Leading the transformation

Balall Yaqub is back at Emitac — the company he helped establish 30 years ago — as group CEO with a plan to turn the distribution, software and services player into a regional giant

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By  Stuart Wilson Published  September 3, 2006

|~|77Balall.jpg|~|We hope to adopt a business model successfully used by major systems integrators, says Emitac’s Balall Yaqub.|~|Balall Yaqub, newly appointed Group CEO at Emitac, can be described as a man on a mission: his vision is to take the distribution, software and services player Emitac to the next level and turn it into a true regional powerhouse. Yaqub played a pivotal role establishing Emitac in 1976. Now, 30 years later, he is back and harbours big plans. In this interview, he discusses how Emitac is developing its systems integration business, where he sees the regional market going, and the difficulty of getting good staff here. What is your history with the Emitac Group? I hate to talk about my history with Emitac because it gives my age away. I started Emitac in 1976. We started selling HP products in the region and in those days HP was know more as a test and measurement and instruments company rather than a computer manufacturer so this is what we launched in the UAE. So we started off with the test and measurement and monitoring equipment and then in the late 1970s HP decided to focus on computing systems and we launched that here in the UAE. The oil companies were our first customers. In the early 1980s we decided that just selling hardware was not enough and we needed to package it as part of a solution, and at that time there was a software firm in the UAE called Datamation Systems that we initiated discussions with and finally took over. That gave us the ability to go into the market and sell total solutions to customers. The 1980s saw the launch of the IBM PC and the whole concept of desktop computer systems. They also came up with the first laser printers in the early 1980s and we were able to sell the first laser printer in the Middle East to Adnoc. In the mid 1980s I left the UAE because there was an entrepreneurial bug in me and I wanted to go out and set up and do business on my own. I have set up a number of successful ventures and the latest is a US software company — which has offices in the US, Spain and Pakistan — and I came back here to set up the Middle East operation. While I was here, I was asked to take over the responsibilities as CEO of Emitac Group. Was it an easy decision to accept the CEO role at Emitac? I think, honestly speaking, I had mixed feelings. In terms of the positives I see tremendous opportunities here in the Middle East market. Emitac today is recognised as one of the leading IT companies in the UAE. I think the challenge that is facing us is how we take Emitac to the next level and make it one of the leading IT companies in the region, not just in the UAE. This was the challenge that was given to me and I am very excited about. When you look at the divisions within Emitac, you are a powerful IT distributor but you also have a strong software integration and services division; how do you balance that and how do you see the overall company developing? I feel these have to balance. The nature of each business is very different. Our strategy at Emitac is to operate these as independent businesses, so they are companies within a wider organisation. The skills, the expertise, the business models and the strategies for distribution are very different to solutions and systems integration and that is one of the challenges I need to meet with — to ensure that within the Emitac umbrella we do give enough independence to each of the groups so that each one can focus in their own domain and develop their own value-adds. It is do-able and many companies all over the world have done it as long as there is a certain element of independence in the decision-making process. We are starting to see the creation of regional IT services and systems integration groups. Is this where you see Emitac going? Yes. And if you look at the solution and services delivery models, starting from pre-sales to post-sales, it requires a high level of knowledge and domain expertise and strong business development professionals backed by skilled pre-sales and product managers. The business model we hope to adopt is something that has been used very successfully by most of the major systems integrators; a front office that does the business development and project management supported by a back office that does all the pre-sales support. So you have a competency centre that has expertise in certain domains that goes out and helps the business development people to help develop a customised solution for the client. How big is the systems integration arm now at Emitac? At the moment it is about 70 people in that business unit. We work with Symantec, HP, Cisco and a number of other software and services companies that have domain expertise. We have a partner in the document management space and another purely in the education space called ATS. We are a Great Plains and Microsoft partner in the enterprise resource planning (ERP) area. We represent Avanza Solutions, which is focused on web-enablement in the banking domain. The nature of systems integration is such that you need a number of partners to put together an effective solution for the customer. How do you see IT spend developing in the region? We are always looking at the split between hardware, software and services. What is your view? The economies are booming here so I think if you follow the trend, IT expenditure closely follows an economic boom. When things are tough, the first thing that companies try and pull back on is making any major investments in their assets and capital equipment and that has an effect on IT. On the other hand, when business is good, the companies do go out and make an investment in IT infrastructures and solutions that can help them to do business better. I wish the reverse were true because it is in bad times that you really need some help, but this is the reality. Given the hectic economic