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www.itp.net JUNE 2010 Vol. 08 Issue. 06

CHANNEL MIDDLE EAST

Building and delivering IT solutions for the Middle East An ITP Technology Publication

INCOME STATUS

The role of the MEA channel in driving virtualisation sales (24)

The secret to creating a winning rebate scheme (36)

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TH

Wi ll ch the an em n e ret els h rgen ail ar c sa m t e of les ra ? ( diti onlin 34 on e al )

BUILDING AND DELIVERING IT SOLUTIONS FOR THE MIDDLE EAST

er authorised v o w o d a h s a imports casts l e ll ra a p in e rg East (30) Su le d id M e th in channels

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VIRTUAL REALITY

UN

OCTOBER 2008 Vol. 06 Issue. 10

OWNERSHIP CHANGE AT COMPUME UAE STME SELLS OUT TO SAUDI INVESTORS WEBSENSE SPLITS FROM FVC SUN CHANNEL CHIEF LOOKS FOR NEW POST

Licensed by Dubai Media City


Channel E/A : Full Page Trim: W=230 mm x H=275 Full Page Type: W=215 mm x H=250 Full Page Bleed W=240 x H=285 mm


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DATA LIST (1) // HEADLINE NEWS FROM THE MIDDLE EAST IT CHANNEL

::

CLASH OF THE APPLE CHANNELS

As IT dealers meet demand for the iPad by sourcing from the US, authorised Apple reseller iStyle urges customers to wait for official launch despite failing to confirm date

CA REVISES MENA MODEL

C

A Arabia has shifted its operating model for the

Middle East to a new strategic

>>

A fierce channel battle is erupting in the Middle East as IT dealers and retailers look to profit from uncertainty over the regional release date of the Apple iPad by importing the product from abroad. Apple has not yet revealed when its exclusive regional

partner ABM will begin holding stocks of the much-awaited tablet, but that has not deterred resellers from sourcing the product from international suppliers. “We don’t want to buy from grey but there is no other choice,” said one reseller. “We have been sourcing iPads from

channels in the US. The other alternative is to wait until later in the year, but that is too late because customers want them now.” Apple has sold more than one million iPads in the US since the device was introduced in April. The product was launched in Australia, Canada, Japan and six European countries on May 28th, but so far there has been no indication of when the iPad will be rolled out in the Middle East. Some retailers believe that the regional launch is likely to take place around October, although sources close to the Apple channel suggest

it will be much sooner than that. However, hopes that the launch could happen in July were recently dashed when the Middle East was not included on a list of territories that will begin receiving iPad stocks from next month. Nine countries were on that list, including Hong Kong and Singapore, although details of availability and local pricing had not been revealed as we went to press. For now, that means Middle East retailers will be forced to import though alternative channels if they wish to sell the iPad. Most firms appear to be - - - > (4)

partnership with the Midis Group (formerly the MDS Group). The new venture, CA MENA, will be the sole representative of CA Technologies in MENA, the Levant and Pakistan. Gilbert Lacroix, senior VP for CA for EMEA, said the switch to a new model would allow it to better address the region after facing difficulties with some of its local partners who were not capable of investing in the range of solutions it was providing. “We had a choice,” said Lacroix. “Do we want to invest in people and actually put people in every country, and make a very intensive investment in dollars and time; or do we want to find one local company or group who can help us to achieve that?”

SHARE CHANGE AT COMPUME New ownership structure in the UAE CompuMe and i2 have finalised a deal that

>> has led to their ownership structure changing in the UAE. Dikran Tchablakian, senior VP of retail at i2 and co-founder of CompuMe, has become the owner of the new organisation after working with Arab Emirates Investment Bank to engineer a management buy-out. He will also serve as CEO. Confirmation of the change in structure marks the latest chapter in the ownership tale of CompuMe UAE. Back in 2005, i2 and

- - - > (7)

The new set-up builds on the

NEW FUNDING SPURS STME

existing, five-year relationship

Takeover will allow company to round out its regional infrastructure offering

between Midis and CA, with

STME’s recent sale to Saudi investment house >> MIC is set to herald its transition to a more rounded

transferring to CA MENA.

IT infrastructure provider, according to a member of the company’s senior management team. Although STME’s roots lie in the storage arena, deputy CEO Jocelyn Al Adwani says the company’s new owners have sanctioned plans to expand its market offering, particularly in terms of professional services and enterprise solutions. And she insists their financial backing gives STME a strong foundation to move forwards. “It is going to give us the strength and the ability to grow in a much more stable manner because they have invested quite a lot of funds and they have a good vision,” she explained. “We are enhancing - - - > (9)

staff has set up its own

the majority of CA Arabia staff A small group of technical operation in Lebanon, which will partner with CA MENA.


// INSIDE THIS ISSUE >>

FRONTLINE

// CONTENTS CHANNEL MIDDLE EAST_JUNE 2010

04_GBM involved in Cisco Capital first

11_Online sales to take retail by storm

04_Divorce for Websense and FVC

11_Redington Value aims high

07_New server buying scheme

11_Aastra rolls out reseller scheme

07_Adobe rings the changes

13_HP Software begins channel push

THE RETAIL RACE

09_Symantec changes track

13_Injazat makes skills claim

09_Xerox signs first product distie

13_Mars mission for Mega Electronics

Vendors and distributors were out in force at this year’s DCC and we asked their opinions on the big topics shaping the market.

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INSIDE INFORMATION

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CONSUMER ELECTRONICS

22_LINKSYS SETS OUT STALL

51_JUMBO BOOSTS SUPPORT

Amanulla Khan, Cisco’s Consumer Products Group chief, discusses the company’s new retail channel strategy

Sony retailer boldly claims that it is redefining customers’ after-sales services expectations with new centre

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PEOPLE

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53_SIX-CORE STRENGTH

Middle East and North Africa channel chief weighing up his options after deciding not to join Oracle

ECS launches new motherboards based on the latest AMD chipsets

47_RETAIL KIOSK VENTURE

MSI announces roll-out of GT660 gaming laptop across the region

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BUSINESS INSIGHT

VIRTUAL REALITY The adoption of virtualisation solutions in the Middle East might be slow, but the channel has a key role to play in bolstering sales.

53_ONE FOR THE ROAD

(21)

49_NOKIA HOLDS OFF RIVALS Handset vendor records 16% rise in shipments during the first three months of year to maintain position

(24)

PRODUCTS

47_HAUBERTIN LEAVES SUN

Khalid Abuayyash launches own company after leaving Promate

(16)

>>

(30) SHADES OF GREY The flow of product outside a designated territory can create havoc for official channels if it is not properly controlled by vendors.

