1. 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

2. Outline Introduction Infrastructure IT Industry
Human Resources Development
eReadiness (eBusiness & eCommerce)
eGovernment
eLearning
Comparative Status

3. 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.

4. Directions Developing a feasible Infrastructure
Managing the IT Industry
Improving Human Resources
Integrating IT in education
Expanding eCommerce & eBusiness

5. 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.

6. 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

7. 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)

8. Comparison of IT Infrastructure
Source: ITU, 2001

9. 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

10. 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

11. Infrastructure: Teledensity
Teledensity (number of standard access lines per 100 inhabitants) started out with about 7 in 1990 and progressed to 13 in The graph shows the growth and its prediction
Source: STC Data, US Census Bureau

12. 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 The graph below shows the number of mobile subscribers per 100 inhabitants.

13. 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

14. 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

15. 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.
[1] Netcraft, September 2001

16. 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

17. 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

18. Growth in IT Industry
Sales of IT Hardware, Software, & Support services in the Arab Middle East & North Africa
Source: Pyramid Research 2000

19. 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

20. 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.

21. 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.

22. 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 Billion (33%) during the fourth plan
SR Billion (33%) during the fifth plan
SR Billion (53.8%) during the sixth plan, and currently it is
SR Billion (56.7%) in the seventh development plan
Source:

23. 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 e-Readiness.
Key factors for readiness are
innovation and impact of telecommunication infrastructure
current connectivity
governmental human resources and
budget resources

24. eReadiness: KSA Status
Ranking is based on country’s score out of 10
Source: The Economist Intelligent Unit, 2001

25. 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

26. 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

27. 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.

28. 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.

29. 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

30. 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.

31. 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.

32. 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.

33. 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.

34. eGovernment
Definition: eGovernment is the transformation of public sector internal and external relationship through Internet-enabled 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).

35. 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.

36. 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

37. 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.

38. 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

39. Saudi Arabia: Status
Source: © Knowledge for Development, WBI, 2002

40. 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

41. 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.