Standing tall

With question marks hanging over some of the most prominent end-users in verticals such as banking and construction, local systems integrators are industriously tightening every nut and bolt in their organisation and offerings to remain competitive. Talking to some of the long-established service partners hailing from the locale, Channel Middle East hears why this is not the time to stop hiring staff, reduce commitment to training or give up the fight against international SI market invaders.

The integrators we spoke to were: Sami Abi Esber (SE), president at Mideast Data Systems (MDS); Khaldoun Al Shamaa (KS), head of business development and marketing at Emirates Computers; Fayez Ibbini (FI) managing director at Alpha Data; Tapas Roy (TR), COO at Raqmiyat; and Feraz Al Jabi (FA), general manager at Itqan.

What aspects of your work do end-users value the most during the current climate? And how do you capitalise on that?

TR: In addition to the work, [they value] the fact that the company has been servicing the financial sector for the last 25 years and has built up relationships and trust. Also, it is the capability to deliver.

Contracts are there to provide guidelines and frameworks, but it is a combination of the products, people and processes that we have put together over a period of time.

We provide not just the systems integration, but managed services and outsourcing services as well. All of this put together reduces the TCO, and as project managers we are able to outsource the risk that the customer has.

We also have multiple vendors behind us and can deliver projects that we will have done a number of times successfully.

FI: It is about being able to deliver on time and on budget as agreed. And now, more than ever, customers want to know that you have the resources, people or finances to deliver what is expected.

Some make promises beyond human capability. So if you have got the resources and funding, and you can have everything available at the right time, they value that very much.

FA: End-users want to maximise their pre-existing solutions investment. They look for committed professionals and fast-response integrators to enable more features.

We are planning to improve the utilisation of purchased [solutions] and move closer to organisations that have invested in these systems. There will also be new business and projects. But helping those that have invested already is very important and we have to be responsive to a budget crunch if there is one.

SE: Customers are looking to save money and have good services, but at the same time they also expect very competitive prices. MDS is a local systems integrator offering a quality of service equivalent to an international company.

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To give you a good example, we won an oil and gas implementation of HP software against HP, so it means that we can offer the same quality of service.

KS: Technical knowledge should be taken for granted. The ability to understand customers and handle deadlines properly and manage the quality of the delivery is important as well.

Understanding the customers' business and internal procedures, and how they will be related to the actual implementation of the system, is also important.

How do the capabilities that you have set you apart from the competition that you face in the market?

TR: It is the ability to be able to quickly deploy and the focus and hunger that we have as a larger SMB. We currently have over 300 staff deployed on various locations.

For instance, HSBC has got perhaps 5,000 employees in Dubai and we have got about 45 people deployed to look after their everyday needs, such as support and networking. We have people who understand the processes well. Yes, somebody could come in with the cheaper option and higher promises, but trust and the relationship is the main thing.

FA: Itqan has gathered a wide range of experience from a huge array of projects. And the experience that we have gathered working for leading international systems integrators has also helped us inherit the global flavour of systems integration. Our recent partnership with Capgemini is going to add a lot of value to the market as well.

FI: We have specialist divisions, each focusing on certain areas, whether it is cabling, security or networking. Within the company, these groups integrate seamlessly to the customer as specialists.

Most companies tend to go the general route and say they can do everything and in the background do specialisation. We do it the other way around and talk to the specialist within the enterprise and then do the integration, in-house.

KS: We have a department that is responsible for handling the fulfillment of projects, let's say. This will always ensure that a project happens in a professional and appropriate fashion.

The other aspect is the industry expertise that we have built up over time in certain industries, such as the government or hospitality sectors. We work with a range of partners to acquire knowledge, not just in the product or the technicalities, but also the actual implementation or application.

Over the last few months you will have made some very tough decisions relating to the impact of the financial crisis on your business and customers that you serve. What have you been doing to ensure you can sustain growth in the months ahead?

FI: The first step is to be careful of who we deal with. With the very best intention, your customer - more often then not a contractor or sub-contractor - could face a problem and you then see a domino effect that hurts.

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We have to be 100% sure the client can actually honour their commitment and not cancel the project or put it on hold.

On the other hand we have a fairly large pipeline, so we have enough business momentum to see us through 2009. If this crisis continues beyond 2009 then the whole game shifts for everybody. But, as it is, we have a fairly full order book for the year.

SE: It is not very easy to maintain growth. I am not sure that we will have growth over the level of the 34% that we saw in 2008. But we are looking to continue and sustain at least what we have achieved.

To do that we are planning mainly to offer our customers diversified solutions which go towards reducing their IT span, such as SaaS and outsourcing part of the IT infrastructure.

KS: We have a strong customer base and the fact that we are focusing entirely on our foundation business and not just on the market growth will keep us sustainable.

