption which is greater than
40 bits. Such servers are not
hackable, even by intelligent
hacking tools.
A survey conducted by Netcraft
on the number of secure servers
(weak and strong) in 166
countries of the world showed
that Saudi Arabia stands at 87th
position in the strong encryption
group.
The table summarizes the
survey.
15
Infrastructure: Initiatives
The government in the Kingdom is working on improving
the IT infrastructure, as success of various other IT related
aspects, like IT Industry, eBusiness, eCommerce and
eLearning is directly dependent on it. Some of the
initiatives that could be taken and are being considered
include:
Opening up competition in all telecommunication services sector
to expand access
Issuance of licenses for different wireless services to provide
connectivity
Establishment of community & edutainment centers
Establishment of a very high-speed network to link research
institutions, universities, and Science Parks (under development)
Development of a national IT security policy and a mechanism to
counter cyber crime
16
IT Industry
IT industry is one of the largest and fastest growing sectors
in the world. The major industries that comprise the IT
sector are generally acknowledged as:
Manufacturing
• Computer Hardware
• Telecommunication Equipment
Services
• IT Professional Services
• Computer Software
• Telecommunication Services
17
Growth in IT Industry
Saudi Arabia, Egypt and the UAE
Rest of the Arab Middle East and North Africa
10000
8000
6000
4000
2000
0
2000
2001
2002
2003
2004
2005
Sales of IT Hardware, Software, & Support services in the Arab Middle East & North Africa
Source: Pyramid Research 2000
18
IT Industry Challenges
The high competition in the IT sector from the
developed as well as the developing countries
Supporting traditional practices of investment in
land and infrastructure assets with investment in
intellectual assets
The availability of an infrastructure that is
necessary to support the IT industry
19
Human Resources for IT
The success of a nation today will highly depend
upon the education, training, productivity, and
competitiveness of its IT workforce.
A well-thought planning process and commitment
are the most needed ingredients to develop and
retain a reasonable level of IT workforce in the
Kingdom.
20
Human Resources: Status
Surveys conducted showed that there is a serious
dearth of human resources in the IT public sector
of the Kingdom.
The latest survey is in agreement with the 1994
study on the need to adopt a national IT human
resources development strategy that coordinates
national IT programs and directs Saudi education
institutions to satisfy IT human resources
requirements.
21
Human Resources: Funding
The importance of human resources in the development of
the Kingdom is very much reflected in the national
development plans
There has been a steady increase in the share of
expenditure on human resources development in the
previous five consecutive national development plans:
SR 115 Billion (18.4%) of the total expenditure in the third
plan
SR 115.1 Billion (33%) during the fourth plan
SR 164.6 Billion (33%) during the fifth plan
SR 222.2 Billion (53.8%) during the sixth plan, and
currently it is
SR 276.9 Billion (56.7%) in the seventh development plan
Source: www.planning.gov.sa/Planning
22
eReadiness
Definition: The extent of presence of an environment that
empowers individuals and organization for the utilization
of IT and the availability of necessary technologies
measures how e-ready an organization or a country at large
is to participate in digital economy. This is termed as eReadiness.
Key factors for readiness are
innovation and impact of telecommunication
infrastructure
current connectivity
governmental human resources and
budget resources
23
eReadiness: KSA Status
eBusiness Leaders eBusiness Contenders eBusiness Followers eBusiness Laggards
US(8.73)
Australia
UK
Canada
Norway
Singapore
Finland
Denmark
Netherlands
Switzerland
Germany
Hong Kong(7.45)
Ireland(7.28)
France
Austria
Taiwan
Japan
Belgium
New Zealand
South Korea
Italy
Israel
Portugal(6.21)
Greece
Czech Republic
Hungary
Chile
Poland
Argentina
Slovakia
Malaysia
South Africa
Brazil
Turkey
Colombia
Philippines
Egypt(3.88)
Peru
Russia
Sri Lanka
Saudi Arabia(3.80)
India
Thailand
Venezuela
Bulgaria(3.38)
China
Ecuador
Iran
Romania
Ukraine
Algeria
Indonesia
Nigeria
Kazakhstan
Vietnam
Azerbijan
Pakistan(2.66)
Ranking is based on country’s score out of 10
Source: The Economist Intelligent Unit, 2001
24
eBusiness
Definition: eBusiness is about enabling
organizations to cohesively bring together their
processes and the Internet technologies for cost
effectiveness, efficiency and better relationships
among partners
These partners could be business organizations,
customers, suppliers, government departments or
citizens
The main thrusts of the eBusiness are eCommerce
& eGovernment sectors
25
eBusiness: Status
The strength of the Saudi eBusiness market lies in
the Kingdom being the center of the Islamic World
with the largest economy (over $168 Billion) in
the Arab world with virtually no direct taxes
The large Saudi population compared to other
Arabian Gulf Countries and the presence of large
IT companies based in Saudi Arabia gives Saudi
eBusiness an advantage and competitive strength
in the region
Source: Saudi American Bank Report, 2001
26
Computer usage: Business sector
Saudi Aramco, the Kingdom’s oil company, is considered
to be the largest buyer and user of computers in the whole
Arabian gulf region
It has about 10,000 computer units and the annual budget
spent on purchasing and updating the systems crosses
SR 3 Million
Saudi Arabian Airlines is another major buyer of
computers.
In private sector, banks are considered to be the largest
users of computers. There are 11 banks operating with a
total of 1200 branches operating throughout the Kingdom.
Source: Icon Group International, Inc.
