New Data Center Brings Easy Cloud Access to Middle East

Oracle has unveiled new plans to build a massive data center in Abu Dhabi, delivering high-end cloud services to customers throughout the Middle East. But despite high demand for regional cloud access, the move doesn’t come without its hurdles. 

Heeding strong Middle Eastern market demands for cloud-based solutions, Oracle has announced plans to develop a huge data center in the United Arab Emirates (UAE) capital of Abu Dhabi, offering premium cloud services to thousands of enterprises across the region. 

The move comes in response to the burgeoning technological community in the Middle East, which seeks to rapidly and flexibly scale using cloud-based deployments. According to Gulf News (citing IDC research), the Middle East is increasingly focused on information and communications technology (ICT), correcting for an economy made sluggish by low oil prices. ICT investments are estimated to reach $103.6 billion in 2016, marking a year-over-year increase of 2.17%. 

IDC anticipates that, by 2018, half of all Middle East IT spending will be cloud-based. 

While Oracle has set themselves up to massively capitalize on this market, there are still several obstacles that threaten their success: regional laws, cautious buying, and self-imposed platform limitations.

The World Loves to Buy Local

According to Computer Weekly, Oracle’s decision to build a regional data center was partly a legal one. While Oracle has experienced more than 80% software-as-a-service (SaaS) growth in the Middle East, it has done so via its European data centers. 

Gulf Cooperation Council (GCC) laws -- which include all Persian Gulf states, like the UAE and Saudi Arabia -- prohibit governments, government contractors, and financial institutions from housing their data overseas, putting a cap on the revenue Oracle can generate from elsewhere.

Moreover, there’s a general discomfort among regional businesses with investing in cloud solutions based in another continent, which is understandable given the global concerns regarding cloud security. 

To ease their landing, Oracle has hired 250 new Middle East-based cloud sales employees, opening multiple new offices throughout the region. 

They’ll likely find a receptive audience. According to the Saudi Gazette (citing other IDC research), neighboring Saudi Arabia expects its cloud market to grow 44.5% in 2016, where more than one third of businesses have already adopted some form of cloud service. 

More broadly, Cisco predicts that the Middle East and Africa will have the fastest regional cloud growth in the world, at 41% compound annual growth (CAGR) through 2019.

The Need for Infrastructure Management and Modeling

Still, one problem with Oracle’s deployment -- which includes SaaS, infrastructure-as-a-service (Iaas), and platform-as-a-service (PaaS) -- is that it’s primarily designed to run a full suite of Oracle software. By contrast, most companies deploy a mixture of software from several vendors, a mixture that usually involves their biggest cloud competitors: Amazon’s AWS and Microsoft Azure.

More than that, the cloud-based solutions can often be the costliest, as a separate Computer Weekly article notes. Many companies want to avoid committing to one vendor and their related licensing and maintenance fees, opting instead for open source software and to “ringfence” -- to set aside funding for IT innovation. 

The reality is that cost-effective cloud solutions don’t start and end with adoption; they require detailed and effective metrics management and modeling. And in the likelihood that Middle Eastern organizations employ a variety of physical and virtual environments under one roof, they will need more than just a service provider to ensure that IT provides value to the business.

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