TOUCH OF GENIUS

Peripherals vendor details retail sales-out programme

(36)

49_NANJGEL GAINS ISO BADGES IT solutions provider meets high standards for security management

(14) >>

INCOME STATUS A well-run rebate scheme can do wonders for a vendor’s sales figures, not to mention supplement basic product margins.

EDITOR’S NOTES

iStyle’s iPad plea looks like an act of desperation

(45)

EXPERT’S VIEW

Why SAP could be following in rival Oracle’s footsteps

>>

(54) MARKET EVENTS >>

Update your calendar

(43) (15 )) 115 .... .. ...

(56) GET TO KNOW {}

Shaheen Haque, Interactive Intelligence

FACT FILE

BI software emerges as a solid area for channel to invest in after 4% annual rise

_www.itp.net_


// CHANNEL MIDDLE EAST_JUNE 2010

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FRONT LINE (4)

< - - - (1) buying from the US, with one even admitting that it has purchased units from airline cabin crew contacts that have brought back small quantities of the product during trips to the US. With no official local pricing, however, retailers are having to set their own price points for the various models they procure. Speaking on condition of anonymity, one Kuwaiti retailer claimed it was only selling the iPad for a small mark-up, but insisted it was important to stock the product to meet customer expectations and increase footfall. In the UAE, one technology retailer insisted iPad margins were offering strong double-digit margins despite a fierce price war, but said it was proving difficult to

get hold of the new 3G models. While multi-brand retailers are scrambling to take advantage of initial consumer appetite, one company that has not been able to cash in on the boom is prominent Apple dealer iStyle. It belongs to MDS, the same group as Apple distributor ABM, and is urging customers “to be patient and wait for the official launch of the iPad” in the region. iStyle is refusing to help Middle East customers that require support for iPads which they have sourced from outside the region and admits it has already turned away customers that have approached it with issues. iStyle insists it cannot service units purchased from “grey marketers” and will only be able to

assist customers with iPads sold in its outlets, although it was not able to give details of a launch date. “While we understand consumers’ desire to purchase an iPad ahead of the official launch, we want to make sure that they understand that the help, support and assistance that they are used to receiving from iStyle will not be available to them if they have not purchased their iPad from our store,” said Hani Nehme, business development manager at iStyle. “We strongly urge consumers who have not yet purchased an iPad to wait until their official Middle East launch in order to benefit from the ongoing aftercare that is a key component in what makes Apple such a popular premium brand,” said Nehme.

GBM THE PARTNER FOR FIRST CISCO CAPITAL DEAL Solutions provider to purchase Cisco services and provide network support for Emirates Group

G

ulf Business Machines (GBM) has played a central role in the signing of the first Cisco deal financed through Cisco Capital. Travel firm Emirates Group recently put pen to paper on a three-year contract that will see it purchase network support and optimisation services. The agreement is financed by Cisco Capital UAE — which launched in the region last year — and will be fulfilled by GBM. The 700-strong solutions provider is one of Cisco’s largest resellers in the region, retaining Gold status within its channel programme and serving as a Cisco Learning Partner.

>>

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Emirates Group will work with GBM to purchase the services and work closely with Cisco to deliver the services and support its infrastructure. Cisco claims the deal represents a “milestone” for its UAE business as the Emirates Group is one of the first regional companies to utililse the additional resources that it offers beyond products and basic maintenance services. “The Cisco Capital financing for Emirates Group marks a major step forward in the way Cisco does business with organisations in the UAE as we increasingly seek innovative new business

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solutions to meet the everchanging needs of our customers,” said Wayne Hull, general manager of Cisco’s UAE operation. “As a result of this, we will be able to build on the existing agreement for future projects and solutions, enabling the Emirates Group to proceed with future projects jointly with Cisco,” he added. Cisco Capital provides end-user financing, such as leases and loans for all Cisco products. The facilities are designed to complement the regional channel financing it offers.

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Wayne Hull says the Emirates Group deal is an important step in the way Cisco serves customers

DIVORCE FOR WEBSENSE AND FVC KSA partnership brought to a close after eight months

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nternet security vendor Websense and its distributor FVC have called time on their alliance in Saudi Arabia less than eight months after describing their pact as a “win-win” partnership for both companies. FVC won the rights to distribute Websense’s security solutions in KSA in mid-October last year. Stephen Grey, Websense’s regional boss, said at the time: “FVC is a great fit for Websense because it has excellent business and technical skills, strong geographical coverage and established relationships with resellers within the Kingdom of Saudi Arabia.” However, Dharmendra Parmar, general manager of marketing at FVC, confirmed there had been changes to the relationship and that the decision to split was mutual. He said the distributor now planned to focus on similar solutions offered by its existing vendor partners, rather than sign a replacement for Websense. “Several of our vendors like Barracuda and Google, who have been our valuable partners for a considerable amount of time, are delivering new products and enhancements in the same field,” explained Parmar (below). Websense’s strategy for KSA remains unclear. The company did not respond to requests for clarification of the situation.


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FRONT LINE (7)

< - - - (1) Tchablakian acquired the UAE operations of CompuMe from CompuMe British Virgin Islands through a 60-40 partnership. At the end of 2006 the pair began negotiations on a share-swap deal that would see the i2 Group acquire CompuMe. That particular agreement was finalised in January 2007, with i2 vowing to spend US$35m on developing 150 new multi-concept stores. However, after running into difficulties last year i2 has been selling off its operations in various markets, which prompted Tchablakian to buy both the 60% of CompuMe UAE that it owned and the i2 business in the UAE. Tchablakian says he will continue to use both brands, with CompuMe

:: positioned as a digital IT company and i2 operating as the company’s in-store mobile provider. In addition to those brands, CompuMe UAE has the licence to serve as the ‘concessionaire’ partner for Virgin Megastore in the UAE, Jordan, Egypt, Qatar, Bahrain and Saudi Arabia. Tchablakian believes that the new company is in a strong position to move forward in the market: “As one of the eldest players in the market, we have always been committed towards our clients and partners in the region and we are confident that the new brand will raise the competency level within the industry.” He added: “i2 and CompuMe were well known for their leading IT mega stores in the Middle East that provide an innovative

ADOBE RINGS THE CHANGES

A

dobe has moved to ramp up its distribution

coverage in the region by awarding a MENA contract to Logicom. Channel Middle and extensive range of digital and IT products and services to consumers in the region, and therefore we are expecting that i2 Compume will pave the way for a new era in electronic business solutions in the region.” Tchablakian says he does not want CompuMe to compete directly with bigbox rivals, but instead serve as a “boutique-type” outfit: “We are spending a lot of money on services and staff training. Today the customer wants value when they come to our stores.”

