Think global act local

It used to the be case that when many people talked about the power of the Internet they commonly focused on the likes of Amazon.com or other B2C wonder sites. It seemed that many people missed the point that the real potential of the Net lies in its ability to save organisations money, rather than generate revenue.

  • E-Mail
By  Greg Wilson Published  April 29, 2001

Introduction|~||~||~|It used to the be case that when many people talked about the power of the Internet they commonly focused on the likes of Amazon.com or other B2C wonder sites. It seemed that many people missed the point that the real potential of the Net lies in its ability to save organisations money, rather than generate revenue.

The big brand IT vendors have led the way throughout the 1990s, demonstrating how a sophisticated use of the Internet has enabled some of them to reduce operating costs, maximise profits, accelerate product delivery and build global services & support capabilities. In many respects they have had little choice — deploying virtual organisations was the only way they could keep pace with their own massive growth during the boom times of the 1990s.

The evidence is well documented: Michael Dell’s ultra efficient supply chain and use of the Web as a direct channel has taken the vendor to the number one PC spot worldwide; Larry Ellison’s e-business campaign has saved Oracle an estimated $1 billion; and Cisco’s John Chambers has orchestrated an IT infrastructure which has expanded with the networking vendor’s 50% average year-on-year growth and saved billions of dollars.

But for the vendor’s satellite offices in the Middle East, reaping the rewards of an advanced IT infrastructure has meant thinking ‘global and acting local.’ When attempting to automate processes via the Web for regional partners, local offices have run up against Internet bandwidth, quality of services and low awareness problems.

On the logistics side, vendors have had to tackle what is still commonly an expensive and complex process of shifting IT kit around the region. Furthermore, attempts to build regional service and support models have been slowed by the need to tread carefully around country-specific partnership agreements. The idea of maintaining a simple and efficient business model has been challenged as vendors have attempted to maximise their regional coverage, while not breaking the bank, and hitting their quarterly targets — the key to winning greater investment from corporate.

To a great extent many of the big name vendors have already brought their internal operating environment in line with corporate headquarters. For many of the local offices, the corporate intranet is at the core of their operation, enabling users in the Middle East to securely access applications for just about every core business function.

Another core money saving strategy deployed by the majority of vendors in the region is the common office environment (COE). Depending on the role of the inidividual, each person has a standard machine configuration and a set of task-specific applications. For example, HP’s employees may be given various Microsoft applications and anti-virus software. The pre-set machine configuration also only allows for an HP employee to have 60 M/bytes of e-mail in their Inbox. “We’re trying to limit the way people use disk space and use their e-mail,” says Graham Porter, marketing manager HP.

The COE model has also played a key role in simplifying the support of headcount in the field. If an HP employee’s application corrupts they can go to the Internet and go to the Application Integration Manager, which reinstalls the software on their machine and automatically charges the licensing fee to the relevant department.

However, the real challenges begin when vendors look to extend similar operational efficiencies and processes out to their regional business partners and customers. In the US and Europe there is strong move to take support, the whole logistics processes — from ordering to delivery — and training to the Internet. However, following the corporate line is made difficult by persistent bandwidth and quality of services issues, the difficulties of operating in a region with country specific partnership agreements and logistical nightmares of all kinds.

||**||Page 2|~||~||~|One area that vendors can make huge cost savings in is training. Online training programmes enable vendors to keep staff and partners where they should be i.e.: in the field facing customers and also reduce other obvious overheads such as travel and accommodation. Consequently, the majority of vendors have numerous tools in place to train customers and partners.

But bandwidth and quality of services issues restrict the effectiveness of web-based training. “We are giving partners more and more access to training materials online… but the problem with online seminars is that just about anywhere in the Middle East the bandwidth isn’t going to be good enough to work,” explains Porter.

