STC: A unique power in IT services

By Julia Yao & Linda Xu

IT services are becoming an increasingly lucrative market segment as the traditional market saturates. According to MarketsandMarkets, telecom IT services market will be worth over USD230 billion by 2019. Saudi Telecom Company (STC) has made great breakthroughs in such this market in areas such as IT infrastructure, applications, and business modeling. Dr. Tariq M. Enaya, Senior Vice President of STC Enterprise Business Unit, recently spared some time to fill us in.

A robust market

WinWin: Can you tell us a little bit about STC and the Saudi market?

Dr. Tariq M. Enaya: We are 70% owned by the government and we are one of the unique companies in the world in that we bill the government for connectivity projects and we get our money directly from the Ministry of Finance. It is a government-driven economy, Saudi Arabia. It’s driven by the spending of the government and returning that money to the government makes an even powerful tool to the organization. Not only that, the government uses us also to build up organizations under subcontractors that do different kinds of businesses. It empowers the economy. It can grow out of the oil economy into a more uniform economy in the future.

WinWin: Can you tell us a bit about the scope of your network deployments and other infrastructure projects?

Dr. Enaya: In the megacities in the Kingdom, we provide Wi-Fi services everywhere. We provide maybe one of the best LTE coverage in the area. 4G coverage in Saudi Arabia is very easy to get in all the major cities and in the majority of highways between the cities. The whole Kingdom is connected everywhere through major highways and major communications. Not only that, also in airplanes there is Wi-Fi connectivity. Your cell phone works on airplanes whenever you are in the Saudi Arabia.

We have been working heavily on the fiberization in Saudi Arabia, where we have a goal of a Gig of bandwidth to every business and every home. That initiative is supported by the government. There are a lot of initiatives going around it. In the majority of mega cities we have already fiberized the majority of the landscape. The majority of cities right now are running 200Mbps bandwidth. So the major milestone of having the infrastructure is ready. It's the matter of building the capabilities on top of it right now, building the applications that make the environment smarter, and hopefully that is coming. But we do have great example of smart cities and smart campuses. It's called the King Abdullah financial district in Riyadh. It's a great example of smart connectivity and infrastructure.

We do have great examples of smart solutions in those major districts. We are working heavily with industrial cities, industrial villages in the country to build that infrastructure to provide those kinds of service as well. Smart cities can happen with M2M and cloud services. There is a complete system that builds it, not only a smart concept that comes in by itself. You have to have all the elements of making that city smart. And the City of Jiran is an example. I think we are moving really very fast in it, with the Information Technology Communications Complex (ITCC). In the city of Mecca, the majority of the buildings are fiberized. There are smart hotels already there. Voice over IP is everywhere. It's the apps that are going to make the city smart in the future.

Enterprise is vital

WinWin: From your perspective, what are telcos' unique advantages in providing enterprise IT services versus Internet Service Providers like Amazon?

Dr. Enaya: I think the best thing about telcos is the customer base, especially in terms of connectivity. For a company like STC, we own about 90-to-95% of the connectivity projects of the government and enterprises in the Kingdom. That customer base is what makes us unique in terms of enterprise. And the services we can add on top of the links that we have comprise the uniqueness of our connectivity power. STC has a unique power there.

I think convergence is going to happen in order for service providers to survive in the next era of IT or of services. Things have to converge in a way that IT becomes, in essence, like power, like water, like other things. And you can only provide that kind of service if you converge towards IT. Also, from being a service provider, your links are going to become a commodity at a certain stage. If you don't introduce and protect your customer base by introducing new services and new technology and other services that add value, then you will lose the customer base at a certain stage.

WinWin: How are you tapping into emerging markets such as BYOD, M2M, and smart cities?

Dr. Enaya: We have lots of applications going on. What we try to focus on right now is to prioritize different things; bring-your-own-device (BYOD) types of things. We do have a couple of services going on with a couple of agencies and the government where BYOD is becoming a security concern for lots of people. If BYOD is implemented in the right way, organizations are protected with their own security systems, before people bring their own devices for interface.

On the other hand, I think additional services where cloud is going to be introduced is another area of improvement we're working on right now. At STC, we have major data centers and major pipes connected to those data centers that allow a lot of people to connect to our applications and data centers much easier than others.

