Middle East, North Africa telecoms 'underinvesting' in IT: study

Telecom operators in the Middle East and North Africa trail their European counterparts when it comes to IT investments, according to a new report.

Telecommunications firms in the MENA region -- that's Middle East and North Africa, for the uninitiated -- are spending half as much on IT investments as their European counterparts, according to a new report.

A new study by global management consultancy Oliver Wyman reveals that MENA operators allocated only 7 percent of operating expenditures to IT; that contrasts with 14 percent by European operators.

The difference "jeopardizes their future competitiveness," the firm says.

The firm looked at the IT spending patterns of 50 participants; it's an interesting compare-and-contrast exercise for a region that usually gets lumped together under "EMEA."

MENA and European operators also allocated investments differently. Application development remains king for both, but Euro telecoms invested 37 percent of that budget on front office & CRM systems; in contrast, MENA operators invested 25 percent -- their priority was spent instead on G&A (that's "general and administrative" expenses) and Web platforms.

Outsourcing was also an issue. Both groups spent about 27 percent of their IT spend on it, but the MENA group tended to outsource more application development than operations, even though the latter is traditionally where outsourcing can generate significant productivity improvements. This is more for labor arbitrage than competitive differentiation, the authors write.

"MENA operators are missing an opportunity to boost productivity," they write.

The morals of the story:

  • IT's role is no longer just managing technology; it now enables strategy.
  • IT systems are a way for telecom operators to support robust product offerings, quick time-to-market and customer intelligence.
  • MENA firms need to invest more in IT -- particularly in differentiating elements like CRM and billing -- and rethink their approach to outsourcing.

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