The world retracting from globalisation

The world retracting from globalisation

Connectivity will drive the world’s exchange of goods and services as it were from home, in the future, notably in those emerging countries of the Middle East.  In the meantime, let us know why the world retracting from globalisation.

The above-featured image is of the Fourth wave of globalisation saw China’s increasing role as a global powerhouse.  Getty Images

Is the world retracting from globalisation, setting it up for a fifth wave?

By Elsabe Loots, University of Pretoria
Over the past 25 years there has been lots of research and debate about the concept, the history and state of globalisation, its various dimensions and benefits.

The World Economic Forum has set out the case that the world has experienced four waves of globalisation. In a 2019 publication it summarised them as follows.

The first wave is seen as the period since the late 19th century, boosted by the industrial revolution associated with the improvements in transportation and communication, and ended in 1914. The second wave commenced after WW2 in 1945 and ended in 1989. The third commenced with the fall of the Berlin Wall in 1989 and the disbanding of the former Soviet Union in 1991, and ended with the global financial crises in 2008.

The fourth wave kicked off in 2010 with the recovery of the impact of the global financial crises, the rising of the digital economy, artificial intelligence and, among others, the increasing role of China as a global powerhouse.

More recent debates on the topic focus on whether the world is now experiencing a retraction from the fourth wave and whether it is ready for the take-off of the fifth wave.

The similarities between the retraction period of the first wave and the current global dynamics a century later are startling. But do these similarities mean that a retraction from globalisation is evident? Is there sufficient evidence of de-globalisation or rather “slowbalisation”?

Parallels

The drawn-out retreat from globalisation during the 30-year period – 1914 to 1945 – was characterised by the geopolitical and economic impact of WWI and WWII. Other factors were the 1918-1920 Spanish Flu pandemic ; the Stock Market Crash of 1929 followed by the Great Depression of the 1930s; and the rise of the Communist Bloc under Stalin in the 1940s.

This period was further typified by protectionist sentiments, increases in tariffs and other trade barriers and a general retraction in international trade.

Looking at the current global context, the parallels are remarkable. The world is still fighting the COVID pandemic that had devastating effects on the world economy, global supply chains and people’s lives and well-being.

For its part, the Russia-Ukraine war has caused major global uncertainties and food shortages. It has also led to increases in gas and fuel prices, further disruptions in global value chains and political polarisation.

The increase in the price of various consumer goods and in energy have put pressure on the general price level. World inflation is aggressively on the rise for the first time in 40 years. Monetary authorities worldwide are trying to fight inflation.

Global governance institutions like the World Trade Organisation and the UN, which functioned well in the post-WWII period, now have less influence while the Russian-Ukraine war has split the world politically into three groups. They are the Russian invasion supporters, the neutral countries and those opposing, a group dominated by the US, EU and the UK. This split is contributing to complex geopolitical challenges, which are slowly leading to changes in trade partnerships and regionalism.

Europe is already looking for new suppliers for oil and gas and early indications of the potential expansion of the Chinese influence in Asia are evident.

A less connected world

De-globalisation is seen as

a movement towards a less connected world, characterised by powerful nation states, local solutions and border controls rather than global institutions, treaties, and free movement.

There’s now talk of slowbalisation. The term was first used by trendwatcher and futurologist Adjiedji Bakas in 2015 to describe the phenomenon as the

continued integration of the global economy via trade, financial and other flows, albeit at a significant slower pace.

The data on economic globalisation paint an interesting picture. They show that, even before the COVID pandemic hit the world in 2020, a deceleration in the intensity of globalisation is evident. The data which represent broad measures of globalisation, includes:

