Logicom targets Saudi Arabia for Cisco distribution boost

Michael Papaeracleous, director of distribution at Logicom talks through plans for the further growth and expansion of the company’s fast-growing Cisco Systems distribution business in the Middle East market including expansion plans for Saudi Arabia.

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By  Stuart Wilson Published  July 30, 2006

|~|mp200.jpg|~|Michael Papaeracleous, director of distribution at Logicom|~|Michael Papaeracleous, director of distribution at Logicom talks through plans for the further growth and expansion of the company’s fast-growing Cisco Systems distribution business in the Middle East market including expansion plans for Saudi Arabia.

CME: How has Logicom developed its Cisco business in the region?

MICHAEL PAPAERACLEOUS: Basically, our Cisco business in the region started back in 2001 when our distribution franchise was expanded from Cyprus to cover the Levant region as well. As we grew our business in the Gulf we also became interested in representing Cisco there as well. Fortunately, we were in a position to bid for a CDP contract in the Gulf at a time when Cisco had some problems with its channel. Cisco took an interview type approach that was sent out to between five and ten partners asking for a proposal and explaining why we wanted to become a CDP. We put a great deal of effort into this and Logicom was appointed as Gulf CDP in early 2004.

CME: What level of interaction do you have with Cisco regarding business development in the region?

MP: When the relationship started Cisco still had the EMEA theatre and MEA was just 10% to 15% of sales in the region. Now, with the creation of Cisco’s emerging markets theatre, I think it has changed the way that they are looking at the region. Obviously the recruitment of more people at Cisco has helped to create significant momentum and business is picking up. Our numbers probably mirror what Cisco is doing and we are seeing very healthy growth. It is probably running somewhere in the region of 40% growth year-on-year — sometimes we even achieve that quarter-on-quarter. For Logicom, the relationship with Cisco is very important. As a major player in the components space, bringing in Cisco really helped us to balance our portfolio and create more value-add within the business.

CME: How have you developed the Cisco channel breadth?

MP: This year we have been working on Project400 at Logicom to drive reseller recruitment for Cisco products and really work on enabling and training them. Out of the 400 resellers targeted by this initiative there were probably 250 in the Gulf region that formed part of this drive.

CME: What about Logicom boosting its Saudi presence. Has there been progress on this?

MP: As we speak, our team in Saudi is having a meeting with the Cisco guys there. We have now finalised the rental agreement for our offices in Saudi. We are also finalising an outsourcing agreement with Aramex to handle the logistics within Saudi and we are now ready to start employing account managers. The operation in the Kingdom is now very much at a deployment stage. Our country manager has been on the ground in Saudi for the last year but it took about nine months to get all the paperwork done to register the company — it takes time.

CME: So what level of presence will you have in Saudi Arabia?

MP: The main office and stocking point will be in Riyadh and once the momentum starts building we will look at expanding the presence into Jeddah and Khobar. Logicom already holds significant Cisco stock in Jebel Ali and in Dubai city itself. It will be a flexible supply strategy for Saudi Arabia. We will bring in the run rate products from Dubai to Riyadh, which takes about 48 hours and hold some stock there. For the complex projects that typically have a four to eight week lead time we will ship to Saudi Arabia directly from Cisco. It is a model we already use elsewhere. For Turkey, we hold stock on the ground but also source from Greece if it makes. The stock that we hold in Cyprus serves customers in Lebanon, Jordan and even Iraq if they prefer to purchase from Cyprus rather than Dubai.

CME: How much encouragement did you get from Cisco in Saudi Arabia?

MP: A great deal. It was part of the five-year plan that we put together when we bidded for the CDP contract. At that time we committed to sales offices and holding inventory in various markets including in Saudi Arabia. It took slightly longer than we expected in the Kingdom in terms of registering the company and we knew that Cisco was keen for us to move quickly. Cisco has identified gaps in the Saudi market and wanted more stock and resources on the ground to support the strong local presence that they have and the significant long-term commitment that they are making to the market.

CME: If Logicom enters Saudi Arabia as a CDP, what does this mean for in-country CADs like Al Jammaz?

MP: The whole CDP-CAD model has been more or less annulled in the region. Al Jammaz has a distribution contract with Cisco and buys direct. The real benefit for us in being a CDP is the increased visibility we have in terms of dealing with Cisco.||**||

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