Talking tactics

Trigon LLC has moved to strengthen its business in the Middle East, outlining new channel strategies and go-to-market models it believes will earn it success in the region’s broadline IT distribution sector

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Talking tactics Arun Chawla
By  Manda Banda Published  March 17, 2013

Trigon LLC has moved to strengthen its business in the Middle East, outlining new channel strategies and go-to-market models it believes will earn it success in the region’s broadline IT distribution sector.

After yet another unpredictable 12 months in the Middle East IT distribution sector in 2012, there is emerging optimism that this year may well be the turning point for the channel industry that is still on the mend following the global financial meltdown from four years ago.

And while the regional channel has rallied back to fend off effects of the worst global recession, political instability and the tightening of trade and financial sanctions on Iran, has cast further uncertainty about whether the regional IT channel will shake off these fresh challenges that it faces before it.

Not surprisingly, many in the PC hardware distribution channel have pinned their hopes on Microsoft’s recently launched Windows 8 operating system as the one thing that will spur PC hardware sales to soar as businesses in the region prepare to upgrade to the new OS this year.

Interestingly, while Windows 8 was only released in Q4, 2012, amid high expectations that it would stimulate a PC hardware refresh cycle, analyst figures from Gartner and IDC reveal the opposite as the fourth quarter saw another slide in PC shipments, with volumes dropping 4.3% to just under 90 million units. The slump is seen as a defeat for Windows 8, previously hailed as the last champion of the PC, as consumers are showing a clear preference for mobile devices, rather than supplementing a traditional PC with a tablet.

For broadline IT distributor Trigon LLC, the fundamentals of its business in the region have remained solid despite the challenging business climate and geopolitical instability in some parts of the Middle East.

Arun Chawla, Trigon CEO concurred with IDC and Gartner findings on the fourth quarter PC shipments and said despite all the hopes that were pinned on Microsoft’s new OS, business in the last quarter of 2012 was not encouraging as it should have been.

Chawla said despite the tough business environment that characterised most of the second half of last year, Trigon has continued to diversify and strengthen its offerings to channel partners across the Middle East. “Every year is a different challenge and 2012 was no different. Business in Q4 was not encouraging as it has been in the past but Trigon is very near to achieving its vision and plans for market growth in the Middle East,” he said.

He said 2012 was particularly challenging for the company’s export business to other markets in the Middle East. “We managed to lessen the impact the export business had suffered as a direct result of the on-going political instability because this business is spread over a mix of countries,” he said.

Under the guidance of Chawla, Trigon has developed a business model that focuses on four main units namely Channel, Retail, Corporate and Export business.

Chawla explained that this strategy has been pivotal to the company’s progress and helped Trigon to remain one step ahead. “Our focus to build product portfolios to cater to the four segments of the market has aided us to remain focused on the proven mantra – ‘bottom line basics’ – rather than sell, sell and more selling. We have concentrated on sound, secure and safe business practices, which we have also encouraged our channel partners to do,” he said.

He reiterated that what should matter most in the channel should be gross profit margin and the bottom line. “If one can’t justify and afford to maintain good health of the company, then why continue to be in business,” he asked?

Chawla explained that there is a huge difference between turning an operating profit and making enough money to survive. “Channel players are so pre-occupied with top line sales growth when they need to pay more attention to the bottom line basics,” he pointed out. “Our quick adaptability to the market changes has helped us to focus on a product mix with better profitability rather than the usual volume business.”

He added that the focus on gross margins and good business conduct has been one of the fundamentals that has guided Trigon’s business in the Middle East region.

Aside from a tough business climate that has seen the PC market remain flat for most of 2012, channel credit has continued to be a thorny issue for all involved in the business of reselling IT products in the region.

Chawla said keeping in view of good and prudent business guidelines, Trigon is working closely with credit insurance companies and helping them to understand each reseller’s business model and core strengths, so that it’s easier for them to evaluate and make credit coverage accordingly. “The regional distribution sector has seen a ‘gold rush’ among traditional hardware, commodity product distributors, that have transitioned to embrace software solutions and services models,” he observed.

He added that while this is encouraging for distributors as they make this vital transition, a trading mentality continues to persist in the regional  channel, where reseller companies have continued to buy and sell at the same price point with “omega” margin attached. “This makes the top line sales figure look impressive when in actual fact it’s a false illusion of a company’s size and power,” he remarked. He pointed out that Trigon will continue to build a product mix that caters to the traditional channel, retail and corporate segments of the market.

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