Dikran Tchablakian claims CompuMe is investing in services and staff training

East understands that the design software vendor has also appointed Mindware to address the market in Saudi Arabia. For the last three years Adobe has served the region through Aptec and Grapheast, its long-term distribution partner, so the new appointments represent a major shift in its strategy. In a statement announcing the signing of Logicom, Adobe’s Middle East general manager, Abdallah Saqqa, admitted the company had carried out an evaluation of its channel strategy in the region

NEW SERVER BUYING SCHEME Microsoft and Dell launch OEM reseller option kit with the aim of helping Middle East VARs sell PowerEdge servers

D

ell and Microsoft have unveiled a purchasing initiative that they claim will offer customers of their partners a “more flexible” approach to buying server software and hardware. The Microsoft OEM Reseller Option Kit (ROK) is aimed at VARs wishing to purchase Microsoft’s OEM operating system and Dell’s PowerEdge servers separately. Dell claims that VARs serving SMB customers increasingly want the flexibility to choose the most relevant and cost-effective Windows Server Operating System (OS) option at point of sale. By enabling resellers to buy hardware

and OEM-licensed OS software as separate packages, the need to carry inventory with pre-installed hardware and operating system configurations is reduced. In addition to the benefits of not having to stock inventory for unnecessarily long periods of time, Dell insists VARs will be able to improve their sales efficiency. “Customers today are increasingly interested in technology solutions that offer the most flexibility, best price and highest value so they are better equipped to address pressures from both their internal organisations and their

>>

throughout the last 12 months.

competition,” stated Driss El Ougmani, Dell’s solutions director for EMEA emerging markets. He adds that the initiative will meet all of that criteria, as well as provide benefits to the reseller community in terms of better inventory management and an improved customer experience. Thomas Bauer, Microsoft’s EMEA multi-national accounts general manager, insists the purchasing programme will boost resellers at a time when the channel has a significant role to play in emerging markets. “ROK will enable Dell to better provide the flexible Windows Server-based solutions that their distribution channels require in order to streamline the supply chain process and grow their revenues,” said Bauer.

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He said it was important for the vendor to ensure that it has the “right channels” in place. “During the past year, we have been carefully reviewing our distribution strategy to ensure that we understand the needs of channel partners and customers, and have the ability to deliver products efficiently and effectively across the Middle East and North Africa,” commented Saqqa.

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ADVERTORIAL

ONLINE TOOLS THAT WILL BOOST YOUR BUSINESS! Western Digital now offers a wide range of online resources that are designed to boost your knowledge, simplify support and make you money.

Exclusive offers and promotions

All the info you need in one place

Western Digital offers you the opportunity to join the SelectWD Partner Programme and qualify for access to product training, marketing material and RMA processes via sophisticated online partner tools. These tools will assist you in your dayto-day business, whether you are a distributor, reseller or retailer.

The WDSelect Programme is open to everyone, but you must register on www.selectwd-emea.com. The first level is for Silver partners, which are eligible for multiple promotions every quarter. The programme also has Gold and Platinum categories and these offer access to exclusive product price promotions and rebates on purchases, based on the number of ‘loyalty points’ that are earned through the scheme.

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WD Service and Support is the place to go for any warranty information, product replacement and RMA status checks that you need. At the same time, we offer an online RMA tool, which is a quick and easy way for customers to determine how much warranty is on the drive. And if that isn’t enough, we provide online help with trouble shooting and installation, as well as information about the hasslefree return service offered via collection centres in Dubai, KSA and Egypt.

WD Sales College - our exclusive online training portal - contains all the details and information you need to know about the latest products. It will also help you to maximise your sales opportunities by guiding you on who is likely to purchase the product, what makes the product unique and which features make it stand out in its category. WD Sales College also offers material on emerging product areas, such as Green Power Advanced Technology. And stay tuned, because WD Sales College will launch a certification programme very soon!

More choice than ever before

The best of both worlds The introduction of new online tools will not reduce the direct contact that WD has with you. On the contrary, we have consistently increased our on-theground presence across the region during the last 12 years that we have been based in this market. WD is constantly working towards enhancing its relationship with customers.


// CHANNEL MIDDLE EAST_JUNE 2010

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FRONT LINE (9)

<- - -

(1) the product portfolio and ultimately we will grow across geographies as well. The plan is to grow into more of a full infrastructure provider so we will focus on our strengths for this year and then start to build out by bringing in network and security.” MIC announced the takeover of STME last month after buying the company from its founder and chairman Peter Aubrey. The Kuwait-based business initially started out as the Middle East subsidiary of StorageTek in 1982 before becoming an independent company five years later. Suleiman Al Assaf, CEO of MIC, calls STME a “valuable addition” to its ICT portfolio. “It has a strong regional base and its operational strengths complement our other investments well,” he said.

“ICT remains one of the more buoyant sectors within the crisis and so we expect the acquisition of one of this industry’s key players to generate substantial returns,” he added. MIC has installed Salah Abu Shaar as STME’s CEO and he will pull the strings from Saudi Arabia, which remains the system integrator’s largest market. More accountability also rests with the company’s territory heads following a recent internal reorganisation of its management set-up. “What we have done is restructured the company into regions with their own P&Ls,” explained Al Adwani. “Saudi Arabia is a region on its own, as are all of the Gulf countries. Egypt and Jordan is another region and the fourth one is Pakistan. This gives the

::

XEROX SIGNS FIRST PRODUCT DISTIE recent overhaul of Xerox

A

Emirates’ sales strategy to

initiate more business through the channel has led to Trigon becoming its first authorised area managers the ability to run their region like their own business, but also to be accountable for everything as well. On a functional level they still report to the sales director and the support services director.” With the global recession knocking the enterprise IT market off its feet, Al Adwani admits that STME laid off a number of staff last year to get things “under control”. She says, however, that the 100-strong company has begun hiring again.

products distributor. Jocelyn Al Adwani insists that STME’s recent sale to MIC will give it the strength and ability to grow in a much more stable manner

Xerox Emirates has traditionally served as the printer giant’s lone sales conduit in the UAE, but has recently begun seeking partnerships in a bid to improve end-user coverage. Andrew Hurt, general manager at Xerox Emirates, stated: “Trigon’s experience and presence across the channel, retail and corporate segments complement our existing strategy and they will be an invaluable partner to attaining our vision of being considered for every

SYMANTEC CHANGES TRACK Security software vendor to put focus on specialisations as part of programme update planned for later this year

S

ymantec is following the lead of other international vendors such as HP and Microsoft by tweaking its partner programme to put a firmer emphasis on rewarding resellers for their capabilities and competencies. As part of a series of changes that will come into force towards the end of the year, specialisations that recognise partners with a proven expertise in a particular area of business will become the cornerstone of its programme. Resellers achieve specialisations by meeting certain requirements that deepen their knowledge and proficiency in a solution family.

single business process and

“As specialisations become central to our programme, partners will find even more opportunities to differentiate themselves and deepen their expertise in Symantec solutions and services,” said the firm’s regional channel and alliance manager for the MENA region, Ramzi Itani. “Symantec will deliver several new tools and resources over the next few months to help partners maximise sales opportunities and accelerate profitability in the new model,” he added. The focus on specialisation is one of several enhancements that will come into effect at the end of 2010 as Symantec increases its focus on driving competence in key solution areas and providing partners with more resources, incentives and sales support.

