Inside Systems Integration

Systems integration (SI) has traditionally been a crucial specialty in the IT industry, requiring players in this segment to go beyond the services they scope with solutions they take to market.

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Inside Systems Integration
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By  Piers Ford Published  May 20, 2014

Systems integration (SI) has traditionally been a crucial specialty in the IT industry, requiring players in this segment to go beyond the services they scope with solutions they take to market.

Ask a systems integrator what the greatest challenge is when it comes to developing sustainable revenue streams in the Middle East and you will get a variety of answers, ranging from the usual irritants (rapid technology evolution and ever-fluctuating market conditions) to embracing the business models enabled by the rise of the cloud.

However, two issues currently influence the SI landscape in the region more than any other: the need to raise their game on the services front; and the struggle to get reliable and committed financing. Finding a solution to the latter is largely out of their hands, but many industry watchers will tell you that SIs have a lot to do when it comes to balancing technology know-how with a flexible and innovative service offering.

“Whilst it might be a bitter pill to swallow, the reality is the greatest challenge faced by many SIs today is one of complacency,” said Glen Ogden, regional sales director, Middle East, at A10 Networks.

“There was a saying in the 1970s that you never got fired for buying Big Blue – IBM – and for a time, this was true. In those days, as long as you had Big Blue in your portfolio, everything would be good. However, those days don’t exist anymore and whilst modern SIs have been successful offering ‘run of the mill’ technologies based  on market leadership, the cycles of success for these SIs grow smaller as continuous innovation from new emerging vendors renders yesterday’s brand name technologies obsolete.

“SI’s who fail to adopt these innovative technologies, many of which offer extremely compelling financial models - for example, zero licensing and thus reduced operational expenditure (OPEX) - will eventually see their market share eroded, especially as their target audience, today, is now far more savvy.  SIs must look to the future, and invest in taking on new technologies and being able to deliver cutting edge solution to their customers.”

The fact that it is also a rather crowded market is another factor that is impossible to ignore. Developing a service orientation is crucial, according to Manish Punjabi, channel marketing manager MEA at Alcatel-Lucent. Smart buyers will check up on potential SIs on social media before they even make contact with salespeople. IT managers can switch between suppliers at will. Service should be an obsession for any SI that wants to differentiate itself.

“Traditionally, an SI is limited in the amount of margin it can make by simply reselling an undifferentiated solution,” said Punjabi. “Therefore, the role that an SI plays in the future will be limited by its own ambition. In my opinion, the best evolution path to differentiate and create compelling margin streams moving forward might include a consulting model, managed services and an outsourcing model.

“The common theme in all of these paths is [having] sufficiently trained and experienced staff. However, to achieve a level where customers trust the SI to deliver strong implementation and service teams capable of any of these elements requires laser-focused attention and financial investment.”

And that can be a vicious circle. As Stephan Berner, managing director at specialist security SI Help AG, said, one of the main challenges remains the unwillingness of banks and financial institutions to play an active role in channel financing.

“In the region, channel economics are still very much value-added distribution driven and resellers are especially dependent on their VADs for financing large deals,” said Berner. “This will only change once banks in the region become accustomed to IT leasing and financing. This will depend on transparent financials on the part of the resellers and greater trust on the part of the banks.”

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