Microsoft to appoint sixth LAR in UAE
Software vendor moves to mitigate credit and coverage concerns
Microsoft Gulf is on the cusp of appointing a sixth large account reseller (LAR) for the UAE - only the second time in a decade that it has made adjustments to that aspect of its channel.
However, the decision to increase the number of LARs to six could only prove to be temporary, as the vendor has also indicated it could end ties with an existing partner and move back down to five.
At the moment, the five LARs in the UAE are Alpha Data, Exceed, Itqan, Mideast Data Systems (MDS) Abu Dhabi and Seven Seas.
Their LAR status means they are the only companies in the market authorised by Microsoft to supply large organisations with three-year enterprise agreement (EA) licensing contracts. EA sales contribute around 70% of Microsoft's business in the UAE.
Zaid Abunuwar, SMS&P director at Microsoft Gulf, confirmed the plans to bring a sixth LAR on board and explained the decision was based on a number of factors.
"We need to make sure that we have the right credit capacity, the right coverage and the right customer experience from the existing partners. If any of those three things break or show stress points then we go to the market and say it is time for us to add another one."
Abunuwar claims the number of customers with enterprise agreements had "nearly doubled" during the last two years.
He stressed that Microsoft's philosophy was based on growing with existing partners, but said that recent credit challenges had created a need for it to become extra diligent in how it manages risk and helps its partners to manage risk.
"The LAR business is probably the most stable relationship we have with our partners," he said. "In the last 10 years there has not been a single partner termination from a LAR perspective in the UAE and we have only added one partner in that time."
However, Abunuwar admits that the addition of a new LAR could be followed by the removal of an existing partner from its structure. "We are also considering the potential of going back to five and that is a possibility...we are evaluating that option internally and that is where we are at right now," he said.
The appointment of the sixth LAR is likely to be announced in October or November. Microsoft Gulf is understood to have selected its choice from three candidates that tendered for the contract, but is now waiting for internal financial and compliance checks to be conducted before making the appointment formal.
A senior source at one LAR said that whoever came on board should not expect an easy ride: "One of the major problems with the Microsoft licensing business is that it's low margin and long payment terms. I don't know who would be excited about this."