The Impact of Digitalisation – Part 1
In a two-part series, Kiran Scarr of DMCC talks about how technology can revolutionise UAE’s construction and infrastructure sector.
In my role as general counsel of DMCC, the government authority for, and master developer of, the UAE’s largest free zone dedicated to commodity trade facilitation, I am often asked what I consider to be the biggest challenges facing the construction and infrastructure sector in the UAE. Whilst I could focus on traditional constraints such as commodity pricing, real estate volatility or political risks, what I am increasingly drawn to is the question of what the opportunity cost will be to UAE construction and infrastructure businesses who fail to embrace digitalisation as part of their strategic mandate.
Earlier this year, DMCC teamed up with FutureAgenda & Cebr to produce The Future of Trade; an in-depth study into what the future holds for global trade. After a year-long information gathering exercise that took our team of researchers all over the world, we discovered that the Future of Trade is digitalisation. That is, companies that wish to succeed in our increasingly global economy must adopt a digital strategy as an end to end solution. This is not just about e-commerce or introducing manufacturing run by artificially intelligent robots. It is about conducting business through total digitalisation.
This process of digitalisation is happening at a very rapid rate all over the world. To keep abreast of that, and to monitor which geographies and sectors are making the most progress, we created the Industry Digitisation Index (ID Index) as a key plank of our Future of Trade study. To ensure we gather the most accurate and useful data available, we split the process of digitalisation into 4 core phases:
- upstream supply chain; connecting with suppliers
- production; internal processes
- downstream supply chain; connecting to clients and
- digital infrastructure; digital support to all of the above.
Currently the ID Index ranks construction and manufacturing as the lowest sectors for progress in digitalisation (based on Eurostat data which gives some insight into the global business community). Put in this context, increased use of digital technology by businesses in the construction and infrastructure sector could revolutionise how it delivers products to the market. Establishing potential for digital development and the impact this has on trade (essentially how you bring products to market), has significant relevance to the UAE market given its geographic advantage, its political commitment to significant construction and infrastructure projects and its entrepreneurial nature.
Put simply, we are in an era of internationalisation of supply chains. Adoption of digital technology is a primary pathway to integration of developed economies. In this new era of digitalisation, data is the new raw material of business (just like capital and labour have been for centuries). Greater focus in the construction and infrastructure sector to data as the key supply commodity could put the UAE in the forefront of how projects are procured and delivered on a global scale.
In my next column, I will focus on the potential implications of adopting digital technology on the construction industry.
Columnist:
Kiran Scarr, general counsel, DMCC
