Having engineered the biggest channel integration exercise in the history of the UPS and cooling services market, APC by Schneider Electric is ramping up its business in the Middle East and Africa region. Channel Middle East sat down with Michael Niotakis, VP marketing and sales process EMEA, and Thierry Chamayou, channel director for the Middle East and English-speaking Africa, to understand where the Middle East channel fits into the equation.
CHANNEL:What is the significance of the Middle East in terms of the wider EMEA landscape that you look after today?
Michael Niotakis: The Middle East is one of the regions showing good growth — I think it is seeing 10% GDP growth year-over-year, which is still pretty high compared to the European market. Some of those markets are flat or negative, so that by itself justifies our increased investment here. We have a healthy business here and a great team supporting our customers, so it is a priority for us to be close to the Middle East and to serve them better.
CHANNEL: Can you put the growth you talk about into some kind of context?
Michael Niotakis: We are growing in double-digits, but obviously I cannot disclose more information on that. But we have been growing at least at the same level as the market since we have been investing, and we are continuing to invest. I can also tell you that for many years the investment we have been making here has been outperforming the average investment across the region.
CHANNEL: How are you balancing that with the fact that this region is only on a par with a standard market in Europe when it comes to volume?
Michael Niotakis: We are looking at the absolute IT spend of course, but we are also looking at how the trend is projected to evolve in future years, so when we are making an investment like FZCO [Schneider Electric’s new regional distribution centre in Jebel Ali], we are not doing it just to get a return on investment in the same year or over one quarter, but it is a multi-year investment where a minimum three- to five-year return is needed. To do that, we need to expect that the growth rate of the market in the Middle East will be higher than the mature markets in EMEA.
Thierry Chamayou: That is very true and if you look at all the statistics they are clearly showing that investments around green energy and green efficiency are going to grow exponentially in the coming years. We are talking about power outage and in the Middle East not every country has access to very stable electricity. Schneider Electric is a company involved fully in energy efficiency and energy management efficiency, so we have to invest to be capable of growing and helping our partners grow within this market.
CHANNEL: A lot of resellers are still concerned about the financial situation here in the region. What is APC doing to help the profitability of its channel?
Michael Niotakis: We try to fairly reward our partners for the value they bring to the customers and I think that is one of the cornerstones of our channel philosophy. And actually, this is also defined by the customer because the customer has the ability to purchase from the partners that bring them the highest value. Obviously the resellers and the partners that are investing more in the business and are bringing more value to the end-users are the ones who are benefitting more from our programmes and processes. And there they will not only have a return on their investment, but a healthy margin. The answer to your question is that if they provide value and they capitalise on their value then the margins are there.
CHANNEL: Can resellers make money with APC by just reselling a box or do they have to do a lot more beyond that to see a real tangible financial benefit?
Michael Niotakis: I cannot say specifically what the pricing level is for every single market in the Middle East, but I can say that we want to have a channel that will be profitable, no matter whether they are selling a very small product or a large solution. At the same time, as I said, the higher the value they add to the product or the solution for the customer, the higher the margin expectation they can have for the profitability because there is a multiplier effect. I see that in the Middle East, as well as in other markets, there are growing numbers of customers that are demanding more value, more consultancy and more advisory from their partners.
CHANNEL: How simple is it to become an APC by Schneider partner these days?
Michael Niotakis: It is very simple to start with and then how far the partner wants to go is linked to the time and resources that need to be invested. It also depends on the number of specialisations that the partner wants to achieve. The rules of engagement are very clear, the benefits for the partner are very clear and the expectations that we have of that partner are also clear.
CHANNEL: APC has previously referred to the high amount of education and training it offers partners in this region.Does that suggest resellers in the Middle East lack the skills to sell your products?
Michael Niotakis: Not at all. The challenge that we have is to convert ourselves and transform ourselves from one product set — or two different companies selling products or systems — to one solution-selling company. To do this we have had to invest heavily in training our own people, but that alone is not enough. We have needed to help our channel partners transform from product-selling partners to solution-selling partners. Some partners had very strong skills in the IT world, for example, but not in the facility world. We have had to train them to develop the skills they needed to meet their goals and to grow, not because we had to close gaps.
CHANNEL: APC relaunched its partner programme last year. Are you planning any further enhancements in future?
Thierry Chamayou: One add-on that is actually being launched in the UAE and GCC as part of enhancements we are making to the programme is a reward scheme directly for the resellers. We are definitely going to reward them with gifts and offers for the business they do with us. The more they buy, the more points they will accumulate and so on. We are a company that is very dedicated to its partners, so we are going to make sure they get the right rewards for their dedication to our products and solutions.