  • World exports of goods and services. As a percentage of world GDP, these reached an all-time high of 31% in 2008 at the end of the third globalisation wave. Exports fell as a percentage of global GDP and only recovered to that level during the early stages of the fourth wave in 2011. Exports then slowly started to regress to 28% of global GDP in 2019 and further to a low of 26% during the first Covid-19 year in 2020.
  • The volume of foreign direct investment inflows. These reached a peak of US$2 trillion in 2016 before trending lower, reaching US$1.48 trillion in 2019. Although the 2020 foreign direct investment inflows of US$963 billion are a staggering 20% below the 2009 financial crises level, they recovered to US$1.58 billion in 2021.
  • Foreign direct investment as percentage of GDP started to increase from a mere 1% in 1989 to a peak of 5,3% in 2007. After a retraction following the global financial crises, it peaked again in 2015 and 2016 at around 3,5%. It then declined to 1,7% in 2019 and 1,4% in 2020.
  • Multinational enterprises have been the major vehicle for economic globalisation over time. The number of them indicates the willingness of companies to invest outside their home countries. In 2008 the UN Conference on Trade and Development reported approximately 82 000. The number declined to 60 000 in 2017.
  • Data on world private capital flows (including foreign direct investment, portfolio equity flows, remittances and private sector borrowing) are not readily available. However, Organisation for Economic Co-operation and Development data show that private capital flows for reporting countries reached an all-time high of US$414 billion in 2014, followed by a declining trend to US$229 billion in 2019 and a negative outflow of US$8 billion in 2020.

These declining trends are further substantiated by the evidence of deeper fragmentation in economic relations caused by Brexit and the problematic US/China relations, in particular during the Trump era.

What next?

The question now is whether the latest data is:

  • indicative of either a retraction from globalisation similar to that experienced after the first wave a century ago;
  • or it is merely a process of de-globalisation;
  • or slowbalisation in anticipation of the world economy’s recovery from the impact of Covid-19 pandemic and the war in Ukraine?

The similarities between the first wave of globalisation and the existing global events are certainly significant, although embedded in a total different world order.

The current dynamics shaping the world such as the advancement of technology, the digital era and the speed with which technology and information is spread, will certainly influence the intensity of the retraction of the already embedded dependence on globalisation.

Nation states realise that blindly entering into contracts and agreements with companies in other countries, may be problematic and that trade and investment partners need to be chosen carefully. The events over the past three years have certainly shown that economies around the world are deeply integrated and, despite examples of protectionism and threats of more inward-looking policies, it will not be possible to retract in totality.

What may occur is fragmentation where supply chains becoming more regionalised. Nobel prize winning economist Joseph Stiglitz refers to the move to “friend shoring” of production, a phrase coined by US Treasury Secretary Janet Yellen.

It is becoming obvious that the process of globalisation certainly shows characteristics of both de-globalisation and slowbalisation. It’s also clear that the global external shocks require a total rethink, repurpose and reform of the process of globalisation. This will most probably lead the world into the fifth wave of globalisation.The Conversation

Elsabe Loots, Professor of Economics and former Dean of the Faculty of Economic and Management Sciences, University of Pretoria

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Saudi crown prince unveils design for NEOM’s . . .

Saudi crown prince unveils design for NEOM’s . . .

Saudi crown prince unveils design for NEOM’s . . .

Saudi Arabia’s crown prince and chairman of the NEOM board of directors Mohammed bin Salman has announced the designs of ‘The Line’, a 170 kilometres long smart linear city.

According to the crown prince, the designs of The Line will embody how urban communities will be in the future in an environment free from roads, cars and emissions. The city will run on 100 percent renewable energy and will prioritise people’s health and well-being over transportation and infrastructure as in traditional cities. It will also put nature ahead of development and will contribute to preserving 95 percent of NEOM’s land.

Last year, the crown prince launched the initial idea and vision of the city that redefines the concept of urban development and what cities of the future should look like.

“We cannot ignore the livability and environmental crises facing our world’s cities, and NEOM is at the forefront of delivering new and imaginative solutions to address these issues. NEOM is leading a team of the brightest minds in architecture, engineering and construction to make the idea of building upwards a reality,” said the crown prince.

Saudi crown prince unveils design for NEOM’s . . .

He added, “NEOM will be a place for all people from across the globe to make their mark on the world in creative and innovative ways. NEOM remains one of the most important projects of Saudi Vision 2030, and our commitment to delivering The Line on behalf of the nation remains resolute.”

The city’s design will be completely digitised, and the construction industrialised to a large degree by significantly advancing construction technologies and manufacturing processes.

The Line, which is only 200 metres wide, 170 kilometres long and 500 metres above sea level, will eventually accommodate 9 million residents and will be built on a footprint of 34 square kilometres, reducing the infrastructure footprint of the city.