Symantec currently offers specialisations around end-point management, SMB, data loss prevention (DLP), foundational enterprise security and IT compliance, with more areas to follow in the near future. The programme will continue with the existing partner levels, but specialisations will become essential to attaining Registered, Silver, Gold or Platinum status. Specialised partners will have greater access to Symantec sales and technical resources, as well as financial incentives that will help accelerate the sales cycle, according to the security vendor.

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document management opportunity in the market.” For peripherals distributor Trigon, meanwhile, the partnership serves up a chance to offer its customer base access to another brand. COO Arun Chawala insists the distributor will build on the “very strong alliances” that it has created with other brands over the years to strengthen Xerox’s coverage in the region.

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::

AL-FUTTAIM CHIEF PREDICTS THAT ONLINE SALES WILL TAKE RETAIL CHANNEL BY STORM

AASTRA ROLLS OUT RESELLER SCHEME

Recently-appointed CEO warns Middle East channel to ignore global trends at their peril during keynote address at the annual Digital Consumer Channel conference in the UAE

R

obert Willett, the current group CEO of Al-Futtaim and one-time CEO of US retail giant Best Buy, has warned Middle East technology retailers to prepare for a major shift in customer buying behaviour. Traditional ‘bricks and mortar’ retail outlets remain the primary conduit for IT and CE products in the Middle East, but Willett insists retailers only needed to look at other markets to understand they will need to adapt their sales models as competition from emerging online channels increases. Giving the keynote speech at last month’s DCC event, Willett noted: “A key thing that is happening — and happening faster than any of us probably ever realised — is that in the last few years we have seen the advent of the web and

the advent of call centres, and today for the first time the web is growing faster in Europe than it is in the US. And it is growing even faster in parts of Asia.” Willett told retailers that web sales penetration in the global consumer electronics market was “astounding”, with a third of products likely to be bought over the internet within three years. “Those are not my figures, they are figures from various research organisations and the truth is I think they are understated... my view is that by the time we get to 2015 or 2020 we’ll be looking at 30% or 40% [of consumer electronics goods] being bought online.” Willett says that nearly 70% of all products purchased today are “influenced” by the

vendor Aastra has

Programme, which is customised for HP resellers carrying the ProCurve portfolio in the MENA region. Aastra is a founding member of the HP ProCurve Open Network Ecosystem (ONE) Alliance and as a result offers web — even if they are subsequently bought in-store — and he urged retailers to embrace the multi-channel model. “Multi-channel is here and it is here to stay, and it will impact this market place,” he said. “The astonishing thing is that it will probably impact it much quicker than you think because that is what has happened in Europe and certainly North America, and it is happening in China and Asia,” added Willett.

Distributor aiming to make enterprise division a greater chunk of its business by investing in the UAE and KSA edington Gulf’s value distribution division has set itself the target of achieving revenues of US$100m during its current fiscal year, which runs from April to March. The unit believes it can achieve the milestone figure by making a series of additional “investments” in the UAE and Saudi Arabia, its two largest markets in the region. “Over the past four years we have laid down a foundation to

nterprise communications

rolled out the ONE Partner

REDINGTON VALUE AIMS HIGH

R

E

grow Redington Value’s business beyond US$100m and we are confident that we will be able to realise this vision during our current fiscal year,” stated Ramkumar B, general manager of the division at Redington Gulf. “This ambitious goal continues to invigorate us to pursue further enhancements to our business model and current partner relationships, and we are working to implement our game plan that

>>

its MX-ONE Communications

Al-Futtaim CEO Bob Willett believes a multi-channel approach to retail will prevail in future

Manager on the HP ProCurve Services zl module. “In order to make it easy for HP resellers to take advantage of this alliance and be able to offer Aastra’s MX-ONE IP telephony solution and related unified communications applications, we have created this special partner programme,” said Dr. Roger Hage, VP business development at Aastra. Hage says the programme will fast-track new partners, allowing them to start quoting

will entrench our brand deeper in the potential-laden markets of the UAE and KSA,” he said. Redington insists it will supplement its Saudi and UAE push with a number of “massive” campaigns in Qatar and Kuwait. The aim will be to showcase the solutions that it offers around brands such as Avaya, HP ProCurve, Juniper and Red Hat. The India-listed distributor is especially keen to increase its software and security offerings, as well as recruit highly trained personnel for specialised roles within its account management, pre-sales and marketing teams.

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Aastra IP telephony solutions with minimal delay. “The certification process runs in parallel and Aastra guarantees via its value-added distributors that the stringent quality requirements for installation and support are met at all times,” he explained.

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::

HP SOFTWARE TAKES AIM AT MEDIUM-SIZED ENTERPRISE MARKET WITH CHANNEL PUSH

MARS MISSION FOR MEGA ELECTRONICS

PC vendor’s software division forms new unit and lays out details of aggressive initiative that should make the market for mid-sized organisations more accessible to partners

H

P’s software division has unveiled a new initiative to target the US$7.5 billion mediumsized enterprise market. The ten.to.one initiative aims to provide solutions that are tailored to meet the needs of businesses with 1,000 to 10,000 staff, along with support for channel partners to help them reach this segment. The company has formed a new unit within its software business, called Commercial Solutions, to drive the initiative. Jonathan Martin, VP and general manager for Commercial Solutions, says that while there are many players offering software in the so-called MSE segment, HP intends to take the lead by offering solutions that will be quicker and easier to deploy, and

enable companies to deploy and manage their IT infrastructure better. “This new initiative marks the biggest change in our go to market since the inception of [HP] Software,” claimed Martin. “We identified last year a new opportunity, a new segment that we describe as the mid-sized enterprise, that holds a significant new opportunity for us. Our goal is to become the number one in this segment, as we are in the large enterprise, within the next three years.” HP will be offering software from its existing portfolio of more than 100 solutions, which will then be re-priced, repackaged and repositioned to offer a BTO process that is more suited to MSEs. The new initiative will have a major component

D

ubai-based Mega Electronics has struck

an alliance with Bahraini distributor Mars IT as it looks to get its portfolio of IT peripherals in front of customers across the region. Mars has been awarded an authorised distributorship for the company’s IMEGA Plus range of PC hardware products, which it will initially market in that caters to the channel in a bid to faciliate delivery of the solutions. HP expects 90% of the revenues from this sector to come from channel partners. The channel roll-out includes increased training opportunities for partners — bringing them in line with HP’s own sales force in terms of expertise — as well as growth programmes to drive partner business and marketing automation tools to facilitate demand generation activities.

