MENA software channel poised for upheaval

Belt-tightening among large corporates results in fewer market opportunities for vendors and partners

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By  Andrew Seymour Published  February 26, 2009

The Middle East enterprise software channel is heading for a major shake-out as belt-tightening among large corporates results in fewer market opportunities for vendors and partners, according to IDC.

The research house warns that a reduction in IT budgets will cause the MENA enterprise application space to “slow considerably” over the next two years, with the market unlikely to regain its footing until 2011 onwards.

That will spark a change in the competitive landscape as resellers fight over less business, predicts IDC.

"During the economic downturn, natural dynamics will inevitably lead to consolidation and a resulting reduction in the number of players, providing an opportunity for vendors to support performers, to weed out non-performing partners, and to optimise channel structures," said Dhiraj Daryani, software research analyst at IDC Middle East.

While public sector spending could hold up and cushion the impact of slowing software sales, integrators with a heavy focus on banking and financial services customers appear to be most vulnerable as those sectors are expected to bear the brunt of the downturn.

"Customers will require more out-of-the-box functionality specific to their industries, as well as faster implementation times," said Daryani, adding that the channel will need to emphasise cost-effective solutions. "A clear, crisp message of functionality and features, along with lower total cost of ownership and quick ROI, are needed to attract significant numbers of new clients."

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