Sun Microsystems has already been plugging Internet training and support through a number of customised portals for customers and partners in the region. The Unix vendor is currently developing its Web Learning Centre, which will bring customer-focused training to the desktop. “The Web Learning Centre will be available in the region by the end of 2001 and will ensure that those previously unable to reach a Sun training centre will get the opportunity to become Sun trained and certified,” says Melissa Campbell, marketing and communications manager, Sun Microsystems.

However, bandwidth issues will persist, says Tim Carlson, chief technical officer, Tech Access, Sun’s certified country reseller. Up until now, Sun has conducted its training via a mixture of online and CD-based computer courses. “We would like to do more online training. But depending on the country you’re in, and depending on how heavy the graphics are the bandwidth is going to be an issue,” explains Carlson. “The UAE is an anomaly in the Middle East in the sense it has decent bandwidth… Saudi Arabia doesn’t.” At the end of the day it is still more practical to do a lot of training by distributing CDs, says Carlson. But distributing CDs commonly runs into customs difficulties in certain Gulf states.

A lot of the customer and partner support in the region has been shared between call centres and web sites. HP is in the midst of consolidating its online partner support service Electronic Sales Now (ESN). Currently, the site supports various local partners with marketing materials, competitive information, configuration tools, order status, check on credit terms and when its finished at the end of the year, it will enable regional partners to order HP hardware online — a move which HP’s Porter believes will be a massive leap forward. “We’ve had a big re-organisation in HP. There were different tools for different groups of partners and we’re trying to consolidate it all,” he explains. “But the one thing that it doesn’t have yet is the online ordering. Today we’re still taking orders via fax to a number of locations.”

Other hardware players in the region, such as Dell and Compaq already enable their partners to order online, a factor which Compaq’s regional operations manager Mohamad Itani, believes is critical. “The lifecycle of the product has shrunk dramatically, five years ago the lifecycle used to extend up to a year for a product, but now we’re lucky if it lasts for three months,” Itani explains. “We manufacture in seven days and we’re supposed to deliver in five days. To do this you cannot help but use the Internet, intranet and e-commerce,” he adds.

Currently, Compaq’s partners are using a system called Compaq Link, However, this service is due to be replaced by Compaq Connect in the coming months, which offers greater visibility over the manufacturing process. “80% of their business can now be conducted on the Internet with [web] tools rather than phone or faxes,” says Itani.

Dell has also been working to deliver the benefits of its build to order model in the region. Partners can currently place orders and then track the status of them over the Net. “Our build to order model is just as applicable in the Middle East as anywhere else in the world,” says Dell’s Gulf area manager for emerging markets, Gareth Williams.

However, bringing the full benefits of direct online ordering to the region has needed careful negotiation, to avoid upsetting local partnership agreements. Dell is currently selling machines online with UAE-based partner Emirates Computers on its e-Technoworld site. But to fulfil orders and then support those boxes once they have been delivered, Emirates Computers, Dell and the other regional partners need to reach a ‘win-win’ agreement for all partners. According to Hani Harik, president & CEO of Emirates Computers, talks to extend the reach of e-Technowold’s fulfilment and support capabilities have been ongoing and a result is expected soon. “The idea is to make the Dell name pervasive in the region, while keeping the whole network of dealers in the region happy and cohesive,” says Harik.

||**||Page 3|~||~||~|Compaq has been experimenting with online selling for the last eight months, through its Compaq Plus site. The site — which again is country centric — enables online orders to be fulfilled through one of the system reseller partners in the country.

However, in the initial months of operations, customers have been using the site as a ‘customer resource point,’ with most visitors using the site to obtain information on the latest configurations and prices. Consequently, says Karen Bellwright, marketing manager, Compaq Middle East & Eastern Mediterranean, Compaq Plus is very much geared to the local market needs. “Trying to get a model that works in one country and then trying to make it fit in another country can be challenging,” explains Bellwright.

