Serving Saudi

Saudi Arabia’s position as the Middle East region’s largest IT channel reseller market remains unchallenged. But what prospects does it offer for growth in the post-recessionary period? Channel Middle East checks in with the region’s major players to assess the state of affairs.

Tags: Avnet IncorporatedFujitsu Technology Solutions - UAEInteractive Intelligence Inc ( Networks IncorporatedSaudi ArabiaSymantec Corporation
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Serving Saudi David Paulding, Interactive Intelligence.
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By  Aaron Greenwood Published  October 26, 2010

Despite the impact of the recession across the region, Saudi Arabia remains the unrivalled giant of the Middle East IT sector, with computer hardware sales estimated to be worth US$1.8 billion this year and the IT services sector valued at almost US$1 billion, according to the recent Saudi Arabia Information Technology report published by Business Monitor International (BMI).

Demonstrating its economic resilience and massive growth potential, the BMI report predicts this latter figure to grow 9% year-on-year until 2014, at which point the country’s IT sector will generate US$4.6 billion in annual revenues. The BMI report concludes that the Kingdom’s combination of a fast growing population and massive government funded infrastructure projects make it one of the most lucrative not just in the region, but worldwide.Adding further weight to its argument, the report estimates that PC penetration will only reach 30% in 2014, at which point per capita IT spend will top US$173.

Not surprisingly, given this unbridled potential, many regional IT vendors and their channel partners perceive the market as key to their economic fortunes in the post-recessionary period.

Increasingly, vendors who have previously either serviced Saudi clients remotely or had a limited internal channel network are now revising their strategies for the market, while others are offering more lucrative incentives to their partners to encourage their co-operation.

Printing giant Xerox is one vendor looking to increase its investment in Saudi Arabia, after reporting 20% year-on-year growth in revenues in the country in 2009. The company is represented in KSA by Saudi Xerox Agencies Company (SXL), which distributes its Office, Production and Global Services portfolios. It also works with its master distributor, CCS-Computer Communications Systems, to distribute its monochrome and colour printing ranges as well as its entry-level MFPs to Saudi clients.
Dan Smith, general manager for integrated marketing for the MEA region of Xerox’s Developing Markets Operations, says the company is looking to appoint power retailers and offer further incentives to existing network of channel partners.

“Over the last year we have experienced phenomenal growth in Saudi Arabia,” he says. “We are in the process of appointing power retailers across the Kingdom to push our affordable printer line-up targeted at SMBs.

“We already offer our channel partners various incentives such as rebates, channel training, bid support, global account penetration, marketing interlock funding, sales incentives and sales operational excellence awareness. However, we also reach out to the channel community via our promotion incentive and marketing co-op funds. These programmes seek to bring resellers and partners into our network to sell a broad portfolio of hardware, software and services. It is a simple programme based around a series of incentives for our partners that are used to reward performance and drive behaviour, which we believe is mutually beneficial.”

While on the whole, the Saudi Arabian economy has remained recession-proof, the impact of the economic downturn has had an impact on the dynamics of the country’s channel sector, claims Hussein Shehab, channel director for sales and operations in the Middle East at Fujitsu Technology Solutions.

“Due to its strong economy, Saudi Arabia wasn’t as badly affected as other countries. Overall, the industry fared well with the exception of a few smaller players which had to exit the market during the financial crisis,” he says. “The biggest challenge in the KSA channel sector today is finding the right partner to serve our customers.”

Despite these concerns, Shehab says Fujitsu is keen to ramp up its presence in KSA. “We are investing in staff and committing resources to the market. We currently have three pre-sales staff, five sales managers and three after-sales support staff, and we are looking to increase this number to 20 within the next 12 months. We have some loyal partners but are now focusing on further expanding our partner network in Saudi Arabia.”

Similarly to other markets in the Middle East, attracting and nurturing new sales talent remains a bugbear of the Saudi channel sector. In response to this, many vendors are gearing up their training programmes in the Kingdom.

