Staying power

Some channel players still refuse to put down meaningful roots in the Middle East, preferring instead to work on an opportunistic basis and invest as little as possible in the region. These players, which exist at every channel level, are doing a disservice to the committed players in the market, decelerating the process of channel maturity and also hindering the development of sustainable long-term margins.

  • E-Mail
By  Stuart Wilson Published  August 9, 2006

Some channel players still refuse to put down meaningful roots in the Middle East, preferring instead to work on an opportunistic basis and invest as little as possible in the region. These players, which exist at every channel level, are doing a disservice to the committed long-term players in the market, decelerating the process of channel maturity and also hindering the development of sustainable long-term margins.

At the vendor level, the degree of genuine commitment made to the Middle East market varies massively. There are some that have opened offices throughout the region and now have hundreds of employees. At the same time we also have some major vendors that have nothing more than a skeleton staff in the region — a token presence when all is said and done.

It would be too easy to oversimplify this situation, lauding the vendors that have developed an extensive presence and meaningful operations in the Middle East and criticising those that have so far shied away from making a real commitment to the region. The reality is actually much more complex and it is something that channel partners must carefully consider when selecting the vendors that they work with.

Vendors with no real presence on the ground are, if anything, more reliant on their channel partners to drive business in the Middle East. If the vendor is not around, the distributors and resellers actually have to take on a much greater role in terms of demand generation, training, certification and end-user education. In some cases, we still see authorised distribution partners taking on the role of a virtual subsidiary for certain vendors.

On the face of it, this may seem like a solid model, but it is not without its risks. If the vendor eventually decides to take the plunge and build up its own presence in the region, the relationship with the partner acting as a virtual subsidiary can quickly turn sour. We have actually witnessed this several times in recent years in the Middle East and it can be a painful process for all concerned.

The problem tends to stem from the fact that the virtual subsidiary is often aghast at the prospect of losing its special status. Many of these deals that were set up in the Middle East were based around an element of exclusivity, which protected the partner, guaranteed their business and made it extremely easy for them to make handsome profits.

This type of partnership is now on its way out in the Middle East IT channel — and rightly so. We’re moving beyond it and vendors, distributors and resellers need to look at every one of their business partners involved in the IT supply chain and ask themselves just how committed they really are to this market.

It is in everyone’s best interests to create a healthy channel where everyone can make a reasonable margin. This should be the top priority for everyone and it would be if people took the time to take a step back and appreciate the bigger picture. Unfortunately, given the frenetic pace of business in the Middle East, this is not always possible.

Strong business relationships are built up over time — they cannot be manufactured instantaneously. It is the vendors, distributors and resellers that have real staying power and are committed to the Middle East channel for the long haul that will drive this market towards greater maturity and a safer business environment.

We need vendors on the ground in the region helping to develop each national market. We need vendors to behave responsibly and refrain from stuffing the channel for short-term gain. We need distributors that are prepared to invest in-country, set up local stocking points, build real channel breadth and drive the development of the reseller base. We need resellers prepared to invest in their staff and develop proactive sales techniques.

There is a great deal that needs to be done to drive the Middle East channel towards greater maturity and accountability. Companies not truly committed to the market will not achieve any of this. It is the vendors, distributors and resellers with real staying power that will win out as the market matures.

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