From carpets to consultancy interviews Ibrahim Al Moaiqel, CEO of one of the most prominent private business empires in Saudi Arabia, Jeraisy — and asks what are the plans to be the company that can provide everything a business needs to operate.

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By  Peter Conmy Published  August 31, 2000 interviews Ibrahim Al Moaiqel, CEO of one of the most prominent private business empires in Saudi Arabia, Jeraisy - and asks what are the plans to be the company that can provide everything a business needs to operate.

From its humble beginnings with a single carpet shop in Saudi Arabia, Jeraisy has grown to become one of the most prominent private business empires in the Kingdom.

Its mission is to provide everything that a business will need to operate. That used to mean desks, chairs and computers. Now Jeraisy has added essential ‘New Economy’ services like technology and business consultancy and Internet service provision.

Today, Jeraisy is planning for the imminent membership of Saudi Arabia to the WTO. Far from seeing global competition in Saudi Arabia as a threat, the company’s CEO, Ibrahim Al Moaiqel is relishing the prospect of partnering with the world’s leading technology and business and companies.

How would you describe the business climate in Saudi Arabia at the moment?

It is really very positive. The Crown Prince representing the Saudi government has announced all the changes recently that you have all heard about.

Many foreign companies have already applied for their own registrations so that most of them won’t need their own Saudi sponsors.

They have eased up the property ownership laws so that foreigners can go and buy their own houses without sponsorship.

In fact, if you are an industrial investor, you are allowed to bring in your own employees under your own sponsorship without having a Saudi representing you. This has not happened anywhere else in the whole Gulf.

So the climate overall is very good. The high oil prices have added a lot of positive feeling to the market. Things are really turning rosy right now and everybody is excited. Many projects have been released by the government that were put on hold for budgetary reasons.

Do you not feel that local businesses could be under threat from foreign companies moving in now that a lot of the protection for national businesses has been abolished?

There is a feeling of being threatened by more experienced companies that can bring more advanced solutions at lower cost.

This is being discussed between the business people and the government. This is one of the points where the level of sensitivity is high when it comes to negotiating with the WTO. The issue of agencies is being discussed.

Take a company like Jeraisy, for example. We represent hundreds of companies in Saudi Arabia at the moment. Some of them will probably say, “we don’t need a local agent, we will come to Saudi Arabia ourselves.”

But we know that it is going to be very difficult for a lot of companies to come by themselves because the support infrastructure that they will need to build will be very expensive.

They will have to continue depending on their local representatives. The nature of the relationships [between manufacturers and agents] may change. It could become more like a partnership.

This is something that we have already started doing at Jeraisy. We have moved some of our agency agreements towards joint venture partnerships agreements.

So, we will be part of the international organisation within Saudi Arabia.

What does globalisation mean to you? Is it a threat or an opportunity?

The term globalisation has to be interpreted in its proper format. It is not easy for many companies in Saudi Arabia to sell globally.

We are not like SABIC, where they have to sell their petrochemicals internationally.

We are a company that provides IT services. We do not manufacture Compaq, for example.

We are resellers of hardware, software and services. The value that we bring is our skills, our market penetration and our experience.

One of the trends around the world today is the creation of a new entrepreneurial economy driven by the Internet. Do you think that as a group, or as a family even, that Jeraisy has a role to play in terms of funding startups in Saudi Arabia?

I cannot answer the question in terms of funding new ventures. You would have to ask the investment people in the Jeraisy Group.

But, helping them in their startup phase is something that we already do. That is part of our mission.

What form does that help take other than selling them IT solutions?

It is not a matter of selling. I’ll give you an example. We have gained a lot of valuable experience starting up our ISP business.

We paid a lot of money getting that experience and now we can pass on the lessons we learnt to other customers. Consultancy is another thing. JCCS is the only company in Saudi Arabia that has established an e-business unit that can go to market and help people get started with e-business; with a business.

One of the things we are saying is that is not necessarily the right strategy for everybody. We have clients that think going is essential, but this is not always the case.

Some problems you have to solve in a different manner.

Many major international companies around the world, and IT companies like HP, Oracle and Microsoft are among them, are prepared to make significant investments in startup ventures in the hope that some of them will succeed and become major customers. In other words, they are prepared to take risks in the hope that some of them will pay-off. Does this risk-taking culture exist in Saudi Arabia?

We have made a couple of investments in this way. The latest one, which is being finalised at the moment, will involve a good amount of money from our organisation to develop a certain e-solution for the region.

We have also partnered with another organisation for Internet education that is managed by Atheer.

So, in terms of being courageous enough to invest and take risks, yes we do that. But in terms of just investing [like a venture capitalist] that is something for the investment group of Jeraisy and I cannot comment on that.

I know they are investing both locally and internationally, but mainly internationally because that is where the biggest markets are.

It is possible we would look at investing in terms of putting in an infrastructure for a company. We are very flexible.

In terms of the public Internet infrastructure, is this developing at a pace that fits with your plans?

If we take Riyadh for example, they are putting in a fibre optic ring connecting every major centre in the city.

Jeraisy’s building is fortunately one of the hubs. We will be on the fibre ring and we will be connected.

This will solve some of the speed, traffic, and bandwidth [problems], but again it has to be part of the whole thing. We have to upgrade the international link, and upgrade the national infrastructure, they are doing a bit of this and a bit of that … slowly.

There is more than one organisation involved. You have KASCT involved as the link controller. Even if there is an increase in the number of modems and ports, you still need KACST to upgrade their international link.

What has been the effect of the poor infrastructure on Jeraisy and its ISP business, Atheer?

We reached a point where we told our sales people not to sell [new Internet subscriptions], which is the most frustrating thing for sales people.