“Compaq Plus is a tool for the whole of the business development group, which is made up of the smaller EMEA countries that are all within a certain revenue range. It’s pretty much geared to developing markets,” she adds.

Vendors are also investing heavily to build their customer information resources, normally through their call centre operations. Compaq took its Siebel-based call centre live, in parallel with the launch of Compaq Plus. Now there are plans to expand its use of the CRM software throughout its business. “We’re expanding our use of Siebel into other parts of our business,” says Bellwright. “[For example,] our sales coordinators can actually use it as a tool.”

HP is another also closely aligning both its online efforts with its local call centre, with the ultimate aim of building a fuller picture of its customers. At a global level within the coming six months the vendor will be shifting its database structure to base it around Oracle CRM. “Every deal that a salesman is working on is in the database; there are customer records linked to information on other deals, classified by products [and] by order value. There is a reporting tool that allows us to generate a picture of where the business is going to be in the next three months, six months or nine months,” says Wissam Kamel-Eddine, customer care manager with HP. “We hope this is going to take us a step further and give us a more accurate profile, identify the profitable customers, look at our salespeople and our partners and produce some real analysis of how effective they are.”

Cisco is another vendor that is looking to reinforce its Internet services in the region, with a call centre. The networking vendor already offers a host of web-centric services, based around its Customer Care Online (CCO) site, but with the recent launch of its E-fficiency drive, it is now aiming to deliver a call centre to manage “the whole customer interface side of [the strategy],” says Cisco’s regional director, Rowland Griffiths.

The fully localised call centre, will be using sophisticated CRM technology. “The software will recognise the organisation when they call in and they are routed to the people that have a level affiliation with their environment,” predicts Griffiths.

Another hurdle to vendor operations at the local level is the sheer logistics of shifting kit around the region. Cisco took the step over a year ago to set up an express logistics centre in Bahrain, it houses various different spare components and products, to enable it to fulfil its SmartNet maintenance agreements. SmartNet agreements require the networking vendor to deliver products within a four to six hour timeframe anywhere in the region. To set up the centre, Cisco has formed an agreement with DHL. “We have within DHL a stock of Cisco equipment… that are swap-outs or mission critical components,” says Griffiths. “[DHL] manages the whole process through online ordering and the maintenance of stock,” he adds.

Compaq has also formed a strategic alliance with DHL to enable the rapid delivery of machines within the region, which says Itani has improved the cycle time and the transit time. However, Compaq doesn’t have a huge standing stock on the ground. “Logistics now isn’t how much you stock, it’s how many boxes you have on the move, and we have a lot — we have approximately 600,000 to 800,000 kilos of moving weight in this region” he says. “These products are owned by the customer from the point of dispatch so Compaq doesn’t have warehouses,” comments Itani.

||**||The Software Vendor|~||~||~|Larry Ellison and Oracle has been plugging the fact that it managed to save $1 billion by migrating its internal procedures to the Internet. The project began over two years ago with a simple aim — standardise and centralise as much of the IT infrastructure as possible.

Over the last two years Oracle has consolidated its information and services for 145 country offices into one data centre located near the corporate headquarters. In doing so Oracle has enhanced the control and manageability of its corporate data, slashed IT operating costs and reduced the headcount of its IT staff.
Since beginning the project Oracle has reduced its global IT operating budget by $200 million and the number of IT staff has shrunk to 900. A further $40 million saving is expected by the end of this month.

By the end of the this year, Oracle aims to have consolidated 97 e-mail servers and 120 databases down to just four servers running four databases. Back office servers would also be cut from 32 servers running 60 databases to two servers running four databases.

With server and database consolidation underway, Oracle also embarked on a comprehensive installation of its own software including its 11i E-business Suite, Oracle E-mail Server, 8i Internet Application Server and of course Oracle’s 8i RDBMS.

Locally, Oracle has switched over to the worldwide sales and marketing modules of 11i. The sales application tracks the progress of a sale, from an opportunity all the way up to completion, enabling global or local product managers to obtain an up to the minute idea of the sales situation.