Further into The Line’s design, NEOM revealed that the city will be designed with the concept referred to as Zero Gravity Urbanism in mind. The idea of layering city functions vertically while giving people the possibility of moving seamlessly in three dimensions (up, down or across) to access them. Unlike cities with just tall buildings, this concept layers public parks and pedestrian areas, schools, homes and places for work, so that one can move effortlessly to reach all daily needs within five minutes.

The Line will also have an outer mirror façade, allowing it to blend with nature, while the interior will be built to create extraordinary experiences for people living within the city.

Link to ITP.net

Read the latest here: ‘Revolution in civilisation’: Saudi Arabia previews 170km mirrored skyscraper offering ‘autonomous’ services

.The featured image above is credit to Rojgar Samachar

 

Mideast nations wake up to damage from climate change

Mideast nations wake up to damage from climate change

The MENA region is the most water-scarce in the world and possibly the most vulnerable to climate change.  Water scarcity is also caused or made worse by conflicts, population growth, poor water management, deteriorating water infrastructure, and governance issues.  All the above is millennia old and could only be aggravated by the increasingly apparent Climate Change impacting big and small countries.  In the meantime, critical drivers behind water scarcity in MENA include rising agricultural demand and expanding irrigated land from aquifers decreasing pockets of water.  The immediate effects are as elsewhere, the whole of the Mideast nations wake up to damage from climate change.

The above image is of:

An Afghan girl warms up her hands as she is resting from carrying the water in Balucha, Afghanistan, Monday, Dec. 14, 2021. The Middle East is one of the most vulnerable regions in the world to the impact of climate change, and already the effects are being seen. This year’s annual U.N. climate change conference, known as COP27, is being held in Egypt in November 2022, throwing a spotlight on the region. (AP Photo/Mstyslav Chernov)

Mideast nations wake up to damage from climate change

CAIRO (AP) — Temperatures in the Middle East have risen far faster than the world’s average in the past three decades. Precipitation has been decreasing, and experts predict droughts will come with greater frequency and severity.

The Middle East is one of the most vulnerable regions in the world to the impact of climate change — and already the effects are being seen.

In Iraq, intensified sandstorms have repeatedly smothered cities this year, shutting down commerce and sending thousands to hospitals. Rising soil salinity in Egypt’s Nile Delta is eating away at crucial farmland. In Afghanistan, drought has helped fuel the migration of young people from their villages, searching for jobs. In recent weeks, temperatures in some parts of the region have topped 50 degrees Celsius (122 Fahrenheit).

Mideast nations wake up to damage from climate change

Fishermen navigate on the Shatt al-Arab waterway during a sandstorm in Basra, Iraq, May 23, 2022. (AP Photo/Nabil al-Jurani)

This year’s annual U.N. climate change conference, known as COP27, is being held in Egypt in November, throwing a spotlight on the region. Governments across the Middle East have awakened to the dangers of climate change, particularly to the damage it is already inflicting on their economies.

“We’re literally seeing the effects right in front of us. … These impacts are not something that will hit us nine or 10 years down the line,” said Lama El Hatow, an environmental climate change consultant who has worked with the World Bank and specializes on the Middle East and North Africa.

“More and more states are starting to understand that it’s necessary” to act, she said.

Egypt, Morocco and other countries in the region have been stepping up initiatives for clean energy. But a top priority for them at COP-27 is to push for more international funding to help them deal with the dangers they are already facing from climate change.

One reason for the Middle East’s vulnerability is that there is simply no margin to cushion the blow on millions of people as the rise in temperatures accelerates: The region already has high temperatures and limited water resources even in normal circumstances.

Mideast nations wake up to damage from climate change

Trash piles up in the heavily polluted Litani Rver, in Saghbin, Bekaa valley, eastern Lebanon, June 20, 2021. (AP Photo/Hassan Ammar)

Trash piles up in the heavily polluted Litani Rver, in Saghbin, Bekaa valley, eastern Lebanon, June 20, 2021. (AP Photo/Hassan Ammar)

Middle East governments also have a limited ability to adapt, the International Monetary Fund noted in a report earlier this year. Economies and infrastructure are weak, and regulations are often unenforced. Poverty is widespread, making job creation a priority over climate protection. Autocratic governments like Egypt’s severely restrict civil society, hampering an important tool in engaging the public on environmental and climate issues.

