JDE establishes direct presence in Middle East
JD Edwards has established a direct presence in the Middle East by acquiring Dalma Computer Systems. The vendor hopes the deal will boost its local sales and improve its market share.
Enterprise resource planning (ERP) giant, JD Edwards, has established a direct presence in the Middle East through the acquisition of its UAE partner, Dalma Computer Systems. The software vendor hopes the several million dollar deal will not only boost its sales and market share in the region, but also improve customer service and introduce local businesses to JD Edwards’ extended product portfolio.
“The Middle East is experiencing a lot of new business opportunities as it opens up international trade, while industry analysts are predicting that local market demand for business software is going to continue to experience double-digit growth of around 15% over the next several years,” says Fady Sfeir, the newly appointed managing director for JD Edwards Middle East.
“As such, we have decided to open a direct office here in Dubai by acquiring Dalma computer systems and, by establishing an operation here and boosting the quality of our operation, we will be able to close the gap [on our competitors] and become a leading software provider in the Middle East,” he adds.
The acquisition of Dalma is the latest in a string of deals that have seen JD Edwards buy companies in India, China and Sweden. According to Gilles Lambret, vice president & general manager of JD Edwards Southern Europe, such deals have been necessary to ensure that the company keeps growing in light of poor sales with Europe and North America.
“Currently, we are looking to expand our business worldwide… We are struggling in terms of growth worldwide, like most other software companies, and one of the easy answers to buy some services companies in order to reach critical mass in developing markets. Therefore, this deal in the Middle East is part of our global growth,” he says.
In practical terms, the local deal will see Dalma’s 40-odd employees integrated into a local JD Edwards office and approximately ten international staff will join them. While sales and marketing will be strongly represented in this foreign contingent, the vendor says it is bringing new skills to the operation, such as project management.
“The whole reason for this investment [in Dalma] is to give the market something slightly different. So in addition to bringing sales & marketing people to the market we will add technical and implementation skills. We see this as a differentiator in the local market,” says Tim Caulkett, Middle East regional director for JD Edwards.
Lambret argues that these additional skills will be key as the vendor attempts to grow its local market share as, arguably, the ERP battlefield is no longer being fought in the back office but in the realm of extended ERP.
“ERP is much more complex now because it is not just back office because you have customer relationship management (CRM), supply chain management (SCM) and business intelligence (BI). It is very difficult for business partners to have skills in all of these areas so the skills that we will bring to the local market are important,” he says.
In addition to bringing product skills to the local operation, JD Edwards’ international employees will also beef up Dalma’s implementation methodologies and help its end users achieve a more tangible return on investment (ROI).
“We will be rolling out JDE’s global methodologies and tools for project management in the Middle East. In addition, we will bring our value assessment tools to the region to help users get as much benefit as possible from [implementations],” confirms Sfeir.
Although JD Edwards already has a substantial share of the UAE market, Caulkett argues that establishing a base in Dubai, rather than markets where it has been less successful, such as Saudi Arabia, is currently unrealistic.
“One of the reasons we chose Dubai was because of its technology infrastructure. Within the Middle East it is also seen as a leader. Elsewhere in the region there is not quite the infrastructure, so in terms of making this investment now, Dubai is the right place. However, part of my remit is to now look at the Saudi market and see how we can build that. Having a direct presence here will help our partners in Saudi and the other countries in the Middle East,” he says.
The setting up of a local JD Edwards operation will not signal a shift in its target market. Caulkett says the vendor will continue to focus on regional verticals and those industries within each country that are currently investing most heavily in ERP.
“We can’t sell everything to everybody, so we are focusing on the industries that we are currently serving. In the UAE, for instance, that is retail and property management and in Saudi it is [sectors such as] manufacturing,” he says.
Just how much growth the acquisition will provide is unclear. The additional skills brought to the region by JD Edwards’ international team, for instance, may find fallow ground as SCM and BI have yet to really take of in the local market. Caulkett agrees and admits that extended ERP sales are unlikely to soar for the next couple of years.
“In terms of the local market, the new products [such as CRM, SCM and BI] are gaining interest, but we are not quite there yet. These products have a lot of growth potential for the next two years, but in the meantime ERP continue to make up most of our sales,” he says.