Middle East software market remains strong

Despite the IT spending slowdown spreading across the Middle East, software sales remain positive as IDC reveals that upwards of US$770 million was spent by the MENA region in 2001.

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By  Matthew Southwell Published  September 24, 2002

|~||~||~|Despite the IT spending slowdown that is currently spreading across the Middle East, software sales remain positive. Preliminary figures from IDC reveal that upwards of US$770 million was spent by the MENA region on application solutions, tools and system level software apps during 2001.

Saudi Arabia remains the region’s largest market with just over US$230 million spent on software last year, while both Egypt and the UAE topped the US$125 million mark.

“Saudi Arabia, UAE and Egypt were the largest markets in the region during 2001 in terms of software spending. Interestingly, the UAE market is quite big and is catching up with Saudi Arabia,” says Jyoti Lalchandani, manager, software & consulting CEMA region, IDC.

Enterprise resource planning (ERP) applications accounted for the bulk of the MENA region’s spending, with well over US$100 million being spent on such solutions. This is no longer restricted to the region’s large verticals either, as the Middle East’s medium sized companies are also beginning to deploy ERP software.

“At first glance we [IDC] thought most of the investment would be in the core sectors of oil & gas, telecommunications and banks. However, we saw investment across almost all industries… and we are seeing a lot of investment from medium sized companies,” says Lalchandani.

Within Saudi Arabia in particular, this growth is being driven by the work of local developers. IDC reports that companies, such as ACP and Alphasoft Group, are addressing the real need for Arabised solutions being generated by the Kingdom’s small-to-medium sized businesses (SMBs).

“Very few ERP vendors have invested in Arabising their software [and] we found that Saudi companies are far more willing to invest in solutions that are Arabised. As a result, we have seen a lot of Saudi companies developing and providing ERP solutions to the Saudi market,” says Lalchandani.

“In other markets, such as the UAE, this is not as important. However, it does mean that a number of companies are not able to tap into the Saudi Arabian market because of the language restriction,” he adds.

According to IDC, those organisations that have already invested in ERP solutions are beginning to build on their initial implementations by deploying extended ERP applications, such as customer relationship management (CRM), supply chain management (SCM) and e-commerce.

Of the three, Lalchandani says CRM will grow the quickest as local organisations attempt to build brand loyalty ahead of market liberalisation. “We have seen a limited investment in supply chain applications... However, CRM and e-commerce spending looks very good,” he says.||**||

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