A changeable future

In spite of the uncertainty about the regional economic outlook and the geo-political situation in Egypt, Yemen, Libya, Iraq and Levant, the Middle East channel stakeholders are optimistic about what the next 12 months will bring to their business. Business in 2015 was generally flat, so why is the channel so hopeful about business prospects in 2016?

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A changeable future
By  Manda Banda Published  February 2, 2016

While the overall business climate in the regional channel remained sluggish for most of last year, pundits are hoping that 2016 will see business improve despite lingering uncertainty especially in the PC segment, where sales of desktops and notebooks have continued to dip.

For many channel players, the first half of 2015 was firmer and showed a lot of promise although that buoyant mood seemed to have ebbed midway through when oil prices registered the biggest drop in over a decade.

Despite this, the spread of new technologies and the rapid adoption of mobile devices, industry pundits have expressed mixed feeling about what the future holds.

In fact, most commentators are forecasting a variable IT future where business will be lean and not every channel player will gain from the business opportunities in the year ahead.

Partners that will benefit are those that are already playing in the professional services, cloud services and IT solutions space.

According to research firm Gartner, the public cloud services market in the Middle East and North Africa (MENA) region is projected to grow to 19.3% in 2016 to total $880m, up from an estimated $737m in 2015.

Business Process as a Service (BPaaS), the largest segment of the cloud services market in MENA, is expected to grow 7.3% year over year (YoY) in 2016 to reach $266.2m. The largest growing market, cloud management and security services, is projected to grow 29.3 YoY percent in 2016.

“The forecast for cloud services vary based on local factors, including supply and demand within the local markets, country-specific economic conditions, currency exchange rates, and other global market factors,” said Sid Nag, research director at Gartner.

“The fact that the BPaaS market is the largest in the MENA region in 2016 is testimony that enterprises in MENA are moving away from traditional business process outsourcing (BPO) models to a cloud-based BPaaS model. The strong growth in the cloud management and security services in 2016 is an indicator that security continues to be a perceived inhibitor for cloud adoption in this region,” Nag added.

Claire Jones, director, Partner Sales, Middle East and Africa (MEA) at Juniper Networks, said 2015 was a year of change and transition for both vendors and channels in the region.

Jones said for vendors, the physical and virtual worlds are converging and that means training has become vital to ensure teams understand both worlds.

She added that for channels it means adapting to new and evolving business models, training and recruiting staff to sell, design, deliver and service within this converged, but exciting world have presented challenges and new opportunities. “Channel partners will continue to see many changes in the year ahead in how their own businesses and customers operate,” she said.

At regional value-added distributor Logicom Middle East Group, regional director Mounir Sarkis, said transformation is the key word. Sarkis said this is taking place at a fast and sometimes erratic pace across the different layers and elements of the channel, either through adoption of new technologies or adoption of overall new business models. “Pretty much all businesses are constantly trying to reinvent themselves and to a large extent determine, define and shape their respective future,” he said.

Sarkis said delivering more on the distribution as a service (DaaS) is key to Logicom’s strategy going forward. He said while operational excellence remains a key metric for the company’s overall distribution/fulfillment engine, the main focus will revolve around strengthening the structure to deliver more competitive and innovative DaaS capabilities in the regional channel.

The transition to new business models to meet changing demands of customers will be a difficult balancing act for channel partners in the region.The winners will be those that maintain their core business while at the same time shifting to new revenue streams.

Partners must move the bar to sell business outcome-led solutions that support the transformational growth seen in the Middle East.

Mario M. Veljovic, VP Solutions MEA at Global Solutions, concurred and said those who are in the region for a while, will understand that this level of uncertainty always exist and it has to be dealt with by being vigilant of what’s going on and adjusting your strategy accordingly. Veljovic said rather than dwelling on challenges, it’s vital for partners to look at the new opportunities, this uncertainty brings with it. “Global has been pioneering “solutions distribution” in the region, which is stressing the importance of more partner education and training, providing alternative financing models and increasing service opportunities. IT has become increasingly complex and distributors, like Global, are going the extra mile to support partners to stay competitive and win more business in the market.

Glen Ogden, regional sales director, Middle East at vendor A10 Networks, added that: “Without a doubt professional services is the biggest area of opportunity for channel. There is a huge demand for professional services work here in the region.”

Ogden said what channel partners needs to do is skill their teams up to the point where they are considered an arm of the vendor. “And once they’ve done that, there is a huge amount of ‘margin-rich’ opportunities,” he said.

He explained that the fact that there are vendors like A10 Networks that are not interested in building their own professional services teams, but would rather fulfil that through partners means the services and consultancy opportunity is still huge for solution provider partners.

In 2016, experts say channel partners will get even more selective with their partnerships, only aligning with vendors who enable them to offer best-of-breed solutions and bespoke offerings for their customers. Customers will demand not to be locked in, looking to IT vendors and their channel partners to help them with flexibility for future industry shifts. The channel will have to follow these trends, catering to customers with open solutions that are seamless, scalable and flexible to business needs.

Osama AlHaj-Issa, channel director, Middle East and Turkey at Aruba Networks, agreed and said readiness and early engagement are the two basic components for a successful partnership. “We work closely with our partners to enable their sales, pre-sales and post-sales capability so that they can represent us in each of these areas. This ensures their customers get high quality delivery of the proposed solutions and services,” he said.

AlHaj-Issa said product margin is always an area of attack by many factors so services will be a top margin source for channels in the Middle East in 2016. At security solutions vendor Gemalto, Sébastien Pavie, regional sales director, MEA, said the UAE is fast becoming a hot-spot for IT investments and is one of the most advanced countries in the region with a clear vision to modernise, through the implementation of new technologies, interactions between citizens, government entities and businesses. “Dubai has grand ambitions to become the world’s leader in smart city infrastructure incorporating everything from enhanced online public services, advanced transportation using mobile NFC contactless transit ticketing, mobile payment, contactless multi-application banking cards and M2M technology,” Pavie said.

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