Computerlinks throws caution to the wind

Computerlinks Middle East - formerly Fusion Distribution - continues to expand its range of services and vendors as it looks to continue its momentum in the market. Lee Reynolds, managing director for the Middle East, Africa and Asia, reveals what it means to be part of a larger group and explains why the company believes now is the right time to be making investments

Tags: Computerlinks Middle EastEconomic crisisUnited Arab Emirates
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Computerlinks throws caution to the wind
By  Andrew Seymour Published  July 1, 2009 Channel Middle East Logo

Has much changed since Fusion was taken over by Computerlinks to create Computerlinks Middle East?
Yes, our revenues have quadrupled for a start. There are also certain restrictions when you compare a local company to an international company - one is finance, that's obvious. A billion dollar group like Computerlinks has a lot of money. And that helps the local market because we offer that edge over other distributors that are local and can't handle those big infrastructure deals that are happening right now.

It was definitely the right acquisition partner for us, particularly when you look at that financial and logistics chain. At any one particular point, for instance, we carry US$26m worth of Juniper stock and we are one of Blue Coat's biggest customers in the world. These vendors have really had a taste of international distribution and they love it.

Has the Middle East business lost autonomy from being part of a much larger group?
Not at all. Each of the local offices has the right to recruit vendors and run the business - there is no corporate strategy here and that is the strength of Computerlinks as a group because every market is different. A vendor that is good in the Middle East may be weak in Germany, for example, so it is really up to the local offices. We do have a lot of global agreements, of course. And when we look at this type of thing it is about the bigger picture, not the smaller picture.

Computerlinks now has offices in Saudi Arabia and Bahrain. How has that helped the business?
I think sometimes the vendors like to see a face there - they like to see local offices and a local presence. We have people on the ground and it is a balance between systems engineering and channel roles. In Saudi Arabia we have tended to be quite tech-heavy - so we have more technical resources than sales resources there - because that is what is needed from the vendors that want us in the country. Saudi Arabia is very significant to us, this year 58% of our business will come from there. We are investing heavily in Saudi.

You also have plans to open an office in South Africa and Hong Kong. Is it really a sensible time to be expanding when everybody in the market says conditions are difficult?
I'll give you an analogy. When everybody is buying Pepsi, Coca-Cola spends more on marketing. And there is a reason for that. When things like that happen it is time to take market share. And the financially strong players will take more of a stronghold in these times than the weaker distributors. It is time for us to do that and take full market share. I think that as a company we have been very successful over the last two years in the Middle East and it is certainly time to expand that regionally and add more vendors into the portfolio. We are looking at 40% growth this year at least.

Does most of your business come from software these days?
It is a mixture of software and hardware. It hasn't really changed, not like it has at a company such as EMC, which has gone from 70% hardware to 70% software.

You established a training centre and professional services unit last year. How important are those in the context of providing a more rounded value added proposition?
We all know that the margin in distribution is going down, even in VAD world. And the debtor days are going up and at some point they are going to meet in the middle, and that is three years in front of us. If you don't put some differentiators on board now, such as professional services, training, on-site support and telephone support, then you won't survive later. There is also the strategy of going into different countries as well. We are going into Africa and setting up in Hong Kong and Singapore. We are bulking the group up ready for that situation.

How serious is the shortage of credit in the market at the moment?
There are certain areas of the business that survive on credit and I think it is the smaller resellers that have history or money in the bank that will suffer from the economic climate. The bigger systems integrators and resellers of this world don't have those same problems. If a small reseller in Dubai gets a US$2m deal and doesn't get paid on that then they can't pay the supplier because they don't have US$2m in the bank. But the larger systems integrators, the likes of Jeraisy, Integralis and Dimension Data, don't have that problem.

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