Full steam ahead

Buckle up and hold on tight because 2007 is going to be another year of frantic change and development in the Middle East IT channel. Vendors are realising there is more to the region than Dubai, partner strategies are being reviewed, and technology convergence is driving new opportunities. We’re heading towards the next stage of the market’s evolution and it threatens to be the most intriguing phase yet.

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By  Andrew Seymour Published  December 20, 2006

Buckle up and hold on tight because 2007 is going to be another year of frantic change and development in the Middle East IT channel. Vendors are realising there is more to the region than Dubai, partner strategies are being reviewed, and technology convergence is driving new opportunities. We’re heading towards the next stage of the market’s evolution and it threatens to be the most intriguing phase yet.

It’s that time of year again when pundits from all around the industry speculate about what life is going to be like in the IT market during the forthcoming 12 months. IDC has wasted no time in putting its head on the block by predicting that 2007 will be the year of “hyperdisruption” as IT vendors embrace new models in an attempt to satisfy their appetite. This disruption, you see, is the result of a global technology market that is only set to expand a mere 6% during the next year, meaning growth is going to be harder to come by than it used to be.

IDC claims that the disruptive shifts it anticipates will lead to a whole raft of changes, including channel-oriented players taking a more direct stance, indirect vendors developing radical new strategies and the small business sector finally being given the significance it deserves.

In theatres such as Western Europe and North America I have no doubt that this will be the case. But does it translate to a market like the Middle East? Probably not.

Most companies in this region are still enjoying low-double digit growth at the very least, and that means they do not face the same pressure as IT providers outside the region. Furthermore, the blurring of direct and indirect models simply isn’t conceivable here because the channel remains such a vital component of the overall technology delivery model.

That doesn’t mean the region isn’t going to be without its own form of disruption in the next 12 months, however.

I’ve been speaking to a range of vendors operating in the networking and security enterprise market during the past fortnight and the clear message from them is that the way they manage their Middle East partner networks will change next year. The emphasis is switching from simply engaging with anyone and everyone to actually redefining the profile of partners that they need to be working with moving forward. We have already seen the likes of HP and Cisco introduce an element of specialisation to their regional set-ups, preferring to reward those resellers that invest and develop in their technologies and services than those who may sell their brand occasionally.

This same vision is now being communicated by other vendors, particularly those that have been in Dubai for one, two, maybe three years, and operated a fairly modest internal structure with a couple of sales staff and one or two technical guys.

I’m certain that these sort of manufacturers — and there are plenty of them around — have simply focused on getting their house in order during the past few years and hitting their numbers. These firms are now showing signs that they are willing to push on to the next level. The vibe I’m getting is positive and several of them at last seem to recognise that the long-term growth of their business will come from empowering a select group of resellers with the necessary skills and business acumen, rather than addressing a huge crowd of partners that sell the product infrequently.

This in itself will create its own kind of disruption, both in terms of the channel programmes that need to be put in place, and in the way this model is executed. It will also pose challenges of course. Can these vendors really identify the companies that best suit their strategy or will they find it too difficult to resist the lure of a sale when partners they aren’t particularly interested in come calling?

This all ties nicely into how manufacturers are developing their geographical spread, a topic I have covered in prior editorials just recently. I believe the Middle East IT market finds itself at a very exciting stage of its development. We are really starting to witness true momentum in terms of manufacturers, and distributors for that matter, moving beyond Dubai and into surrounding markets.

The pace of change in Saudi Arabia — with the advent of economic free zones and freight airports — could easily transform the dynamics of the local IT channel in the Kingdom beyond belief, while Egypt, the Levant and other areas of North Africa are all starting to attract serious investment from some manufacturers.

We’ve seen the billion dollar vendors staff up in these markets over the past few years. Now it is time for the next tier of global technology providers to shed their inhibitions and expand into these markets. Such a shift can only be welcomed and encouraged. The more investment and support that is ploughed into these markets locally will increase the prospect of strong and profitable business being conducted in the reseller channel.

Unlike other parts of the world, the disruption associated with companies realising the significance of small businesses isn't necessarily relevant in the Middle East. Small businesses in this region fall under a different definition and are a staple diet of most IT companies here already. It is up to vendors and channel partners to create their own disruption by working together to truly identify the technologies and services that will make these SMB customers perform their core competencies even more efficiently.

This feeds into the subject of solutions and services, which in a market renowned for being so transactional isn’t always given a starring role. However, the solution play is likely to become far more visible next year, particularly if technology convergence — both from a data and voice, and consumer and corporate, standpoint — continues to develop at its current pace.

Convergence won’t be the only global phenomenon that impacts the Middle East. Microsoft Vista is also going to have an enormous impact — both in terms of the sales opportunity it creates for the reseller and retail communities and also in terms of how it alters the local PC assembly sector — while we will continue to see some of the big outsourcing firms enhance their presence in the market.

The word disruption might be fraught with negative connotations, but that doesn’t mean that it has to restrain the Middle East channel in 2007. Quite the opposite in fact.

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