“Finding the right talent to support growth is a critical challenge for channel partners,” says Hani Suwwan, business development representative for Saudi Arabia at memory manufacturer Kingston Technology, which currently works with five local distributors and multiple channel and retail partners in KSA.

“Training is one of our priorities in Saudi Arabia. All of our channel partners, regardless of their location, have access to the Kingston Partner Programme website, which is a self serviced portal offering a wealth of information, Kingston academy online training, as well as sales and marketing tools.” David Paulding, regional sales director at Interactive Intelligence, insists Saudi Arabia faces many of the same challenges as other markets in the region. “Finding the right channel partner with the correct skill sets is hugely important, especially when dealing with complex technologies,” he says.

Enterprise storage distribution powerhouse Avnet, which currently operates a dedicated KSA HQ employing 12 staff, works with more than 50 resellers across the Kingdom.

The company’s managing director for MEA, Jamal Qaffaf, says the benefits of providing extensive training programmes for its partners in Saudi Arabia ultimately provides commensurate dividends.

“We invest significant resources in our partner development and training programmes, which are designed for our channel partners,” he explains. “We also have a number of technical professionals on the ground in Saudi Arabia. Our main objective is to empower our partners with knowledge and enhance their skill sets to secure more business and better margins for both them and us.”

Taj El Khayat, director of channel and general business sector MEA at networking vendor Juniper, argues that another consequence of the recession in Saudi Arabia has been a shift in the onus on providing training services and financial support from the partner to the vendor.

“In my opinion, the biggest challenges [facing the Saudi channel] are the high attrition rates in regards to resources and finance,” he argues.

“Channel operators are very cautious about investing in skills development due to the high employee attrition rate. They are also facing financial challenges due to severe delays in accounts receivables. This puts pressure on vendors to take on the full investment in regards to training and develop financial support programmes to accommodate partners facing financial challenges,” says El Khayat.

Saudi Arabia’s massive geographic size also poses challenges for vendors and partners looking to do business in the Kingdom. Many vendors have found the solution lies in committing resources to key population bases within the country.

“For a large country like Saudi Arabia, the geographical challenge is an obvious one,” claims Judhi Prasetyo, regional channel manager for Fortinet Middle East, which operates an office in Riyadh and works with eight resellers located across the country.

“We have focused on recruiting partners that reach a broad geographic area within the country. We have also committed significant resources to providing them with the support they require. We are working with our existing partners to ensure they provide the geographic reach required by our clients, especially for time critical projects relating to IT security.”

IT security expert Symantec, which has a significant presence in Saudi Arabia including a dedicated country HQ in Riyadh employing 23 full-time staff, has confronted this challenge by expanding its relationships with key systems integrators. “We work very closely with major integrators such as MDS, Jeraisy, Dell KSA, ITS, STME, ITS², BMC, Versos, MIS and Active Solutions covering all our solutions, regions and sectors,” explains Ramzi Itani, regional channel and alliance director for the Middle East and North Africa region at the security software vendor.

“In addition, our sales and technical teams are focusing on different regions within the country, including the Eastern, Western and Central provinces,” says Itani. “The Saudi channel sector has evolved rapidly [in recent years]. We have developed a successful strategy working closely with our existing partners to empower them to pursue opportunities in the market. This includes developing skills and equipping them with the tools to sell and implement our solutions.”

Ultimately, the massive commercial advantages provided by doing business in Saudi Arabia significantly outweigh these collective challenges.

As Fujitsu’s Shehab comments: “The KSA IT channel may be changing, but it is changing for the better. Overall, many retailers and channel partners are willing to invest in the market to capitalise on the opportunities that economic expansion is offering.”

The last word goes to Avnet’s Qaffaf, who insists the outlook for the KSA channel segment is bright, with lots of new projects coming online and stalled projects getting back on track. “The channel will no doubt continue to grow in order to meet this demand,” he says.

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