In M2M, we have a lot of requests from the government to manage vehicles, to manage the flow of people. One example is the crowd management of the Hajj. The Hajj is the biggest event in the Islamic world every year. About four million people are in about four square kilometers, and the government has agencies and services to support those Hajis when they come to Mecca. So there are a lot of applications supporting this and we are part of those for crowd management, healthcare, police services, security, you name it. All the services that human beings would need in that short period of time. Putting a SIM card with every Haji could mean that Haji could be monitored. For that Haji, you could tap into what language he speaks, what area he is from, what health illness he has, then you can manage the whole flow of people. You can provide the right data at the right time.

SMEs are big business

WinWin: How does STC plan to make breakthroughs in small and medium-sized enterprises (SMEs)?

Dr. Enaya: Any healthy organization should have 40% of revenue coming from SMEs. That's the focus of STC. We were not focusing on enterprise in the past three years. But a shift in strategy has happened. The majority of investments in the upcoming future, the upcoming three years, is going to be for enterprise and SMEs. SME in Saudi Arabia is a very big business. It's a big environment, where we have thousands and thousands of stores and businesses that we're not covering right now. But we are developing joint ventures with government agencies to provide us with requirements for those agencies to be eligible to do business in Saudi Arabia, and bringing those applications required to make life easier to interact with customers.

With SMEs, I think at this stage, we offer proper connectivity and proper agility. We are not so sophisticated yet in terms of our data services or data center services, but we do have a lot of customers right now and we provide them with disaster recovery, hosting services, application services that we provide them through an SaaS model or through services that make CAPEX spent versus OPEX spent. We make an environment where it’s easier to start up and organize.

I think with SME’s it’s about making business easy. One of our ideas is to have a one-stop shop for them. It's a target for us; from starting a business to closing a deal. When starting a business, they come to our STC website, and we provide them with government registration, rental, etc. We are going to deliver everything they need, and make it easier for multinational companies to come also to Saudi Arabia to invest and build their capability. It's not an easy task. But I think it's a doable task if we have it as a target.

Verticals have a big upside

WinWin: Which vertical industries does STC prioritize?

Dr. Enaya: When you connect the majority of the Kingdom, you are connecting all the verticals in the Kingdom. We connect universities. We connect schools. We connect hospitals. We’re involving in building value-added services in those environments. One of the best examples we have is connecting 20,000 schools in Saudi Arabia. For rural areas, we provide them with wireless services, Internet services, the right information, and also some teleschooling or telepresence types of instruction. We are also in an integrated solution framework with a couple of ministries like the Ministry of Education, where we are trying to build an e-learning environment for them and those schools. We are going towards different elements of innovation there, where we connect schools and provide the next step of connecting them to the Internet, providing them with a teleschool or e-schooling system that could be utilized. And we connect them also to the applications required by the schools.

From the healthcare perspective, all hospitals in Saudi Arabia are connected, or the majority of them, maybe 95%. Those hospitals also require data services, management services, and security services. We provide security systems to protect them from hacking, protect them from external environments.

And we are trying to adopt new models where we spin off some of our own companies outside, some of our own entities inside STC to go outside to develop and come back better, like multinational companies, to give them more agility to adapt more to those technologies.

One of the things we are very proud of is some of the applications and services that some of the government agencies, such as the Ministry of Interior, do in Saudi Arabia. The majority of transactions you need for renewal of driver’s licenses, passports, exit & entry forms, that you need as an expat happen through the Internet. You don't have to go to the agency any more. You have to authenticate once. Once you authenticate, you are provided with a password and username, and everything is integrated with a unified billing system where you can pay all the fees, even the traffic violations that you have, via the Internet through your bank. That’s a unique system that the government has built. That's a unique way of doing e-transactions. That's an application we introduced.

A trusted ICT partner

WinWin: How do you expect Huawei to assist STC in the vertical market?

Dr. Enaya: Huawei is a great partner that we have, and plays a big role in the network of STC. Huawei is a part of our eLTE network. Many regions in Saudi Arabia use our LTE solutions. We are looking heavily into of how we could use that technology in our towers to provide better services to citizens and to the people serving those citizens, or the enterprises serving those citizens.

We look forward to Huawei stepping up in terms of data center base, and how can they help us build data centers that can support us in the future with our consumer business and our enterprise business. Not only this, Huawei is also a mega player in our fiber connectivity projects. They have our transmission units, connecting all the cities together. They are a major contributor to our success. We value the partnership. We are looking to innovate with them on the next level of ICT business.

We do have a couple of initiatives around smart cities with Huawei. One is in the city of Mecca, where we're trying to connect the whole city through cameras and through physical security systems, and through smart solutions to traffic lights, to crowd management, and so on. We are trying to work with them in developing solutions that could help pilgrims make their journey much easier.