Jonathan Martin says the MSE initiative is the biggest change to HP Software’s strategy yet

Bahrain before attempting to target other countries. Mir Abbas Ali, general manager at Mega Electronics, says the company is committed to providing “world-class IT products” to customers in Bahrain. “Having the support of a leading IT distribution company is a huge vote of confidence for our organisation and we look forward to this partnership continuing for many years to come,” he said. Ali Mohammad Akbar Khan, general manager of Mars IT,

INJAZAT MAKES SKILLS CLAIM IT services specialist insists it now has the most certified infrastructure library service managers in the Middle East

I

njazat Data Systems claims it now holds the distinction of presiding over the highest number of certified IT infrastructure library (ITIL) service managers in the Middle East market after 11 more of its employees were recently awarded the certification. Injazat now has 32 certified ITIL managers on its books following completion of the latest training programme, which was delivered to employees through

the Injazat Institute. ITIL is a set of concepts and standards for managing IT services, IT development and IT operations. The ITIL service managers programme is designed to teach and certify trainees to a high standard so that they are able to apply and manage ITIL processes. Adam Ali, head of service assurance at Injazat, insists the certifications are a ringing endorsement of its skills. “The

>>

latest ITIL programme was a resounding success in terms of the number of passing examinees and the level of scores for both the service delivery and service support exams,” said Ali. “This is a testament to Injazat’s firm commitment to the growth of its personnel and serves as an assurance to our customers that they are being served by highlyskilled subject matter experts.” According to the UAE-based outfit, the success rate of employees that have taken the ITIL training stands at 66%, which it claims outweighs the global industry average of 45%.

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which this year celebrates its 10th anniversary in the market, is adamant that Mega Electronics’ products will be a strong addition to its portfolio. “We believe that addressing our clients’ needs is vital to a successful business relationship,” stated Khan.

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// CHANNEL MIDDLE EAST_JUNE 2010

EDITOR’S NOTES (14) // by Andrew Seymour

SOUR GRAPES OVER APPLE RETAIL SALES iStyle has asked customers to wait for the iPad to be officially launched in the Middle East rather than source it through other channels. That sounds a pretty audacious request to me.

Seagate hopes the decision to slash distribution numbers will improve profitability for its remaining wholesale partners in the region.

Vendors that don’t recognise the changing capacity of the market risk being saddled with an over-stocked channel, which corrodes the value of the franchise for distributors.

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Apple reseller iStyle’s plea for Middle East customers to be patient and wait for the official launch of the iPad in the region looks to me like an act of desperation than a well-meant request on its part. iStyle belongs to the same group as ABM, Apple’s exclusive partner for the Middle East, so until the iPad officially arrives in the Middle East you aren’t going to see it in its stores. I’m sure iStyle bosses must be tearing their hair out as they watch other retailers in the market cashing in on the biggest hit of the year while they’re forced to sit tight until they can formally take stock of the product. The simple fact of the matter is that Middle East customers want access to the device as quickly as any other part of the world. iStyle’s apparent frustration at not being able to exploit that demand — while other retailers find ways of importing the product from alternative sources — just makes them look like the boy found crying in the corner because his lunch has been stolen by the bigger kids. As one UAE retailer said this week: E “ veryone is more or less selling the iPad after importing through their own

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channel. Sales have been quite strong here.” iStyle’s response to seeing customers snap up iPads from other retailers has been to warn them that it will not provide any support or technical assistance they may require. According to a statement issued by the company, it is unable to service any iPads bought through the grey market. I have an issue with that reference to the g‘ rey market’ though, and it’s this: oFr a grey market to even prevail suggests the existence of a legitimate channel in the first place. But that is not the case with iStyle because it is not even selling the iPad yet! iStyle might feel aggrieved at not having the iPad on its shelves, but you have to question whether making ultimatums to customers is really a sensible way to go about things. If it wants to pick fights with anyone then surely it should be Apple. After all, Apple controls who the product is supplied to globally, so if goods are coming into the region when they shouldn’t be then something needs tightening up elsewhere. Such shenanigans don’t surprise me though. I’ve always found the Apple

channel to be an odd one to understand here, what with the eclectic mix of independent retailers and those that share common ownership with ABM. The iStyle-iPad debacle undoubtedly illustrates the way in which market dynamics in the Middle East continue to be shaped by product flow. It also raises questions over retailer policies on warranty and support, which are important factors in fostering customer loyalty. iStyle, for instance, currently claims that it will only be able to assist customers with iPads purchased through its own stores, once they are available of course. If the customer doesn’t have a warranty that is valid in this region I can understand that stance, but does that mean it is prepared to turn away customers that have purchased an iPad elsewhere and simply approach it for advice or nontechnical guidance? It seems we are unlikely to find out the answer to that anytime soon. In the meantime, customers must decide whether it is worth relinquishing iStyle’s aftersales care w ( hich they may or may not need)for the sake of getting their hands on a device without delay.


THE RETAIL RACE

Vendors and distributors with an interest in the Middle East retail channel were out in force at this year’s Digital Consumer Channel (DCC). Channel Middle East stopped by their booths to seek their opinion on the big topics shaping the market.

RETAILERS ARE CONSTANTLY LOOKING FOR WAYS TO INCREASE MARGINS. WHAT ARE YOU DOING TO ASSIST WITH THIS SITUATION? Laszlo Szalontai, Regional Sales Director MEA & CEE, Dicota We are working on our pricing structure — revising the pricing — and focusing on new marketing models as well, such as new point-of-sale material and retail-friendly packaging. We know that if we want to have a successful product then it must be combined with an appealing margin for the retailers as well. On the one hand we have to make a lot of marketing activity to establish Dicota as a valued brand for end-users, but at the same time we have to make the retail channels more interested in selling Dicota products. As well as sufficient margin, the size of the portfolio is also important — you need a wide enough portfolio to cover all the segments to be present in retail.

