Power brokers

A combined workforce in excess of 1,700 staff, annual sales north of US$3 billion and extensive coverage across the entire Middle East and North Africa region. Any idea what I’m talking about? Why, the 15 largest UAE-based IT distribution houses of course. As the soon-to-be-published 2007 Power List will reveal, the Middle East distribution sector is bursting with energy.

  • E-Mail
By  Andrew Seymour Published  February 28, 2007

A combined workforce in excess of 1,700 staff, annual sales north of US$3 billion and extensive coverage across the entire Middle East and North Africa region? Any idea what I’m talking about? Why, the 15 largest UAE-based IT distribution houses of course. As the soon-to-be-published 2007 Power List will reveal, the Middle East distribution sector is bursting with life.

This year’s Power List will again provide a compelling insight into the structure and composition of the Middle East IT distribution channel. The combined sales volume of the 15 heavyweights profiled by Channel Middle East serves to remind us how integral the wholesale channel remains to the regional IT sector.

Vendors might be able to bypass the distribution tier in more developed markets, but in the Middle East it is simply a waste of time to even ponder such a strategy, let alone implement it.

This editorial isn’t a forum to wax lyrical over the role of the distribution channel, but to contemplate the direction the market is moving. The headline figures of this year’s Power List illustrate the sheer scale and influence of the distribution channel in the Middle East market, but let’s be honest, we knew that already. What’s less obvious from those figures is that it is also a channel very much in the midst of transformation.

When Channel Middle East published its inaugural Power List three years ago, the emphasis was firmly on revenue figures and top line growth. In some cases this was even at the expense of profitable business. Last year, meanwhile, it was all about the margin as distributors acknowledged that a “sales at all cost” mentality isn’t particularly conducive to healthy, sustainable growth.

So what do we have before us in 2007? The answer is a distribution market firmly tuned in to the twin aspects of customer satisfaction and value creation. “What can we do to make customers spend more money with us and how do we ensure they keep coming back?” are the questions being posed by senior distribution managers in the Middle East.

The good news is that many distributors believe they have found solutions to this dilemma. At least four distributors in the 2007 Power List have outlined radical plans to heavily invest in new purpose-built facilities that take their logistics, delivery and customer services capabilities to a whole new level.

These distributors are acutely aware that if they are to properly engage with customers then they must have the systems and operational infrastructure in place to do so. In any industry, change is routinely met with opposition, but distributors with a progressive outlook understand that these investments represent the key to their future growth.

What’s more, I believe 2007 will see distributors taking an even closer look at how they are structured internally. In some cases this will mean developing dedicated business units that encourage true market and technology focus.

The advantages of this resourceful model — which is designed to give value to both vendors and resellers — are numerous, as several distributors have outlined to Channel Middle East over the course of the past few weeks.

Meanwhile, other distributors are placing increased importance on strengthening the breadth of their product portfolio. Whether it’s components specialists moving into finished goods, or networking players adding security brands, distributors are clearly eager to position themselves as a one stop shop for their customers’ needs.

Additionally, there is a much stronger commitment among the largest distributors to expand geographically and build true economies of scale. The pros and cons of in-country coverage in the GCC countries are well debated, but we are now starting to hear Dubai-based distributors make a beeline for markets in North Africa, East Africa and even the Indian sub-continent.

Let’s not kid ourselves though. It is fantastic to see companies showing a clear forward vision, but we must not lose sight of the fact that Middle East distributors are operating in a highly competitive environment facing its own set of unique challenges.

As the 2007 Power List will reveal, several distributors experienced flat or even reduced sales last year, exploding the myth that growth is always easy to come by in so-called emerging markets.

This year’s Power List will provide the most comprehensive guide yet to the positioning and aspirations of the 15 largest UAE-based IT distributors. For the first time ever, it will also recognise some of the leading value added distributors that lack the volume to make the top 15, but serve the market with their own brand of expertise.

If that’s not enough, the 2007 Power List will flag up some of the smaller UAE distributors making waves in the market for various reasons and disclose the identity of the most formidable distributors operating in the Saudi market.

To make sure you get your hands on a copy of the 2007 Power List you will need to subscribe to the hard copy edition of Channel Middle East by accessing the following link: www.itp.net/subscriptions and clicking “Channel Middle East”.

Don’t delay! Do it now and guarantee receipt of your inside guide to the Middle East distribution channel.

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