At the same time, developing nations are pressuring countries in the Mideast and elsewhere to make emissions cuts, even as they themselves backslide on promises.

The threats are dire.

As the region grows hotter and drier, the United Nations has warned that the Mideast’s crop production could drop 30% by 2025. The region is expected to lose 6%-14% of its GDP by 2050 because of water scarcity, according to the World Bank.

In Egypt, precipitation has fallen 22% in the past 30 years, according to the World Bank.

Mideast nations wake up to damage from climate change FILE - A horse cart driver transports wheat to a mill on a farm in the Nile Delta province of al-Sharqia, Egypt, on May 11, 2022. The Middle East is one of the most vulnerable regions in the world to the impact of climate change, and already the effects are being seen. This year's annual U.N. climate change conference, known as COP27, is being held in Egypt in November, throwing a spotlight on the region. (AP Photo/Amr Nabil, File)

A horse cart driver transports wheat to a mill on a farm in the Nile Delta province of al-Sharqia, Egypt, on May 11, 2022. (AP Photo/Amr Nabil)

Droughts are expected to become more frequent and severe. The Eastern Mediterranean recently saw its worst drought in 900 years, according to NASA, a heavy blow to countries like Syria and Lebanon where agriculture relies on rainfall. Demand for water in Jordan and the Persian Gulf countries is putting unsustainable pressure on underground water aquifers. In Iraq, the increased aridity has caused an increase in sandstorms.

At the same time, warming waters and air make extreme and often destructive weather events more frequent, like deadly floods that have repeatedly hit Sudan and Afghanistan.

The climate damage has potentially dangerous social repercussions.

Many of those who lose the livelihoods they once made in agriculture or tourism will move to the cities in search of jobs, said Karim Elgendy, an associate fellow at Chatham House. That will likely increase urban unemployment, strain social services and could raise social tensions and affect security, said Elgendy, who is also a non-resident scholar with the Middle East Institute.

Mideast nations wake up to damage from climate change FILE - People cross the Diyala River, a tributary of the Tigris, where decreasing water levels this year have raised alarm among residents, near Baghdad, Iraq, June 29, 2022. The Middle East is one of the most vulnerable regions in the world to the impact of climate change, and already the effects are being seen. This year's annual U.N. climate change conference, known as COP27, is being held in Egypt in November, throwing a spotlight on the region. (AP Photo/Hadi Mizban, File)

People cross the Diyala River, a tributary of the Tigris, where decreasing water levels this year have raised alarm among residents, near Baghdad, Iraq, June 29, 2022. (AP Photo/Hadi Mizban)

Adapting infrastructure and economies to weather the damage will be enormously expensive: the equivalent of 3.3% of the region’s GDP every year for the next 10 years, the IMF estimates. The spending needs to go toward everything from creating more efficient water use systems and new agricultural methods to building coastal protections, beefing up social safety nets and improving awareness campaigns.

So one of top priorities for Mideast and other developing nations at this year’s COP is to press the United States, Europe and other wealthier nations to follow through on long-time promises to provide them with billions in climate financing.

So far, developed nations have fallen short on those promises. Also, most of the money they have provided has gone to helping poorer countries pay for reducing greenhouse gas emissions — for “mitigation,” in U.N. terminology, as opposed to “adaptation.”

For this year’s COP, the top theme repeated by U.N. officials, the Egyptian hosts and climate activists is the implementation of commitments. The gathering aims to push countries to spell out how they will reach promised emission reduction targets — and to come up with even deeper cuts, since experts say the targets as they are now will still lead to disastrous levels of warming.

Mideast nations wake up to damage from climate change FILE - Afghan farmer uses donkey to carry water canisters across the dried-out river near Sang-e-Atash, Afghanistan, Dec. 13, 2021. The Middle East is one of the most vulnerable regions in the world to the impact of climate change, and already the effects are being seen. This year's annual U.N. climate change conference, known as COP27, is being held in Egypt in November 2022, throwing a spotlight on the region. (AP Photo/Mstyslav Chernov, File)

Afghan farmer uses donkey to carry water canisters across the dried-out river near Sang-e-Atash, Afghanistan, Dec. 13, 2021. (AP Photo/Mstyslav Chernov)

Developing nations will also want richer countries to show how they will carry out a promise from the last COP to provide $500 billion in climate financing over the next five years — and to ensure at least half that funding is for adaptation, not mitigation.