Bradley Bennett, Middle East Channel Manager, SanDisk We have recently introduced a new pricing structure and new packaging, so we have what we call a netnet model, which allows us to be a lot more competitive at the shop-face, but at the same time react to the market in terms of pricing. And that filters down from us to the retailer to create healthy margins across the board so that everyone is making money and investing in the brand. We changed the pricing strategy to become competitive and to add to the competitiveness of the market. The flash industry is very commoditised, so we felt this new model would give us an edge in the market.

aYsir Al-Kaar, General Manager, Promate Technologies We have a very straightforward view: a retailer has no loyalty to any brands, but to its own GP. That is the way it should be and we tell our retailers that. The retailer does not own the brand;the only brand it owns is its own — which is its name — and so its loyalty should only be with its profit. I believe we offer the highest GP among most of the vendors here today, plus we have our Profit Mate Loyalty Programme, which generates more money based on the business they do. All-in-all, an average % 04to % 05GP goes to the retailer when doing business with Promate.

Tarek Kuzbari, Managing Director Middle East, Kaspersky Retail is about margins, but it is also about turnover and how you move your products. The feedback we are receiving from retailers is that we have a very fast-moving product and this is definitely helping them in order to be able to invest by allocating more shelf space and promoting the brand. We are providing special discounts to partners targeting these retailers in order to give them the ability to provide additional rebates and incentives to the retailers. This is in addition to all the marketing and training they need to create both the push and pull of the products.

(16) // CHANNEL MIDDLE EAST_JUNE 2010_www.itp.net_


IT RETAILERS IN THE MIDDLE EAST FACE SOME ENORMOUS CHALLENGES. WHAT IS THE KEY TO SUCCESS IN THIS SEGMENT?

Abdelkarim Awad, Brand Manager, Grand Stores It is important to follow the market trends, focus on segments witnessing an increase in demand and work on offering the right product at the right time. Being price-oriented is not enough because many products can quickly become mainstream, so you have to keep an eye on the new generation of technology, which may bring more opportunity. In addition, retailers should co-operate more with the suppliers. There are still a lot of formalities and listing procedures which could prevent new technologies from achieving the margins they offer. The longer it takes for such technology to reach the market, the more it loses its USP.

Cizar Abughazaleh, Regional Sales Manager MEA & Turkey, Iomega I believe the market is starting to improve overall and we are actually planning to have more people working in the stores. I think the secret to success is that it is like a recipe and so it is crucial for retailers to make sure that walk-in customers are being converted to actual customers. If 1,000 customers walk in then the more that can be converted into actual customers — and then loyal customers — the more profitable the retailer’s business will be.

Alan Chu, Regional Sales Director, MSI We only started in this market one or two years back so we are still learning about it, but if you talk about other neighbouring markets where we have more experience then one of the strategies that we use is product diversity. In addition, we have other product lines that can help retailers diversify their options and increase additional margins. Our partners play a valuable role by emphasising the sale of high-end products, for example, and we can help them through our marketing activities.

Noor Al Tabbaa, Regional Manager, Memory Technology S KA A strong financial base is important because retail payment terms are challenging. Good stock management is key — not only ensuring the stock is available all the time, but having fresh stock. Customers may look for another source if they don’t find their requirements, and aging stock might mean a bad price. Smart stock management will allow continuous product flow at the right times. An important subject in the Saudi market is logistics services because sometimes the product needs to be delivered to a location more than 050 kilometers away. This requires strong logistics and operation management.

Manoj Thacker, Managing Director, Sky Electronics The key to success in any type of environment is connecting with your people, and for power retail it is connecting with customers who are inside your store. Stores are large so you have to make sure they feel comfortable, like the way you would when a guest visits your home. People connecting with them inside the store also make a lot of difference because people can change their mind when they come to your store. They might end up buying something else or something better than they originally planned — it has been proven that the store can help up-sell the product and so having people to communicate with the customer is an important part of that.

(17) BY ANDREW SEYMOUR & IMAD JAZMATI

// CHANNEL MIDDLE EAST_JUNE 2010 _www.itp.net_


WITH CONSUMERS FINDING NEW SOURCES TO PROCURE PRODUCTS AND ONLINE SALES CHANNELS SPRINGING UP, WHERE DOES THIS LEAVE TRADITIONAL IT RETAILERS?

aJ i Keswani, Sales Manager, Ashley I think that both channels — traditional and online — can work together. The market is huge and the best part of an online site is that you can get updates on the products very quickly. At Ashley we are really interested in the online concept and we have actually started this on our own website, which shows how serious we are. I don’t think the traditional retail channel will see these trends as a big challenge because every day you see a new retailer coming into the market. The entire industry’s eyes are on the retail sector and I am sure you will see many more retailers in the future.

aJ sem Al Roomi, Managing Partner, Buffalo AdvanTec Online is still not well-established in this part of the world. Buying online from other parts of the world, especially IT products, is not really practical because you don’t have the advantage of manufacturer warranties. Taking this into account, you need to have the right products at the right price with the right shopping experience. It is a simple formula and I am sure that consumers appreciate it very much. Regardless of the trends, there is still a big opportunity for the traditional retailers.

aHrrison Albert, Regional Sales Director, D-Link I think the physical stores are here to stay, at least for the next three years, because for an online or e-commerce business to really have an impact on the consumer in this region, the market needs to have very strong consumer protection laws and regulations related to online purchases and return of goods. Right now, consumers are not confident about online purchasing;a lot of people do their research online but they like to feel the product and learn from a sales person in a retail outlet before making a decision.

Sanjeev Gupta, Business Development Director, Razer If you have a good pricing strategy and your prices are uniform then people won’t buy across the markets. We are hearing about the web channels as a threat to retail channels, but I don’t think that is the case. In the broader spectrum of users there will always be some users who would like to buy online and some who prefer to buy through a retailer. The retailer really has to understand the value that it provides, whether that is through its assortment, its solutions or the ease of returns. It has to stock and it has to offer an experience. If you have a clear value you will have customers and business.

Christian Assaf, Channel Sales Manager MEA, Seagate I believe there is an opportunity for both [physical retail and online retail] — u j st look at Europe. There are people who like to go online and choose what they want to buy and others who like to buy the product off the shelf. Our markets haven’t really experienced this kind of online trend — the fear of fraud and using a credit card online seems to be the main concern. o Hwever, I do believe that in other markets retailers do both — they have an online division and they have retail outlets. Traditional retailers in the Middle East have to evolve their model, if not today then certainly in one or two years.

(18) // CHANNEL MIDDLE EAST_JUNE 2010_www.itp.net_


SOLID SALES Genius Computer Technology (GCT) has unveiled details of an innovative new incentive programme to drive sales-out activity for its Genius and Edimax brands by rewarding retail stores for the level of stock they carry and sell. Milad Jabbour, president and CEO of Genius, spoke exclusively to Channel Middle East about how the programme will work. What are the reasons for launching the Power Retail Programme (PRP)?

Is the PRP limited to the UAE, or will you be introducing it elsewhere in the region?

