Emitac revisited

Balall Yaqub founded Emitac in 1976, developing it into a major IT solutions and services provider before the entrepreneur bug bit him again. In the mid-1980s he left Emitac to establish a number of successful ventures, the latest being a US software company with offices in the US, Spain and Pakistan. Even so, Yaqub is back at Emitac, where he is now the CEO of a group that is about to become an AED1 billion enterprise.

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By  Published  August 31, 2006

Arabian Computer News Was it an easy decision to accept the CEO role at Emitac?Balall Yaqub I think, honestly speaking, I had mixed feelings. In terms of the positives I see tremendous opportunities here in the Middle East market. Emitac today is recognised as one of the leading IT companies in the UAE. I think the challenge that is facing us is how we take Emitac to the next level and make it one of the leading IT companies in the region, not just in the UAE. This was the challenge that was given to me and I am very excited about.
ACN When you look at the divisions within Emitac, you are a powerful IT distributor, but you also have a strong software integration and services division. How do you balance those aspects and how do you see the overall company developing?
ACN We are starting to see the creation of regional IT services and systems integration groups. Is this where you see Emitac going?

Balall Yaqub "We have had some excellent successes but feel we could do even better.We would like Emitac to not just be a UAE company but to become a truly regional company within the next three years."

ACN How big is the systems integration arm now at Emitac?
BY At the moment it is about 70 people in that business unit.We work with Symantec, HP, Cisco and a number of other software and services companies that have domain expertise.We have a partner in the document management space and another purely in the education space called ATS.We are a Great Plains and Microsoft partner in the ERP area.We represent Avanza Solutions, which is focused on webenablement in the banking domain. The nature of systems integration is such that you need a number of partners to put together an effective solution for the customer.

ACN Is the solutions business a unit that you plan to expand moving forward?
BY Yes. One of the intentions of separating the distribution and the solutions business was that it allowed us to focus on each business and let the opportunities drive the future strategies and growth possibilities. The solutions business is an area that is growing at a very high rate and an area that we want to participate in.We feel that we already have some very good partners - we do have a lot of excellent references in the domains that we are present in and I think we need to start leveraging these advantages towards more of a highgrowth strategy in this area. One of the things that I will be focusing on in addition to making sure that we continue our positive growth in the distribution business is how to restructure and reorganise the solutions business to make it into a major player in the region just as the distribution business is.

ACN What sort of restructuring steps do you envisage at this stage?
BY It is going to be both in terms of the solution offerings and what is Emitac's value proposition and then do we have the infrastructure in place to go to the market and demonstrate it. I think this will therefore require major restructuring in the products portfolio, the services portfolio and in the HR strengths and the organisational structures that we have.

ACN How easy is it to find and recruit skilled staff now in this market?
BY That's a tough one.You know, it is not easy because the GCC countries are very dependent on expertise coming from the outside world and if business is doing well in Egypt and in Jordan and in India for example, then to get people to come here from there becomes much more difficult.When the economies of these countries were not doing so well and the economies in the GCC were, there was always an opportunity to get people across, but with these economies doing equally well now, it becomes a very tough ask. However, I think an IT professional is typically motivated not just by the financial aspect but also by the challenges in technology that they can address. I believe the market here is offering enough state-of-the-art technology challenges to attract quality people to come out here and participate in delivering that technology to the customers here.

ACN Do all the staff need to be here? Blended delivery models seem to be getting more popular now in the GCC.
BY Excellent question and that is what I am saying - we need to see how we can leverage onsite with offshore capabilities and as part of our complete delivery model that is another area that the solutions business will be looking at. Do the core competency centres need to be here or could they be in another market allowing us to leverage the technical expertise at a very attractive expense base and bring them into the market here to help and support the onsite? The model always has to work in conjunction with the onsite presence - you need to have that in terms of offices, business development people and your project management and first level support staff. But the actual solution architects and the technical architects and the developers could be physically located anywhere. With an excellent communications infrastructure - and I hear that the rates are going to become even more attractive with Etisalat already announcing some reductions and promising more by the end of the year plus the fact that we have a competitor coming in, du, which will further force everyone to offer more economically competitive solutions to users like ourselves - I think leveraging the offshore will become an even more feasible solution.

ACN Have you started exploring potential partners for the offshore option?
BYWe are looking at India, Pakistan, Jordan and Egypt. It is one of the building blocks I was talking about that I need to put in place this year ready for 2007.

ACN How predictable is the solutions and services business in the Middle East, in particular in the UAE? Is it easy to manage order pipelines, day rates and utilisation levels? Do you have that level of transparency in this market?
BY In the solutions business your inventory is not boxes it is people. And the skills sets, the technology they are offering and their utilisation - it is how you bring in efficiencies in these areas that separates a successful solutions provider from an unsuccessful one. So, I think these are parameters that any successful business should be able to measure. As the market for solutions increases in the region, we will have more players coming in, including the big players eventually landing here one day.

