Connection perfection

‘Welcome to the human network’. This may sound like some kind of futuristic space-age greeting but according to Cisco Systems, that day is already upon us. With the vision of ‘changing the way we live, work, play and learn’, Cisco’s premier message at its global forum in San Jose last week was of ushering in a new era where the network becomes the platform.

In the Middle East, this can be illustrated by the pertinent example of Saudi Arabia, where millions of Muslims travel each year to the Kingdom’s holy cities. Through a partnership with the Ministry of Hajj, Cisco has connected ministries, travel agents, tourism operators, and embassies – the visa process alone has been condensed from six weeks to one day.

In fact, Cisco first established operations in Saudi Arabia in 1998 and today has offices in Riyadh, Jeddah and Al Khobar. Cisco Systems announced in April this year that it would invest more than US$265m over the next five years to expand its operations in Saudi Arabia. Cisco’s investment highlights the growing importance of the Saudi market in the global economy. As Cisco CEO John Chambers observes: “Our investment plans in Saudi Arabia reflect our alignment with the country’s focus on entrepreneurship, innovation and education, which we believe will help drive the 21st century global economy.

“As the ever-more-intelligent network evolves into a platform, each one of us will be able to communicate from any device and in whatever mode we choose,” says Chambers, aware that his message may impact upon generations to come.

Cisco, one of the globe’s leading networking companies, believes the world is becoming a smaller and more efficient place with all forms of IT and communications being converged into the network, enabling new business models, consumer activity, entertainment and productivity. And with such lofty ambitions, it seems, come healthy revenue flows. Cash flow from operations was US$2.3bn for the first quarter of fiscal 2007, versus US$1.4bn for the first quarter of fiscal 2006.

By placing the network squarely at the centre of innovation, the entire value chain of IT is being changed, claim Cisco. It is predicted that as many as 14 billion devices will be connected to the internet by 2010, fuelled by an increasing number of computing tasks being handled online, from phone calls to personalised searches and downloading entertainment. As the centre of the ‘interactions net’, the network is emerging as an important IT platform — like the microprocessor. Charlie Giancarlo, chief development officer of Cisco says: “This industry is not only undergoing enormous change – it’s a revolution. And of course, the people who are driving this industry today are changing – it’s not just the professionals, it’s the end-users too.”

Increasingly, business leaders are realising that by growing the value of each transaction rather than simply trying to increase the number of transactions, they can enjoy a greater growth trajectory and better return on investment. “It doesn’t matter where I travel in the world,” Chambers tells Arabian Business.

“Wherever I go, the first thing CEOs talk about is growth and the second thing they want to discuss is how to build in the capability to grow, to use information technology to help enable – and perhaps even change – their business strategy.” The network is fast becoming the most cost-effective platform companies can use to integrate complex interactions for increased value and growth.

“In the next decade or two, interactions will bring a whole new level of innovation to us — the ability to drive productivity at results that are five, ten maybe 12 times greater than what we have seen in the past,” Chambers says. “And one of the technologies that helps increase the value of transactions – and to move from transactions to interactions – is the network,” he adds.

Aside from transforming the network into the platform, Cisco’s other major advancement in the next few years will be increased infiltration into emerging markets, mainly Latin America and the Caribbean, Russia and the CIS countries, Central and Eastern Europe as well as the Middle East and Africa. As Paul Mountford, president of emerging markets at Cisco and in charge of 140 countries, points out: “This constitutes about two-thirds of the physical geography of the earth and US$5.4bn worth of opportunity for investment.

“Conditions are in place in emerging markets for accelerated, sustained economic growth. In 2005, these countries accounted for more than 50% of the world’s output and over 50% of the increase in global GDP.” According to a recent article by The Economist, rich nations no longer dominate global production, representing the biggest shift in economic strength since the rise of the United States over 100 years ago. And Mountford believes the network platform is at the heart of this shift. “I believe that network technology is the key to global advancement for these emerging markets and the ability of these markets to compete depends on how they exploit its power.”

And the emerging countries themselves recognise the strong correlation between technology and global competitiveness and in some instances, Saudi Arabia, for example, they are even ‘leapfrogging’ technology to surpass developed countries. According to the Global Information Technology Report from the World Economic Forum, there is an 89% correlation between a country’s Information and Communications Technology (ICT) usage and its global competitiveness. In addition, Viviane Reding, the European Commissioner for Information Society and Media at the European Union, recently said: “We know that ICT accounts for half of the productivity growth in modern economies.”