We have been studying the market and looking at new ideas following the financial crisis. Genius products should be acceptable to the market in terms of value, so brand plus price must be very reasonable to the end-user. I believe that now is the right time to increase the business, so we felt that we should focus on making sure that sales-in are managed properly, with more SK Us and higher stock value. Our current stock to sales ratio is more than 05%. This is a very good sign as the information I have from some customers is that the ratio for other brands is around 30% to 35 %.

Right now we want to implement it in the UAE. Within Genius there are two different divisions:export and local. So in the UAE we play the role of a local distributor, like our distributor in aQtar or u Kwait or Egypt or Saudi Arabia. There is no advantage for Genius Computer Technology Dubai at all. There will be a similar pricing structure, information and SK Us elsewhere, the only difference is that we have taken the initiative to build this programme and convince retailers that it will bring them more business.

Is there a limitation to the number of retailers that can join the PRP?

There are five levels to the programme: Base, Silver, Gold, Platinum and Platinum Premier. Is it a case of the more investment you make in Genius products, the more rewards you can expect?

How long will the programme run for?

How will retailers benefit from the new incentive programme? It will be a good index for retailers to understand which product lines can help them increase their profitability. Based on the salesin, this programme will provide them with a number of indoor sales people, a number of promotions and a number of discounts to be able to do the sales-out.

Yes, at the same time as driving sales-out, the programme is designed to reward the retail stores that offer us the most stock value, more SK Us and more space. And they will definitely receive more added value from us.

There are no limitations. It is important to point out that the criteria is per outlet though, not per retailer. So if one retailer has five outlets, it depends on the stock value of each outlet, not the total value of all five. Hypermarkets are also included in this programme. So far we have seen a positive response towards Platinum Premier, so I think weâ&#x20AC;&#x2122;ll have at least 20% of outlets in this category.

It will go for one year and it is renewable, and after three months we will carry out a review. We are making a commitment to the retail stores. If we put in a stock value of AED100,00, for example, and the sales-out do not reach 05% in a certain period then we have to drop the stock value and take back some goods to match the ratio. All that makes the retail stores feel very positive and comfortable. Â&#x201E;

GENIUS POWER RETAIL PROGRAMME - BENEFITS PER CATEGORY Platinum Premier

Platinum

Gold

Silver

Base

> Stock value AED140,000+

> Stock value AED 70,000 AED100,000

> Stock value AED 50,000 AED70,000

> Stock value AED 35,000 AED50,000

> Stock value below AED 35,000

> 2 dedicated indoor sales reps

> 1 dedicated indoor sales rep

> 1 dedicated indoor sales rep

> 2 in-store promotions at any time*

> 1 in-store promotion at any time*

> 1 in-store promotion at any time*

> Exclusive bundle offers twice a year

> Special promotion during forecasted calendar event

> Each promotion runs 15 days

> Promotion period for 15 days

> Promotion period for 15 days

> In-store roadshow

> 20% flat rebate/kickback on all sales out during the period

> 15% flat rebate/kickback on all sales out during the period

> 10% flat rebate/kickback on all sales out during the period

> In-store roadshows

> In-store roadshows

> In-store roadshows

* Not to be planned along with any forecasted calendar event

(21) BY ANDREW SEYMOUR

// CHANNEL MIDDLE EAST_JUNE 2010 _www.itp.net_


// CHANNEL MIDDLE EAST_JUNE 2010

_www.itp.net_

INSIDE INFORMATION (22) // EXPERTS IN THEIR OWN WORDS

LINKSYS BY CISCO SETS OUT ITS STALL The brand that once went by the name Linksys is now better known in the market as ‘Linksys by Cisco’, but more pertinently it has emerged as the lynchpin in its parent company’s home networking product strategy. That has naturally brought about a change in its channel strategy, particularly in the Middle East, where under the leadership of Amanulla Khan, Cisco’s Consumer Products Group is seeking to plough a furrow in the retail market.

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CHANNEL MIDDLE EAST: Your channel model has gone through some considerable re-engineering during the past year. Tell us about that. AMANULLA KHAN: If you go back to the old Linksys days we had an SMB channel structure because we had an SMB portfolio, which was a reasonable portion of our overall business. But although that was the case, we had traditional IT distributors carrying consumer products as well, and through them we were trying to do business in the retail space. With the change in strategy — where we are becoming a consumer-centric organisation — we had to realign our entire channel. CME: So what has that meant for your existing distribution channel? AK: We continue to do business with the traditional IT distributors like Logicom, Track and those kind of companies, and through them we sell into the traditional IT reseller channel, which is a significant business. But if you look at consumer buying behaviour and what is happening in the retail space, more and more consumers are moving to the malls and the power retail channel for their purchases. Obviously that transition in the market place and the transition that has happened in our product portfolio with becoming consumer-centric meant we had to go and recruit partners that can grow our business in the retail space. So we have started to bring in specialist retail distributors. We started that in the UAE by bringing in Eros Electricals as our retail-focused distributor at the end of last year.

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CME: So what does a ‘retail-focused’ distributor such as Eros Electricals bring to the table? AK: Number one, they understand the retail business because they only do business in the retail space. Retail requires a different DNA and that is what they have. They have contracts with 99% of the retailers in the UAE, so they have the relationship, existing business and presence in all of those retailers, which is a good headstart. When we brought Eros onboard we were present with about 16 or 17 retailers in the UAE. By the end of our fiscal year in July we will be present in close to 100 stores in the UAE. CME: Is one retail-focused distributor sufficient for a market like the UAE? AK: For the UAE we will look to rely on Eros and that is our strategy as of today, but our market is a dynamic place so it might change as we move forward. We are looking at having a similar set-up in a few other major markets, such as Kuwait and Qatar. In the major markets we definitely believe that we need to have specialist retail distributors. CME: Are there any markets where distributors could play a dual role? AK: In Saudi Arabia we have used Al Jammaz as a distributor for both the resellers and the retailers. The reason for that is we believe Al Jammaz has got a significant presence in the retail space and a strong relationship with the majority of retailers, and it offers complementary products. That is an existing set-up we want to use. CME: What investments are you making in the retail channel?

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AK: When we got Eros Electricals onboard we looked at the cost model and decided we wanted to invest in merchandisers. In all our major stores — and you need to understand that each retailer might have multiple major stores — we have a fully trained merchandiser dedicated to the home networking business. We have close to 24 merchandisers in the UAE today and we expect to grow that number. CME: What kind of role do these merchandisers play? Is it purely as an in-store sales resource? AK: These merchandisers are fully trained and fully equipped to give the right information to the consumer to be able to make the right purchasing decision. We are not trying to push a product — the objective of the merchandisers is to educate the customer so they are able to make the right decision. At the same time, we are also making sure that we invest in the point of sale; ensuring the product is wellpresented in the retail stores and visibly positioned. We have also invested in a dedicated channel manager resource whose only job is to manage the retail accounts. This is an additional resource that we brought in place this year which we did not have before. CME: How significant is the role of the retail channel manager? AK: This person’s job is to help the retailer with in-store activities, making sure that they understand the complete category management and that they understand we can manage the inventory for them to ensure they are not overstuffed.