Of course, we have taken some internal decisions on how to re-organise ourselves in order to meet the current market conditions, such as merging a couple of industry verticals together for example. We already have a lot of projects on our plate that will keep us going for at least a year from now.

At the start of the year SIs were having a difficult time finding qualified people. Has this situation improved and how do you ensure your staffs are competitive?

FI: Improvements have not been felt immediately. Good staff are still in demand and are in short supply.

But what has improved is this business of poaching from each other, where companies would, instead of going and finding the right resources and training them, take the quick route and poach staff from others.

Staff themselves value security now much more than increment in salary. We recruit for projects and expansion and the projects are still there, we need the people and are currently still recruiting.

TR: A lot of our work has been going into skills training and mobilisation and taking advantage of the situation through process and efficiency improvements.

At the top level I don't think the lack of resource availability has eased up yet - in some ways it has and in others it hasn't.

Projects are still going on and this phenomenon is only a few months old. Six- to nine-month projects are still going on.

SE: It has not only improved, but it has been solved. It was difficult for us and for companies like us to find resources but in the last few weeks we have found many of the good resources that had left MDS to go to international companies willing to come back.

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MDS has been in the market for 27 years and we keep and protect our employees.

Our plan is to increase our headcount by 5% to 10% from 2008. Also, unique to MDS, key employees are given an opportunity to be shareholders.

KS: The growth of the market led to a scarcity of quality resources. But when the market growth slows, the availability of resources will logically increase.

However, we have not seen the full impact yet, maybe it will be coming in the next couple of months if the financial crisis has hit specific sectors of the market. We look at it in a positive manner because then we have more resources available.

The services market in the Middle East used to be dominated by local names. Now, after seeing the incursion of large players such as Dimension Data and greater attention from Wipro and Satyam, the market is much more competitive. How is your company meeting this challenge?

FI: Actually, this is a positive development. We are more than happy to compete with internationals rather than a small outfit which doesn't appreciate the commitment and the risk involved in projects.

What makes a difference is that we have been at it since 1981 and our customers and resources are in the UAE.

I have my doubts over how many of the internationals will continue to find it attractive to be here if the market stalls because they will be depending on particular projects.

The growth they are interested in comes from strategic projects and a lot of those are either not coming forward, or are being put on hold.

TR: Satyam and Wipro declared at one point that they would not take any contracts below US$15m. We don't compete with them on this level because it requires a much larger global entity.

However, they are coming down to the level that we operate in and that's where I don't think they can make the impact that we make. Satyam is trying to partner with us in the same sort of business.

They are looking to us to provide manpower and resources so they can deliver their products. It's the comfort we are able to give to the end-user.

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There will be a lot more competition during 2009.

SE: Local SIs are always here when you need them. Two scenarios will happen -international companies will cut expenses locally and downsize their investment. And some players that have problems in home countries will come here to promote business.

KS: We have been working with companies such as Wipro in tandem on certain projects. We look more at the technical abilities that we have internally and get in-sync with our partners, Cisco, Sun Microsystems and Dell, to ensure we can serve the latest product offering that they have to the market.

This way we can ensure that we are always ahead when it comes to delivering those products.

What is your assessment of the way that vendors support systems integrators based in the Middle East? What improvements would you like to see?

FI: They could do more to have a regional high-level support centre. At the moment most go through the UK, Ireland or the US. They need to see this as a much more strategic market that could justify a regional technical support centre in the country.

We see vendors very actively going after the accounts themselves and involving integrators late in the sales cycle, especially the more aggressive sales organisations in our field, such as Cisco, Microsoft and HP. When you look at their models in other countries outside of the Middle East they leave it to the systems integrator and give support.

Here they tend to be very proactive which is healthy in some ways, but it does leave lesser room for the mature or well-equipped systems integrators to put their case to the customer.

It will be healthier for the customer to meet with the systems integrator and assess for themselves who is going to take care of them after the initial sale has been made.

KS: This is a tough question. There are many ways a vendor can support systems integrators. One is getting more aligned with the roadmap of the partner.

The more aligned, the better the responses and the coverage of the market. Also, more operationally, working closely on specific opportunities. This is handled by vendors setting up proper account management structures and organisation towards the systems integrators.

ES: Previously, some of the vendors wanted to do the direct part of the work, specifically in special services, maintenance and implementation. What's happening now is that they are giving part of this work to local systems integrators and that's what we would like to see - more work offered to local SIs.

FA: The improvement from vendors needs to be on the readiness of programmes on new technologies and solutions. The other point is for vendors not to panic in terms of reducing the credit limit of local partners or focusing on recovery of invoices and cash-out.

This will not help future relationships between vendors and local systems integrators. Reducing the credit limit to local systems integrators at this time will not be beneficial for anyone.