ACN The largest global IT services players still have minimal presence apart from serving the needs of top tier clients in this region. How quickly will that change?
BY IT will take a few years and that offers a window of opportunity to local companies like ourselves to get to a level where we have a customer base and as you know, in the services market, if you have a good installed customer base, that can give you enough business to sustain and grow your operations. The other model could be - some of the US companies in the US markets, something I know very well because I run a couple of companies in the US - there are certain risk factors that a US company looks at before coming into markets here and one way of mitigating the risk for these companies is for them to enter into relationships and partnerships here with a local company. For Emitac I see that as an opportunity as we progress into 2007 and put all these building blocks in place, I think all of a sudden we will attract the attention of some of the major players in the European and US markets. Given their restrictions, I think they would welcome the opportunity to work with a local company.

ACN How have your discussions with the Emitac board gone? What specific goals have been set for the company?
BYWe are looking at a short-term plan and a medium to long-term plan. Because of the 30 years association that I have had with the principal sponsors of Emitac, I feel there is a relationship here that extends over a very long period of time. There is a lot of mutual trust in one another and I feel that is one of the strengths that I bring to the table as the CEO of Emitac. I have the confidence and the faith and trust of the principal sponsors and I am a known entity to them. The message to me is: Balall, we have some issues at the moment in the way we are structured and the way we are doing business; we have had some excellent successes but feel we could do even better, so let's try and do better.We would like Emitac to not just be a UAE company but to become a truly regional company within the next three years. So there is a one-year plan I am in the process of finalising for submission to the board. By December of this year I will have also put a three-year strategic plan in place for 2007 to 2009.

ACN Is the capital available to make these plans a reality? Is it self-funded expansion or will there be a capital injection from the sponsors or even an external party?
BY It will have to be a combination of both. One of the responsibilities I have is to bring in more fiscal discipline and that hopefully will generate cash. Some of the plans would require funding by the shareholders and as long as I can convince them on the feasibility of the plans, the funds will be there. These are very astute and experienced business people so I need to do my homework properly and go in with a plan that makes sense. If I do, I have no hesitation in saying that I have their support.

ACN What is the overall headcount of the company now?
BY It is just under 300 staff now.

ACN Prior to your appointment Wael Fakharany was CEO for a relatively short space of time. It was unfortunate that he had to step down, but have all the recent changes damaged the momentum at Emitac at all?
BY I think in all honesty when there is a change at the top there is a short-term effect. I think the reasons were very clear - he had to address his health first and unfortunately had to leave. The last few weeks that I have been here have been spent talking to our teams in the UAE and across the region, talking to our customers and also our business partners. My impression is that, yes, initially there was a concern, but now it is no longer a concern and I think the message I have to deliver is what we want to do now and want to do in the next three years The confidence is there both from our employees and from the market that we are on the right track.

ACN What sort of customer breadth do you have for your solutions, software and services business at present?
BY Telecoms is a sector that we are heavily involved in and the government is another area where we have major projects and activities.Within the government, healthcare and education are major accounts for Emitac. Then there is banking and the financial sector where with the help of HP we have a sizeable account base.

ACN How strong is the order pipeline for the rest of 2006?
BYWe are hoping to close 2006 slightly ahead of the initial projections. The first six months we achieved 98% of our target but we hope to end the year slightly ahead. That translates to Emitac being close to an AED1 billion company.

ACN How much time is spent farming existing accounts and how much time is spent hunting new accounts for Emitac?
BY I think one of the challenges that Emitac faces is to maintain its large existing installed base and at the same time develop new accounts. I think that is one of the business objectives that we have put in place.

ACN How competitive is the IT services sector in this region in terms of pricing pressure and the bidding process?
BY It is extremely competitive.You have some very good local companies and then you do have companies that have ventured here from the West and the result is that all of them like to be based in the UAE, which is a preferred place of residence for most expatriates. This being the base for most of the companies becomes the most competitive market. I think in the distribution area we have an excellent and loyal reseller channel that has been with us for decades.As long as we can meet their needs by providing the latest products at attractive prices, I think that is under control. In the solutions area we have a little way to go in establishing the identity and the value proposition and that will come as part of my plans.

ACN Do you think your message to customers ever gets blurred because you have the distribution business and also a services and solutions business?
BY Not really. Today, because of the volume of our business, we are recognised as a powerhouse distribution business - one of the leading players in the UAE market.

But that is now very separate to our solutions business. For customers on the solutions and services side, we want to let them know our valueadd and make them understand why they are doing business with Emitac.

We have full support with our major vendors and many of these relationships date back many years. They believe in Emitac because of the success they have had with us and therefore their commitment to Emitac is strong.

ACN Are you excited by your new role?
BY Oh yes, there are some real strengths in Emitac that can be used to help the company really realise its vision.We have a number of established businesses: distribution, medical, solutions and services.We have excellent partners; we have an excellent customer base - and a very loyal one I may add - and this gives us an excellent foundation to go out into the market.

For me the important thing is that Emitac cements and has a solid foundation on which to grow yearon- year. It is OK to go from an AED100m to an AED200m company, but when you are aiming to be an AED1 billion company and the intent is there to grow even further, you need to have structure and processes in place. This is what excites me the most - to participate in a growth market with a company that has a very good name and real growth potential to become a major regional player. Who knows, maybe even a global player one day.

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