activity here, IT spending is up and there are new companies with new requirements and new technologies coming in and that is driving the hardware business. So, year-to-year, one is experiencing very aggressive growth rates. As more and more hardware gets installed, there is always a need for software solutions and I think we will see therefore a bigger growth in the solutions area. Is the solutions business a unit that you plan to expand moving forward? Yes. One of the intentions of separating the distribution and the solutions business was that it allowed us to focus on each business and let the opportunities drive future strategies and growth possibilities. The solutions business is an area that is growing at a very high rate and an area that we want to participate in. We feel that we already have some very good partners — we do have a lot of excellent references in the domains that we are present in and I think we need to start leveraging these advantages towards more of a high-growth strategy in this area. One of the things that I will be focusing on in addition to making sure that we continue our positive growth in the distribution business is how to restructure and reorganise the solutions business to make it into a major player in the region just as the distribution business is. What sort of restructuring steps do you envisage at this stage? It is going to be both in terms of the solution offerings and what is Emitac’s value proposition and then do we have the infrastructure in place to go to the market and demonstrate it. I think this will therefore require major restructuring in the products portfolio, the services portfolio and in the HR strengths and the organisational structures that we have. How easy is it to find and recruit skilled staff now in this market? Good question — that’s a tough one. You know, it is not easy because the GCC countries are very dependent on expertise coming from the outside world and if business is doing well in Egypt and in Jordan and in India for example, then to get people to come here from there becomes much more difficult. When the economies of these companies were not doing so well and the economies in the GCC were, there was always an opportunity to get people across, but with these economies doing equally well now, it becomes a very tough ask. However, I think an IT professional is typically motivated not just by the financial aspect but also by the challenges in technology that they can address. I believe the market here is offering enough state-of-the-art technology challenges to attract quality people to come out here and participate in delivering that technology to the customers here. Do all the staff need to be here? Blended delivery models seem to be getting more popular now in the GCC. Excellent question and that is what I am saying — we need to see how we can leverage onsite with offshore capabilities and as part of our complete delivery model that is another area that the solutions business will be looking at. Do the core competency centres need to be here or could they be in another market allowing us to leverage the technical expertise at a very attractive expense base and bring them into the market here to help and support the onsite. The model always has to work in conjunction with the onsite presence — you need to have that in terms of offices, business development people and your project management and first level support staff. But the actual solution architects and the technical architects and the developers could be physically located anywhere. With an excellent communications infrastructure — and I hear that the rates are going to become even more attractive with Etisalat already announcing some reductions and promising more by the end of the year — plus the fact that we have a competitor coming in, du, which will further force everyone to offer more economically competitive solutions to users like ourselves. I think leveraging the offshore will become an even more feasible solution. Have you started exploring potential partners for the offshore option? We are looking at India, Pakistan, Jordan and Egypt. It is one of the building blocks I was talking about that I need to put in place this year ready for 2007. How predictable is the solutions and services business in the Middle East, in particular in the UAE? Is it easy to manage order pipelines, day rates and utilisation levels? Do you have that level of transparency in this market? In the solutions business your inventory is not boxes it is people. And the skills sets, the technology they are offering and their utilisation — it is how you bring in efficiencies in these areas that separates a successful solutions provider from an unsuccessful one. So, I think these are parameters that any successful business should be able to measure. As the market for solutions increases in the region, we will have more players coming in, including the big players eventually landing here one day. The largest global IT services players still have minimal presence apart from serving the needs of top tier clients in this region. How quickly will that change? It will take a few years and that offers a window of opportunity to local companies like ourselves to get to a level where we have a customer base and, as you know, in the services market, if you have a good installed customer base that can give you enough business to sustain and grow your operations. The other model could be some of the US companies in the US markets — something I know very well because I run a couple of companies in the US. There are certain risk factors that a US company looks at before coming into markets here and one way of mitigating the risk for these companies is for them to enter into relationships and partnerships here with a local company. For Emitac I see that as an opportunity as we progress into 2007 and put all these building blocks in place, I think all of a sudden we will attract the attention of some of the major players in the European and US markets. Given their restrictions, I think they would welcome the opportunity to work with a local company. ||**||

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