World events, however, threaten to undercut the momentum from COP26. On emissions cuts, the spike in world energy prices and the war in Ukraine have prompted some European countries to turn back to coal for power generation — though they insist it’s only a temporary step. The Middle East also has several countries whose economies rely on their fossil fuel resources — Saudi Arabia and the Persian Gulf most obviously, but also Egypt, with its increasing natural gas production.

Persistent inflation and the possibility of recession could make top nations hesitant on making climate financing commitments.

With international officials often emphasizing emission reduction, El Hatow said it should be remembered the countries of Africa, the Middle East and elsewhere in the developing world have not contributed substantially to climate change, yet are bearing the brunt of it.

“We need to talk about financing for adaptation,” she said, “to adapt to a problem they did not cause.”

Factbox: What became of the ‘Arab Spring’?

Factbox: What became of the ‘Arab Spring’?

In a would-be factbox enumeration, what became of the ‘Arab Spring’ by is explored in the aftermath of the not-so-well-mediatised people’s mass movements in specific countries of the MENA, Here is perhaps the exception give or take a few other countries such as Algeria, Sudan, Iraq, etc. 

July 25 (Reuters) – Tunisian President Kais Saied is set to secure more power under a new constitution that is expected to pass in a referendum on Monday, in what critics fear is a march to one-man rule over a country that rose up against dictatorship in 2010. read more

Saied’s opponents fear the changes will deal a major blow to democracy in Tunisia, widely seen as the only success story of the “Arab Spring” uprisings against autocratic rule that elsewhere ended in renewed repression and civil wars.

Here’s a recap of how the Arab Spring panned out for the countries affected:

TUNISIA

Fruit seller Mohammed Bouazizi set himself on fire on Dec. 17, 2010 after a local official confiscated his barrow.

Protests spread from his town, Sidi Bouzid, across the country, turning deadly. President Zine el-Abidine Ben Ali fled on Jan. 14, 2011, inspiring revolts elsewhere.

Factbox: What became of the 'Arab Spring'?

Police officers control the crowd while surrounding a man suspected to be involved in opening fire on a beachside hotel in Sousse, as a woman reacts, Tunisia June 26, 2015. REUTERS/Amine Ben Aziza

Tunisia held a first democratic election that October, won by the moderate Islamist Ennahda which had been banned under Ben Ali.

A new constitution establishing a parliamentary system was agreed in 2014, and Tunisians choose their lawmakers and president in free and fair elections, most recently in 2019.

However, economic troubles caused hardship and disillusionment. Illegal emigration to Europe increased. The economy, heavily dependent on tourism, was hit particularly hard by COVID-19.

In July 2021, President Kais Saied froze parliament and sacked the government – moves his opponents called a coup but which were welcomed by those Tunisians who were fed up with political bickering and paralysis. read more

A year later, Saied called a referendum on a new constitution that strengthened the presidency, capping what his opponents called a march to one-man rule. Saied has said freedoms will be protected. read more

EGYPT

President Hosni Mubarak had been in power since 1981, but massive anti-government protests began on Jan. 25, 2011 as activists called a “day of rage”, inspired by Tunisia. As hundreds of thousands of protesters massed after Friday prayers three days later, Mubarak deployed the military.

Factbox: What became of the 'Arab Spring'?

Egyptians rally at Tahrir Square in downtown Cairo February 1, 2011. REUTERS/Amr Abdallah Dalsh

Protests gathered momentum, and the army pulled its forces from the protests and Mubarak stepped down – to be tried in August on charges of abusing power and killing demonstrators.

The once-banned Muslim Brotherhood won the 2012 election but a year later the military, encouraged by anti-Brotherhood protests, toppled the new president, Mohamed Mursi, who was put in prison and died in 2019.