And the research backs her up. According to Net Impact studies (a study of the productivity effect of ICT carried out by the Momentum Research Group), governments can improve productivity sevenfold by deploying and managing business processes over a network.

“To serve emerging markets — more than 100 countries, 81 million square kilometres, almost all of the world’s time zones, and an untold number of cultural differences — Cisco takes a holistic approach through solutions for governments, service providers, enterprises of all sizes, and individuals. In any given country, these four sectors all cross paths regularly and exert critical influence on each other," says Mountford. “The common holistic framework for addressing these sectors and the unifying force for change is the IP network. The network platform equalises all countries and can even give emerging countries an advantage. In the emerging markets, service providers are in a period of great expansion that is being driven by massive deregulation across the board and a desire by governments to develop a knowledge-based economy. Cisco works in such emerging countries with an industry-specific approach.”

The ICT sector has undergone massive transformation in Saudi Arabia in recent years, with global technology giants dedicated to enhancing competitiveness by pumping foreign investments and resources into the local market.

“The ICT sector in KSA has become a driving force for competitiveness,” remarks Dr Badr Al-Badr, general manager of Cisco Saudi Arabia. “Global organisations, like Cisco, have embraced this new transformation in Saudi Arabia, bringing in global technology and leadership to be shared with local businesses and elevate competitiveness to a new level.”

In order to strengthen its growth in the region, Cisco has charted an investment plan that will play a critical role in transforming the ICT and education sectors in Saudi Arabia. The plan will be implemented over the next five years with the support of the Saudi Arabian General Investment Authority (SAGIA) and will include:

• Increasing the number of Cisco employees in Saudi Arabia from about 70 to 600

• Providing leasing and other financial options to Cisco customers.

• Creating a Cisco technology and entrepreneurship innovation centre to demonstrate the effect of technology on vertical markets

• Sponsoring a Saudi technology and entrepreneurship institute, incubation space for startup companies and research and development activities

• Providing equipment, training and support required to provide internet connections to 2000 homes in underprivileged areas

• Establishing 100 new networking training centres, in addition to 42 current centres, to provide technical programmes in concert with local universities

• Finally, Cisco will expand its existing Cisco Systems Networking Academy program by establishing a ‘Netversity’ in Saudi Arabia which will partner with public education organisations to provide advanced business and technical training to align Saudi youth with the needs of world-class employers

• Cisco has said the five-year investment plan is intended to help the country move toward its goal of becoming a ‘connected kingdom’. And Al-Badr is confident that it is deserving of this title.
  

“Speaking in realistic terms and because we have been seeing increased connectivity in the different sectors, both public and private, we believe the Kingdom is a good example of connectivity. The smart cities project is another bright example. SAGIA’s vision for these cities is that they should be, among many things, the latest and greatest in terms of connectivity and smart infrastructure.”

Saudi Arabia’s use of IT and network technologies yielding positive results was proven earlier this year by the 2005 Net Impact study. The study compared government and healthcare services in KSA to other countries in Europe in 2004 and largely found Saudi businesses to be leading the way.

The study discovered that the use of technology had helped Saudi Arabian public sector departments boost customer satisfaction by 44% in the last year. The number of inquiries that employees were able to resolve had risen by 38% and the number of citizens using services had gone up by 34%, all higher figures than found in Europe. At the same time, the country’s public sector outpaces European countries in the adoption of technologies and ‘best practices’ with 95% of Saudi Arabian departments using finance and accounting applications and 79% having a web interface for workforce collaboration and training.

And what other forms of Cisco technology are Saudi Arabia planning on integrating in the future, if any? “What takes priority are things like telepresence (video conferencing), integration of mobile & IP telephony, and consumer technology like Quadplay which is based on fibre connectivity to the home,” says Al-Badr enthusiastically.

Therefore it is not that surprising that Cisco announced last month that Saudi Arabia emerged as the lead adopter of Cisco technology across the world, posting 127% growth in 2006 up from 2005. As a result, Cisco Saudi has been ranked the fastest growing region in the world; the growth achieved is significantly higher than Cisco’s recorded growth rate of around 50% in the fiscal year 2004-2005.

As Mountford points out: “To be able to compete in the digital economy now and in the future it is imperative to invest in the business and technical skills of a nation’s workforce.

“Cisco has created e-learning programmes such as the Cisco Networking Academy Program to teach students how to design, build and maintain networks and the IExec Business Essentials course to give rising business and government leaders the knowledge and tools they need to transform their organisations.”

Mountford concludes: “We are really leveraging academies in the Middle East and putting thousands of students through. Cisco is not just about pleasing the shareholders, we have a deep commitment to social responsibility.”