Running alongside the sales application, Oracle rolled out a marketing application across its entire organisation in just three months. As Oracle’s Middle East & Africa marketing director, Ayman Abouseif, claims the online application is “the only thing,” he runs. “With a small supply chain, the automation of the customer facing processes, such as sales and marketing, offers Oracle the maximum benefit,” adds the marketing director.

The software vendor also recently completed a database merger, combining customer information from its sales and marketing organisations. The end result is a single instance of more detailed customer information, which both areas of the business will be able to analyse and derive business benefit from. This will be further enhanced in coming weeks, when another database merger will also incorporate call centre information. “Oracle Telesales will replace the current software that runs our call centres, that is going to use the same database instance beneath the sales and marketing… this is the final stage in integrating our customer contacts worldwide,” explains Abouseif.

Oracle’s local operation is still running some servers in its offices around the Gulf, mainly for file/print purposes. However, the employees are being encouraged to start moving their work to the Internet File Server (IFS), hosted in the States. “When the servers get old we’re basically switching them off,” says Abouseif. “They’re just being used locally. The important information is being hosted in the US.”

The IFS enables Oracle personnel to work collaboratively through the setting up of groups. ‘Work groups,’ enable employees working locally to work in collaboration with experts elsewhere in the organisation. “People based across the world have a common file structure to share documents, information and alert each other when it has been updated," explains Abouseif.

||**||The Partners|~||~||~|The dynamics of the hardware game are changing — it’s more about the value added services built around the initial hardware sale, than the actual price of the box. In the server game many of the serious players have spent a considerable amount of resources building up their professional services organisations. But the rapid growth of some vendors over the last five years has caused a problem — how to stretch their service delivery capabilities across the globe, in an efficient and cost-effective manner.

Since the start of the year, both Dell and Sun Microsystems have formed similar agreements with local partners that go beyond the usual description of channel agreements. Sun’s agreement with Tech Access and Dell’s appointment of Emirates Computers as an authorised service provider in the UAE, include the swapping of business processes, extensive training and close alignment between all parties. “A company gets to a point in it’s own success where it can no longer be everything to everyone, all of the time,” says Tim Carlson, chief technical officer, technical sales, Tech Access. “What [Sun] needs to do is focus on where their strengths are, and bring in strategic partners in geographical areas to handle the basics. That is where Tech Access comes in — we’re a ‘mini Sun’,” explains Carlson.

Tech Access’ role as Sun’s country wide reseller requires it to deal with the training, support and product logistics to the first tier resellers around the region, while the vendor is left to focus directly on its major and named accounts. If all goes according to plan this dual approach will enable Sun to emulate its US and European success in the local Unix market. “Either way you look at it we’re behind the global market share figures locally,” says Carlson. “We have a dual approach… Sun goes in from a solutions approach. We go in with the resellers and get them up to speed, so they can do fulfilment.”

To deliver Sun’s vision to the market, Tech Access is going about embracing some core business processes used by the Unix vendor. The country wide reseller is currently working to ‘dot-com,’ its own business structure with a comprehensive deployment of Sun’s own iPlanet software.

Emirates Computer’s has recently been appointed as the region’s initial Dell Authorised Service Provider (DASP). The service provider programme is key to Dell’s ability to deliver on its ‘services around the box,’ strategy in the Middle East, and other DASPs are due for appointment before the year’s end. “Dell is going the world over trying to certify it’s indirect partners channel,” explains Hani Harik, president & CEO of Emirates Computers. “Given that in 80% of the world Dell is direct, and 20% of the world indirect, it wants to upgrade the skills of its partners to [deliver] the same services as if Dell was providing the service directly,” explains Harik.

The agreement also includes sharing of best business practices between both companies. “We are involved in an on-going partnership programme with Emirates Computers, based on a detailed business plan, to share best practice between our two organisations,” says Gareth Williams, area manager, Gulf region, emerging markets, Dell.