Army chief Abdel Fattah el-Sisi replaced him as president. Rights groups documented abuses in a crackdown on dissent and the military faced a long-running insurgency from Islamist militants in Sinai.

Mubarak died a free man in 2020 aged 91, the case against him having been dropped in 2014.

YEMEN

Crowds took to the streets against President Ali Abdullah Saleh from Jan. 29, 2011, aggravating splits in the army and between political blocs. Saleh was hurt in an assassination attempt in June 2011, forcing him to seek treatment in Saudi Arabia.

Gulf states brokered a transition deal including a “national dialogue” aimed at resolving Yemen’s problems, with Saleh’s old deputy Abd-Rabbu Mansour Hadi to be president until elections.

With an al Qaeda insurgency raging in the east, Sanaa faced new problems in the north from the Iran-allied Houthi group and from a revived southern secessionist movement.

In 2015, after the Houthis seized Sanaa, Saudi Arabia and its allies began a military campaign to keep Hadi in power – a war that soon reached bloody stalemate, aggravating food shortages and cholera outbreaks.

Ex-president Saleh was killed in a roadside attack in 2017 after switching sides, abandoning the Iran-aligned Houthis for the Saudi-led coalition.

A U.N.-backed ceasefire took effect in April, 2022 and Hadi, who had spent years in exile in Saudi Arabia, was replaced by a presidential council.

LIBYA

In first Benghazi and then Misrata, protests broke out in February, 2011, soon turning to armed revolt against Muammar Gaddafi’s 42-year rule.

In March, the United Nations Security Council declared a no-fly zone to protect civilians from Gaddafi’s forces and NATO started air strikes to halt their advance on Benghazi.

By August, rebels had seized Tripoli and in October Gaddafi was captured hiding in a drainpipe outside his hometown of Sirte and killed.

Local militias seized hold of territory and, as chaos took hold, the country split in 2014 between western and eastern factions. The U.N. helped broker a political agreement in 2015, but in practice the country stayed divided and Islamic State seized control of Sirte for more than a year.

In 2019 eastern commander Khalifa Haftar launched a new war, assaulting Tripoli for 14 months before his forces turned back. By now the conflict was international, with Russia, the UAE and Egypt backing Haftar and Turkey the Tripoli government.

A U.N.-backed election – part of a peace process aimed at knitting Libya back together – was cancelled in December, 2021 for reasons including disputes over the rules.

In March 2022, the Sirte-based parliament appointed a new prime minister but the government based in Tripoli refused to step down, leaving Libya split between rival administrations.

BAHRAIN

On Feb. 14, 2011, the biggest protests in years erupted in Bahrain as demonstrators echoed the Egyptian crowd’s call for a “day of rage” to demand the ruling monarchy grant democracy.

As protesters and police clashed over the coming weeks, sectarian tensions rose in a country where many majority Shi’ite Muslims had long chafed against the Sunni ruling dynasty.

On March 14, neighbouring Sunni kingdom Saudi Arabia sent tanks across the causeway linking it to Bahrain to guard major installations. The authorities declared martial law and cleared protesters from the camp that had become their symbol.

Protests continued for months, leading to at least 35 deaths, but the monarchy suppressed the uprising and restored control.

SYRIA

When the first protests began to spread through Syria in March, 2011, President Bashar al-Assad sent in security forces and there was a wave of arrests and shootings.

Factbox: What became of the 'Arab Spring'?

A youth with his back painted with the colours of Syria’s opposition flag marches during a demonstration demanding that relatives of former president Ali Abdullah Saleh be dismissed from senior army and police posts in Sanaa May 14, 2012. REUTERS/Khaled Abdullah

By July, protesters were taking up arms and army units were joining the gathering revolt, later backed by Gulf monarchies and Turkey, as Assad hit back with air strikes. Full-blown war erupted.

As chaos engulfed the country, the Islamic State group in 2014 seized a swathe of territory, drawing a U.S.-led coalition to back Kurdish fighters in the northeast.

Support from Russia, Iran and Lebanon’s Shi’ite Hezbollah movement helped Assad claw back control over much of the country, defeating the rebels in areas including Aleppo and Eastern Ghouta from 2015-18.

