Year of the VAD

How many vendors are you working with in total today and is there scope to bring more brands on board or are you satisfied with your coverage?

We have about 23 vendor partnerships, but I would say the focus has been more around 10. I believe the portfolio does give us the coverage we want but we do have some areas we would like to expand into, especially on the security side and authentication to ensure that we could give the complete security offering, including a unified threat management. There are areas where we are looking at new vendor partnerships, especially in the identity management space, and we are going to be tying up with a new company in that area.

What is your take on the value added distribution landscape in the Middle East at the moment? Has it evolved in the way you expected?

I believe there has been a strong requirement for companies like FVC to show their value, both to end-users and partners, in bringing greenfield technologies to the market and ensuring they evolve and are successful in their respective regions. I think we have seen this happen, not only with us but also with others who have done it in the same landscape. Distribution is definitely evolving, but it changes every day because acquisitions narrow down the market in terms of the new technologies. We are seeing more and more new companies acquiring and getting acquired — like TippingPoint (3Com), which is now part of HP.

The vendors you deal with generally provide specialised technology in niche areas, which tends to make them attractive acquisition targets. Do you make provisions for companies changing ownership when you partner with them? Or do you just accept that it is something that might happen?

Earlier we actually accepted it, but as we speak the strategy for 2010 is to look more closely at the business in terms of how resilient it is to takeovers and partnerships. We’ve been able to offer more services so that we are more resilient to it.

Is it part of your strategy to work with vendors on an exclusive basis?   

We have typically always tried to work on a sole distribution strategy. The value add generally comes both for the vendor and the VAR when they synchronise fully within themselves. I don’t believe it is a question of exclusivity, but a question of how much trust and faith both of the organisations have in each other’s ability. As long as those abilities are matched — whether it is done by one partner or more — can only be determined by the market, but as long as one distributor can cover it I strongly believe it is fruitful for the vendor and the VAD. The volume of business is not as quantified as the PC or components business, where the volume justifies the margin. Here the volume is not as high so the margins have to justify the business.

Is there any possibility that you would attempt to work with some of the more mainstream networking and security vendors in the future, rather than the emerging technology vendors you’re typically associated with?

The strategy is still focused on the cutting-edge technology vendors; I don’t see us doing mainstream, but you’ll definitely see us evolving more into services. We will be more involved in things like professional services and consultancy in terms of post-sales. I could see us offering more in the way of product scope and services so that we are not only offering a higher level of service to our customers, but also to our partners.

So these would be services that resellers sub-contract from you? 

Yes, or we would basically be the level two or level three escalation for the vendors in the region. We are looking at being the level two, minimum, for escalation of everything. We are working towards ensuring that we even have a hotline in most of the regions and we should be kick-starting something like that in the UAE. 

What else is on the agenda for FVC in 2010?

We are optimistic in terms of market growth. I think for most of us 2009 saw flat growth, if not marginal growth, so most companies, including vendors, will be looking for a solid performance this year. What we would like to do is look at being a more solid and unified team to ensure that we take a bigger chunk of the leading-edge technologies business in the region. We will be focusing on ensuring we can offer a complete portfolio of security services and solutions and also explore potential partnerships in areas such as virtualisation.