“We are also working with Emirates Computers on sales and account management structures and processes, building upon Dell’s global expertise,” he explains.

||**||The Network Vendor|~||~||~|Cisco Systems can close its books in a day, and CEO John Chambers has visibility into every aspect of the business. With Cisco’s growth averaging around 50% between 1995 and 2000 the construction of a virtual infrastructure has been key in keeping pace with the vendor’s expansion. With Cisco entering one of the most challenging periods in its history, the same infrastructure is going to prove critical as it adapts to life in more financially trying times.

Since 1992 the networking giant has been using the Internet to enhance its service delivery capabilities to customers and improve its own internal productivity. Work has focused on three main areas; firstly, the ability to build channels to market and raise top line productivity. Secondly, using the Web to create greater customer satisfaction and thirdly to reengineer internal business practice, explains Cisco’s EMEA president, William Nuti, on a recent visit to Dubai. Cisco’s e-business infrastructure, “has allowed us to manage our growth much like a start-up. To maintain that growth its not just a matter of market momentum, its building an organisation that can allow you to maintain that kind of growth, the Internet has allowed us to do that,” says Nuti.

Cisco System’s initial set of Internet applications enabled it to begin interfacing with its customers and partners, offering online ordering services and ‘interfaces,’ with technical engineers for problem solving. Despite some telecommunications infrastructure difficulties in the region, 99% of all product orders in the region are done online. “Part of the agreement [with our partners] is if you want to have a direct purchase relationship with Cisco, then [partners] have to have the internal infrastructure to buy online,” says Rowland Griffiths, regional director, Cisco, Middle East & Africa.

Cisco’s ordering process also includes a design verification tool, which checks the orders from partners and ensures that the product specs that are entered by the partner are correct. An additional online design tool helps partners to optimise network topologies prior to securing the deal.

The data networking vendor has extended customer satisfaction procedures to the Internet, enabling greater interaction between its engineers and partners. For example, in the States it’s common for 75% of conference attendees to sign up for conferences online. Also Cisco has opened its extranet to its suppliers, tying together its 26 contract manufacturers and enabling them to interact on a daily basis. “[Previously] we would have upwards of 50 people that would need to be on the phone through the entirety of the day to pull together information which we can now get on one spreadsheet in an hour,” says Nuti.

“That single extranet application alone gives us the ability to save money, lower our cost of components and at the same time deliver better timely responsiveness to our customers in terms of deliveries. We were able to shorten our delivery cycle by about 40-50%,” he explains.

However, there are some differences in how Cisco interacts with its customers and partners in the local region. For example, Cisco’s local operation tends to rely more on road shows and seminars to ensure local partners understand the functionality available through Cisco’s web channel. “Here in the Middle East we recognise that the partners don’t have that level of technical knowledge [as the US partners], so we tend to do more onsite support initially and at least once a quarter we do a sales update training. We do presentations [about] doing business with Cisco; how to order, how to do the finance checking, how to make sure that their products are delivered and go into the online order tracking system.”

Another example, where Cisco has had ‘to think global and act local,’ is with the online training facilities. E-learning has provided Cisco with probably its “biggest payback,” says Nuti. “In our industry it’s very important to have a high level of training — most managers and systems engineers go through between four and six weeks training a year.”

If Cisco were to move its staff around for training, the logistics alone would cost the vendor a small fortune. But online training offers cost-effective alternative, comments Nuti.

But local bandwidth restrictions hold back the delivery of online training services to staff and partners. Consequently, Cisco is inviting partners and customers to use their faster network and its 1 M/byte link to Europe to participate in online training sessions. “Obviously, if you have a dial-up connection you can’t use these multimedia, bandwidth intensive training tools so we download them and then invite out partners to come in and do the courses,” explains Griffiths.

||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code