Are you SP ready?

The emergence of service providers (SPs) as a powerful route-to-market in the Middle East will revolutionise the channel landscape. Now that may sound like a bold statement to make, but given the trends witnessed in other global markets, the current low levels of internet penetration in the Middle East, and the time and attention that major vendors are already devoting to wooing ISPs and telecoms operators, the SP space is a sector that everyone needs to look carefully at.

  • E-Mail
By  Stuart Wilson Published  August 23, 2006

The emergence of service providers (SPs) as a powerful route-to-market in the Middle East will revolutionise the channel landscape. Now that may sound like a bold statement to make, but given the trends witnessed in other global markets, the current low levels of internet penetration in the Middle East, and the time and attention that major vendors are already devoting to wooing ISPs and telecoms operators, the SP space is a sector that everyone needs to look carefully at.

In Europe, much of the power that the SP community wields remains concentrated in the voice space — mainly due to the long established history of the traditional PTTs and their legacy interaction with customers for voice requirements. According to UK research house Canalys, the SP channel accounted for 27% of telephony shipments in EMEA during the first quarter of 2006 and only 9% of networking shipments.

Admittedly, that doesn’t sound too impressive, but you need to look carefully at the sales agenda of SPs in the developed markets of Europe and contrast that with the situation on the ground in the Middle East.

For a European SP to transform itself into a complete infrastructure provider covering networking, telephony and security, plus services like bandwidth optimisation, convergence planning and managed services, you are looking at a long drawn out process. Why? Well, these companies tend to be old and slow and also a little bit fearful of cannibalising some of their existing voice revenues by pushing into new areas.

Major vendors are doing their best to change this way of thinking but it is a complicated struggle in many of the developed markets. Now, this brings us nicely to the Middle East market — a region where new SPs are springing up left, right and centre and even the incumbent players are prepared to invest the time and resources in promoting new technologies.

Many of the SPs in the Middle East do not feel constrained by legacy models of doing business in the same way that their counterparts in Europe do. Simultaneously, many of the clients they are pitching for are actually Greenfield installations — new customers setting up in the region or even companies purchasing major networking and communications solutions for the first time.

The SP community is fast becoming an important route-to-market in the Middle East, offering either standalone solutions or a range of services that form an integral part of a wider ICT solution. In Europe the SPs themselves have struggled with how best to take their offerings to market and expand their remit beyond pure voice services. In some cases they have pursued an in-house development model snapping up network integrators to develop a strong go-to-market model.

Others, including BT in the UK, have adopted a more channel-friendly approach, setting up dedicated business units to develop sales through resellers. The inconsistency in approach has made some resellers wary of placing too much faith in the strength of a partnership with a SP. The fear of disintermediation can pose a sizeable obstacle to building a strong business relationship.

If you want to appreciate the growing importance of the SP channel in the Middle East market, you do not have to dig too deep. SMB-focused networking vendors are falling over themselves to build relationships with service providers across the region. They understand that the minute a company signs up for more bandwidth, they will invariably also consider upgrading their network.

SPs are also looking to carve out a role in the sale, deployment and service of push e-mail solutions, figuring that they are the obvious main supplier for customers to turn to. Expect to see many more deals signed in the coming months in this area. Blackberry’s recent tie-up with Etisalat was merely the tip of the iceberg.

Europe has been harping on about the role of SPs in the channel for years and so far little has come of it. The development of the Middle East market promises to be very different and the SPs have a huge role to play in defining the ecosystems that will shape the future channel landscape.

What do you think? Are SPs a viable route-to-market for comprehensive ICT solutions in the Middle East? Should IT vendors and IT channel players invest time and resources building relationships with SPs? E-mail your thoughts and feedback to stuart.wilson@itp.com

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