We were running at 100% capacity. Right now, they have solved it. Four days ago we had a good meeting with STC officials and we requested more than 60 E1 lines.

Right now we have four E1s active, we have four coming and there will be ten within less than a month, but our request was for 60 E1s; that’s how many we want.

But it’s been more than a year and a half and we lived on a single E1 for a long, long time. Right now it’s being solved.

[STC] had capacity problems, they had physical wire capacity problems, although we pay for a lot for each E1: about 50,000 Riyals per month. That is a lot of money.

Do you think there is enough pent up demand in the Kingdom for you to need 60 E1 lines?

There is that much demand. We will not use the whole 60 E1s all of a sudden, but there is demand and it’s growing. People now are becoming more choosey as we thought they would a year ago.

They want quality with the service. They have gone through the exercise of hopping from one ISP to another, tasting what each one had to offer. Now they want to select one and move forward with it.

Which segment of the user population is going to drive the growth of the Internet segment now, is it going to be the business segment, are you seeing those companies really starting to pick up, or is it going to be the consumer segment that is going to drive the market?

The individual subscriber market is still growing , but definitely the revenue is going to be driven by business customers. No ISP is keen at having more individual dial up subscribers.

You want more individuals visiting the Web but not necessarily being dial-up subscribers. The interest of all the ISPs lies within the business sector.

How are your customers looking at their investment in the Internet and e-business? Do most people see it as just a cost of staying in the game or do some see it as a key driver for growth?

We’ve seen both sorts of approaches. We have seen companies that are not willing to join the Internet society, we have seen companies working on Web integration projects throughout their organisations, and then there are some that come for the minimum Internet presences they can which is maybe just a Web site.

We have heard that Jeraisy is investing heavily in upgrading its own internal infrastructure. What is your motivation for this?

Part of our cost reduction study is to minimise the cost of not only communicating with partners but also performing transactions with partners.

That is why we are moving our internal systems entirely over to the Oracle 11i e-business solution suite from Oracle. We’ll be the first to implement that solution in the region.

We’re also in the process of designing, consulting and implementing these systems for our clients.

Companies like Jeraisy in Saudi Arabia have gone through an evolution over the past 10 years. Most started with collecting exclusive agency agreements with manufacturers and have more recently adding skills in services and distribution. Where does Jeraisy fit now along this evolutionary path?

We’re not stopping a being a box mover, we will continue being a box mover, our plans is to create a professional distribution arm for JCCS to take care of the second tier channels.

Since I took over JCCS at the beginning of this year, we have tried to redirect the focus of the company from just box moving hardware and software licenses to becoming a more and more professional system integrator and total solution providers.

We’ve been doing that for a long time, but it hasn’t been the number on focus of the company.

As you mentioned, the company has had to grow naturally, you have to have as many partners as you can to help you reach this situation.

Today, we’re there to provide complex solutions for complex problems.

We have what it takes in terms of manpower, we have what it takes in terms of alliances, international and nation, we have what it takes in terms of management capabilities to assess different types of problems for different types of clients.

With this in mind, when you look at the strengths that we bring, we are probably the only company in the Gulf that has all these capabilities. We’re not the biggest in terms of PCs, or printers, but we’re probably the strongest in terms of capabilities.

We can come and take a look at a problem from A to Z and solve it from A to Z with our own resources.

Recently, I have been contacted by different organisations to come and help, designing and implementing very advanced solutions. Some of these are very large organisations in the Gulf States.

Currently we’re working on a big project, once its finalised we’ll announce it… but we have reached a level where we’re being contacted by other organisations outside Saudi Arabia.

What you describe is fair enough, but we’re not moving away from box moving, we’re still there but we’re bringing a different level of focus on business solutions.

How do you expect your balance sheet to look a year from now, in terms of the break down between generating revenue from the ISP business, generating revenue through retail outlets, generating revenue through distribution to a channel, and generating revenue through systems integration and services?

To tell you the truth it’s going to be something like 60-40, 60% services and 40% hardware, not because we won’t concentrate in selling hardware, but the hardware that we well will be embedded in a solution.

Definitely my dream is to make Jeraisy the number one total solution provider and integrator in the Middle East, I think we’re very capable, we have what it takes, it’s just a matter of focus.

How about a break down between direct contact with customers and distribution?

Right now it’s a 100% direct, in the future I can’t tell. It’s probably something like 80/20 [direct versus indirect]. It depends. The channel would be for hardware.

That’s interesting because the criticism was always that although you were one of the biggest distributors in the Kingdom, you didn’t distribute anything, all your sales were direct.

That is true, we’ve always been selling direct. There is nothing wrong with it. From one PC to five thousand PCs, Jeraisy has always been selling direct.

We’re changing, we’re in the process of selecting the people for distribution, as a matter of fact we’re looking for somebody to head that operation.

Again, we’re slowly changing the culture of Jeraisy slowly; we need to be levelling our focus, to allow our distributors to become truly distributors.

How does the ISP fit in. If you are offering a full solution, I imagine that having the capability to say I can also give Internet services is a benefit. Does that mean that Atheer’s customers will be customers of Jeraisy in a systems integrations sense?

Atheer is part of Jeraisy, and it adds to our strength to have our own ISP. In just about every e-solution there is an ISP involved because you need a carrier.

Atheer is becoming the number one ISP in terms of subscribers. At one time we had over 20,000 subscribers. Definitely that is a community that I want to access as Riyadh House, Jeraisy Computers or Furniture. That is why we’re creating our shopping mall online.

The beauty of Atheer is that it’s a joint venture between Jeraisy and Batelco, so we have the same access to Batelco customers, the same access to Batelco’s other Internet companies.

I know that Batelco brought QNet in Kuwait and they brought one or two ISPs in Jordan, and by default these countries become open markets to us. So we’re banking on this network of ISPs.

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