By the end of the decade, hundreds of thousands were dead and more than half the country’s pre-war population was displaced with the country partitioned between Assad, Turkey-backed rebels and Kurdish-led groups.

Writing by Angus McDowall and Tom Perry; Editing by William Maclean

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Data – The modern lifeblood of heavy industries in the Middle East

Data – The modern lifeblood of heavy industries in the Middle East

Geir Engdahl, Co-Founder & Chief Technology Officer, Cognite

 

Inside nearly any type of business is a treasure trove of data. It’s the companies that understand how to maximise the value of that data and use it to improve decision making, accelerate innovation, enhance the customer experience and drive operational efficiency that will have the competitive advantage. However, it’s easier said than done and companies may find extracting this data value to be challenging.

Siloed data, outdated tools and shadow IT are the most common hurdles faced by industrial businesses. These are the barriers that companies need to overcome if they aim to democratise data and analytics, streamline collaboration and accelerate time-to-insight. The global skills shortage represents another barrier and it’s clearly one that must be addressed if companies are to have access to the right talent pool to tap into that data.

 

Tackling proprietary data protocols

When looking at process-heavy industries, focusing on core operational technologies is key. Systems from multiple vendors, each paired with proprietary protocols, can lock down data, and these systems have an average lifespan of around 20 years. The impact of this mix of legacy kit, disparate control systems, non-compatible data models and communication interfaces can limit a company’s ability to collect and contextualise its data.

Cognite experienced this challenge first hand when it supported an oil and gas company that had 30 oil platforms with more than 300 wells. The operator lacked a unified overview of maintenance activities within and between all assets – ultimately a costly and ineffective way of working. As the data team coming in to fix this challenge, the Cognite focus was on ensuring that this business didn’t have too many disparate control systems using proprietary data models and communication. By bringing these systems together into a shared platform, this oil and gas operator could consequently optimise scheduling, improve communication across organisational silos and make data-driven decisions.

 

Concentrating on user needs

The secret recipe for many successful companies is to maintain a laser focus on their users and on improving their operational efficiency and their ability to make rapid and higher confidence decisions. Data plays a role here, and the work to structure an organisation’s data can bring value to multiple users. The key is understanding how people interact with data across the operation and be aware of how the data needs to be presented to the various roles in the company. By maintaining a user-centric focus and having a solid foundation of scalable data, companies can accelerate time to value.

Across industrial operations there is also a major focus on data analytics to support optimised decision making and to enhance operational efficiencies. In the future, this could lead to the adoption of AI and machine learning to intercede in the operation of industrial facilities in complex use cases, such as where Distributed Energy Resources (localised energy generation) is deployed.

Environmental impact is also something increasingly important for users. One example of this is from another Cognite customer, Aker BP. This oil and gas company used machine learning smart monitoring systems to visualise all data relevant for troubleshooting water contamination and identify factors related to high oil-in-water concentrations. This helped the company decrease its time spent on mitigating actions, a savings equivalent to an annual revenue potential of $6 million. So, concentrating on user needs not only helps to unlock the power of data, it also to drive operational resilience.

 

Using trusted data sources

 

Industrial data empowers everyone who engages with it but the analytics and applications that leverage this data will come from the end users, software providers and equipment manufacturers. When you have a trusted data source with common assets you have a very strong basis for using low code to develop in-house applications, as well as AI to enhance decision accuracy. Given the current industrial landscape, as well as greater market requirements, such as data-intensive carbon reporting and business model disruption from digital technology adoption, companies that do not focus on data as a key asset will face a significant competitive disadvantage.

In the last few years, we’ve seen digital technology adoption increase across the Middle East as businesses in the region look to industry 4.0 tools to enhance their operations and formulate better data driven strategies. A latest study by IDC forecasts enterprise IT spending in the Middle East, Turkey & Africa to grow by 2.7percent in 2022. The same report also estimates regional spending on AI to grow by 24.7percent and big data analytics to grow by 8.1percent this year. Regional businesses that can adjust their people and processes will have a first-mover advantage in this new data-driven era. Those that remain wedded to past investments will eventually have to shoulder twice the technology debt.

Unlocking the power of data will be key to ensuring companies can maintain business continuity, drive operational resilience and grab on to all the benefits they can from emerging technologies.

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