Local managed services market matures

As the use of outsourced hosting facilities grows in the Middle East, Tejari.com has outlined plans to migrate its business-to-business (B2B) marketplace to Dubai Internet City (DIC) and IBM’s joint E-Hosting facility.

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By  Matthew Southwell Published  October 27, 2002

|~||~||~|As the use of outsourced hosting facilities grows in the Middle East, Tejari.com has outlined plans to migrate its business-to-business (B2B) marketplace to Dubai Internet City (DIC) and IBM’s joint E-Hosting facility. The government procurement exchange will migrate its data and applications to the E-Hosting facility in three phases, with the movement of the B2B site itself comprising the first.

“It’s very important for us to have a mission critical infrastructure,” says Lubna Al Qasimi, Tejari’s chief executive officer. “We have three exchanges and we are moving one of them during this phase,” she adds.

Arguably more significant than the actual move itself is the impact that such a high profile reference site will play in enabling DIC and IBM to market its managed services portfolio elsewhere in the region. “This announcement is an important step forward for this partnership and for the region,” says Farid Metwaly, general manager, IBM Middle East, Egypt & Pakistan.

To some extent, the Tejari deal signifies a maturing managed services provider (MSP) market in the Middle East. Whereas at Gitex 2001, MSPs were hardly on the agenda, in the intervening 12 months the whole managed services space has matured significantly.

“Managed services are coming to the local market,” comments Al Qasimi. “The involvement of IBM in this data centre ensures the solution, and we are demonstrating our confidence in it with this move.”

Regardless of the large scale investments made by Etisalat, Jordan Telecom (JTC), DIC/IBM, ECC and ASPGulf, many regional businesses have preferred to use US or European based hosting facilities, citing a variety of reasons such as better service, lower cost and faster and more reliable internet connectivity.

Although the market hasn’t reached anything like critical mass, local MSPs are claiming growing market maturity. “More customers are realising that they have to focus on their core business and not on IT,” explains Siamak Kia, regional principle, IBM Global Services. The IT department is hard pressed to keep up with the changing business environment, so they are increasingly looking to outsource,” he adds.

But the DIC-based E-Hosting Centre isn’t likely to have the MSP market all its own way. Egypt-based ECC has also been building its customer base for the last year. Customers include local small-to-medium sized businesses all the way up to multinational organisations. Post-Gitex, the company was embarking on a regional roadshow to educate the Middle East about its range of managed services and the potential savings they offer.

“We have already won several customers in Egypt. These have been both small-to-medium sized companies and some larger multinationals,” says Amr Aboualam, consultant to the chairman, ECC.

ASPGulf is also reporting growing customer demand for its hSPGulf offering, as companies begin to assess the possibility of outsourcing their full infrastructure to managed service providers. “There has been a growing willingness in the last 12 months to see this as a total outsource,” says ASPGulf’s CEO, Tony Sparks.

Furthermore, Etisalat’s subsidiary Comtrust also announced several wins for its e-hosting and payment services in the run up to Gitex.

As the local managed services market strengthens, its ability to win accounts in other geographies in the region is critical to building a viable business model. While ASPGulf and Comtrust have already enjoyed successes beyond the UAE’s borders, IBM is preparing to leverage on its chain of regional business partners and customers. “We’re already talking to numerous customers from Saudi Arabia,” says Kia.

“We’re able to rely on the full technical might of IBM’s Global Services organisation, which plays a vital supporting role in any managed services solution,” he adds.
Although IBM is confident of leveraging on its high end reputation to win some large references, other players are counting on local market dynamics to provide a cost effective edge.

According to Aboualam, ECC is able to offer favourable price points compared to other managed service providers. “We have good skills at low prices in Egypt. We are able to offer international bandwidth at a low rate,” he adds.||**||

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