27
eBusiness: Challenges
The success of eBusiness in Saudi Arabia requires
substantial improvements in IT infrastructure
easy and affordable Internet access
supported by trained and skilled local IT professionals
Admission to WTO will lower the legal barriers,
thus local firms will be exposed to higher
international competition.
28
IT in Public Sector: Challenges
A recent survey conducted showed that there are
great challenges in the public sector. These
include: (in the order of importance)
inappropriate IT plans
insufficient user training
lack of user involvement
inadequate top management involvement
high levels of organizational rigidity
insufficient IT human resources
low IT management power
29
eCommerce
eCommerce in Saudi Arabia can be traced to the mid 90’s
when SAMA (Saudi Arabian Monetary agency),
successfully carried out two financial projects relating to
eCommerce.
The SPAN (Saudi Payment Network), which became
operational in 1993, allowed commercial banks to use online
EFT (Electronic Funds Transfer) capabilities for their ATM
(Automatic Teller Machines) and another points of sale
terminals.
Another EFT mechanism, SARIE was launched in 1997 for
inter-bank settlement, and was implemented with the help of
Logica.
Source: Icon Group International, Inc.
30
eCommerce: Directions
A permanent high-level committee addressing electronic
and technical issues has been established at the Ministry of
Commerce, whose tasks are to:
Track market developments
Fulfill ethical and legal requirements
Review procedures for common code of conduct on
documentation verification, digital signatures and assurances
necessary for execution of contracts
Formulate standard policies to regulate eCommerce
transactions and for related arbitration, credit system and
legal liability problems
Source: Icon Group International, Inc.
31
eCommerce: Directions
Saudi Telecom Company (STC) is aware that eCommerce in
Saudi Arabia requires an Internet infrastructure with national
coverage at a high bandwidth.
Efforts are underway to install a highly reliable ATM core that
will increase the number of switches from 8 to 61.
Saudi Aramco, the national oil company, is spearheading the use
of eCommerce and also compelling local vendors to do the same
in order to expedite and streamline procurement
Although still in its initial stages, industry sources have also
disclosed that electronic virtual cards will be used for secure
online transactions in the near future
Source: Icon Group International, Inc.
32
eCommerce: Directions
KACST (King Abdulaziz City for Science & Technology)
is planning to place a PKI (Public Key Infrastructure) that
will enable secure Kingdom-wide eCommerce
SAMA (Saudi Arabia Monetary Agency) is working online
payment system for B2B eCommerce
STC expects that the number of leased lines will surpass
30,000 shortly
Ministry of Commerce is planning to come up with the
rules and regulations to govern eCommerce in the
Kingdom.
33
eGovernment
Definition: eGovernment is the transformation of public
sector internal and external relationship through Internetenabled operations, information and communication
technology in order to optimize government service
delivery and governance.
It is about transforming organizations:
Individuals/Citizens: Government-to-citizen (G2C).
Businesses: Government-to-Business (G2B).
Intergovernmental: Government-to-Government (G2G).
Government-to-Employee (G2E).
Intra-governmental: Internal Efficiency and
Effectiveness (IEE).
34
eGovernment Driving Forces
Internet access tariffs are being brought down
Growth in IT Industry and increase in IT
expenditure
2002 Global eCommerce spending > $ 1 Trillion
Saudi IT spending is approximately 1.6%
Source: Global Reach.
35
Integrating IT in Education
eLearning enhances the quality of student understanding
through the use of a interactive and lively learning
approach with multimedia, graphics, simulations, videos,
etc
Compared to conventional Instructor-Led Classroom (ILC)
education, eLearning resulted in about 30% greater
learning in up to 40% less time
Performance of computer-based training (CBT) learners on
examinations was found to be higher by about 26% to 37%
on the average
Likewise, long-term retention was also found to be an
average of 15% higher for CBT
Source: Effectiveness of Computer-Based Training and PLATO software
36
eLearning
For eLearning “The Watani” project, a huge
investment of potentially SR 5 Billion over the
next five years, is underway to connect all of
Kingdoms’ school, which is supported by HRH,
Crown Prince Abdullah.
This will provide access to millions of students all
over the country.
The aim is to make technology, an integral part of
student’s everyday life.
37
General Comparative Status
World Bank Institute’s (WBI) program on ‘Knowledge for
Development’ uses a knowledge assessment methodology
(KAM) which consists of a set of 69 structural and
qualitative variables
These variables provides the current status of a country’s
economy, human resources, communication infrastructure
and knowledge-based activities
It helps to identify the problems and opportunities that a
country faces, and where it may need to focus attention or
future investments
The comparison is undertaken for a group of 100 countries
which include most of the developed OECD (Organization
for Economic Cooperation and Development) economies
and about 60 developing economies
38
Saudi Arabia: Status
Source: © Knowledge for Development, WBI, 2002
39
WBI results: Saudi Arabia
Over time, based on the knowledge based indices,
following are the conclusions:
Incentive regime has declined
Innovation is still stagnant
Education enrollment has improved
ICT improved (relatively, but not enough to catch-up
with the rest of the world)
High investments in Education and ICT do not
have the full expected impact seemingly, because
of poor business environment
40
Recommendations
Before planning, it is worthwhile to look at others plan, as
to know in which direction we are going
National plans for IT has to be developed and implemented
by higher authorities (government)
Promotion of IT will speedup, if and only if, it is regulated
by higher authorities (government)
Extensive emphasis had to be laid on IT training
Coordination with related ministries is a must
Action program from common issues is required
National level security policy must be defined.
And others.
41