All eyes on Saudi

The IT market in the Kingdom of Saudi Arabia dominates growth for the industry as a whole in the region, and it poised to create more opportunities for channel partners this year. IDC expects competition to intensify further over the next few years, as multinationals, including large system integrators look to tap into the growing IT services market in the Kingdom, writes Clayton Vallabhan.

Tags: Al Jammaz DistributionAl Jammaz TelecomBitDefender (www.bitdefender.com/)Optimus Technology and Telecom
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All eyes on Saudi
By  Clayton Vallabhan Published  June 7, 2012

The IT market in the Kingdom of Saudi Arabia dominates growth for the industry as a whole in the region, and it poised to create more opportunities for channel partners this year. IDC expects competition to intensify further over the next few years, as multinationals, including large system integrators look to tap into the growing IT services market in the Kingdom, writes Clayton Vallabhan.

Saudi Arabia is by far the biggest, most lucrative and dynamic IT market in the Middle East. Almost all major IT players have a presence there and the country has a well established and thriving IT channel. The rapid rate of growth and perpetual demand for technology makes it one of the most sought after IT markets in the Middle East region.

Although there is no doubt that the market is maturing steadily, it still has its own challenges and idiosyncrasies to doing business. Knowing the culture and business attitudes is essential for ICT vendors and distributors that want to set-up business in the KSA.

Not surprisingly, given the potential  in that country’s IT market, many regional IT vendors and their channel partners perceive the market as key to their economic fortunes.

Meera Kaul, MD, Optimus Technology and Telecommunications said: “The Saudi Arabia IT services market has been growing at a fast pace as more businesses are deploying technology to streamline their operations and increase efficiency. This growth will definitely increase in the next few years as sectors such as oil and gas, financial services, healthcare, education and communications are continuing to increase their investments in IT infrastructure and legacy systems. Saudi Arabia is a very important market for Optimus. We have a wide network of channel partners across the Kingdom. We offer them value-added services such as technical and product training, pre-sales and post-sales support, lead generation, marketing services and technical support services to address the customer’s needs.”

Pundits say growth is definitely surging, and government spending is only helping to fuel the explosive advancement of the IT sector.

Abdul Nasser Bangcola, country manager KSA, Interactive Intelligence added that the biggest driving force behind the success of the IT market in the Kingdom has been government spending on IT and communications. Bangcola said the national budget released by the Ministry of Finance in December 2011, estimated the country’s 2012 budget expenditure at a whopping $184 billion, and if the previous years are anything to go by, the actual spending is likely go up to $225 billion.

“Such investment is psychologically important to the private sector as it infuses a high level of confidence and permits the cash-flow necessary for the kind of boom we have been witnessing,” he said.

Bangcola pointed out that there are also initiatives which are driving innovation in the IT industry such as STC’s recently established $50 billion fund to facilitate start-ups, small and medium-sized companies operating in the fields of telecoms and IT in the Saudi market.

The IT requirements of the Saudi sector have always been diverse, but the market is maturing into greater demand for services.

Anish Kanaran, regional director, MENA and Turkey at Epicor said: “IT services such as business application services, infrastructure management services and consulting services are in great demand.”

Khalid Muasher, BDM-ME, at regional distributor Silverland, said: “IT is basically services and people are not looking for products alone anymore, but the after-sales experience. “When you buy a product, you expect to handle it yourself, but when you buy a service, you expect it to be delivered to you,” he said.

Although the IT market and services have been leading the growth in the KSA, Manzoor Ali, managing director, R&M KSA, said demand in communications networks is adding to the already booming IT sector. “Apart from IT, there is a good demand for communication networks and mainly fibre to the home demand, which is the new technology of the future,” he said. “Telecoms has seen rapid expansion ever since the government opened the sector to private operators. The newly licensed private operators have aggressively expanded their coverage across Saudi Arabia. We expect this trend to continue in the coming years which is why R&M intends to focus on the telecoms sector in the coming years.”

Looking at how best to address the channel in KSA is perhaps an important question that vendors and distributors need to consider. While in the past companies got away with managing their operations in the KSA remotely, to succeed in this market, one needs to have partners on the ground.

George DeBono, general manager, MEA, Red Hat, said the company prefers to work with partners in the channel.

“Our preference is to work with partners who have invested in our technologies, as we believe that will deliver a more successful outcome for our customers, as well as deliver us more Saudi Arabia specific market intelligence. All of our channel focus is in the traditional reseller space as we do not have a retail product. We do have some ‘box droppers’ in the mix, but they typically are only transactional and they only order from our authorised distributors when their customers demand our products,” he said.

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