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VIRTUAL REALITY The adoption of virtualisation solutions in the Middle East might be slow, but resellers are playing an increasingly strategic role in ensuring this emerging technology area starts to fulfill its potential.

(24) // CHANNEL MIDDLE EAST_JUNE 2010_www.itp.net_


irtualisation is one of the most talkedabout technologies on the enterprise scene, but as is so often the case, discussion and hype are taking a while to materialise into substantial sales in the Middle East. This could change quickly. Gartner says the global virtualisation software market alone is growing at 28% annually, and will be worth US$6.2 billion by 2013. And as multinational customers drive that momentum into the region, the Middle East channel has a great opportunity to capitalise on rising interest in the cost benefits of virtualised desktop and server environments, much of it driven by the explosion of open source software. “Virtualisation is still in its nascent stages but this is not to say that the market is far behind that of other regions such as Europe or the US,” says Lindsey McDonald, consultant for the information and communication technologies practice at market analyst Frost & Sullivan Middle East and North Africa. “There are probably many companies that are already using elements of virtualisation of which they are not aware, such as cloud computing applications like Gmail. The main driver of adoption in the market is the financial services industry, followed by the education and healthcare sectors.” Client education is likely to be the vendors’ main push over the next 18 months, which means the channel — resellers and managed service providers — has an important role to play in actually making the virtualisation market. As customers continue to tighten their purse strings, McDonald says the economic attractions of virtualisation will also give channel players plenty of leverage. Server and software vendors have been building up their channels’ resources in preparation for this anticipated upturn in demand. At Fujitsu, product manager Chandan Mehta says that most partners are already capable, or are in the process of upgrading their virtualisation technical and sales skills. “In terms of technology, we are looking at enhancing these skills as an investment from the partner,” he explains. “Additionally, we are also encouraging partners to invest in some demo units to show proof of concept (POC) to customers in a real life scenario.” Reseller Alpha Data, which works with VMWare, Microsoft and Red Hat in the region, has already noted an encouraging enthusiasm

for virtualisation in the SMB sector. Enterprise Computing Systems business unit head Gigi George says that with this potential for growth, resellers must invest in the appropriate training for their engineers and sales personnel; clients will buy into virtualisation if they understand the TCO and ROI benefits. “Partners need to have the necessary infrastructure to do POC for the customer,” says George. “We have already invested in these areas over the last five years and have a number of trained and well-experienced staff on board. “While virtualisation solutions are primarily aimed at the enterprise network, we are seeing an interest in the SMB sector too.

We expect the rate of adoption to increase as the technology matures, and more players like Microsoft come out with products As information on the advantages of virtualisation spreads within the area, this new technology is appealing to a region that is spread out and diverse in its needs. Virtualisation is particularly beneficial for remote branch offices or a sales force that is constantly on the move. It is also of interest to the service sector, allowing for immediate response and immediate access to resources.”

> Mustafa Kaddoura,SmartWorld

> Chandan Mehta, Fujitsu

V

Server virtualisation sales cycles can be surprisingly short — as little as one month — once the customer is engaged, although desktop virtualisation sales cycles may take up to three months as resellers get up to speed with the benefits. Regional events like Citrix’s Channel Summit, which toured around Jeddah, Dubai, Bahrain and Riyadh in May, will help to fast track their knowledge of the issues and skills involved — and the essential business benefits they will need to demonstrate to the customer. “Although it is still a relatively new market, enterprises are fast realising the potential of implementing desktop virtualisation, whether it be simply streaming virtualised applications or introducing hosted virtual desktops to enhance organisational efficiency and drive down costs,” says Antoine Aguado, regional director at Citrix Middle East. “This is against a backdrop where globalisation, outsourcing and increased mobility are decentralising business processes. Yet shrinking IT budgets and increasing IT accountability for information security and service-level agreements underscore the need for centralisation. It is clear that IT system complexity hinders business agility and resilience — critical success factors in today’s businesses. Thus the need for simplified management systems is a key driver for desktop virtualisation.”

(25) BY PIERS FORD

// CHANNEL MIDDLE EAST_JUNE 2010 _www.itp.net_


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training and certification in the various key players in this segment will be able to offer their customers additional services, including support, POC and so on,” says Gigi George at Alpha Data. “In addition, there are revenues to be made on the potential infrastructure sales associated with a virtualisation solution, like other hardware and software.”

Limited customer knowledge at this level should play into resellers’ hands — as long as they have the right service and support frameworks Channel players also need to decide on their own virtualisation strategy, and how far they actually want to take it, according to SmartWorld’s Kaddoura. “Will they stop at the infrastructure, or go up the value chain and venture into providing other cloud offerings in a virtual environment — like PaaS, MaaS or Saas?” he asks. There is a general consensus that virtualisation will take a greater hold in the Middle East during the next 12 months. As a technology, it is primed to help organisations make better use of their existing infrastructures, something that definitely chimes with the times.

> Lindsey McDonald, Frost & Sullivan

> Pantelis Verginadis, interFRONTIERS

At InterFRONTIERS, NEC’s business development unit for SEMEA, technical sales consultant Pantelis Verginadis notes an increase in customer questions about PC virtualisation. In these cases, he suggests, there is less need to identify a particular type of customer. Rather, the focus should be on PC usage and a good understanding of the client’s PC management strategy. Key triggers for PC virtualisation include Windows 7 migration, desktop hardware replacement, security and compliance issues, PC management costs, merger and acquisition, and remote workers in their home offices. “One trend we see is an increase in the rate of adoption of virtualisation for servers,” he says. “The other trend we have started to see is the adoption of virtualisation for the desktop. Up until now, companies virtualised their servers to make the most out of their hardware. But they have started to see that virtual desktop infrastructure (VDI) solutions can have a great impact and reduce the headaches that traditional PC management — especially in large numbers — can encumber an organisation with.” One thing resellers need to be careful about is pitching virtualisation as a general solution rather than the answer to a specific business or IT challenge. Mustafa Kaddoura, CTO at Dubai-based ICT services provider SmartWorld, says that from the client perspective, investing in virtualisation is not a straightforward activity. “It’s a very broad term and needs to be narrowed down to specific requirements,” he says. “Virtualisation can be done on different levels: LANs, SANs, firewalls, VPNs, hosted intrusion detection systems, servers, applications. Application virtualisation, for example, doesn’t necessarily need infrastructure virtualisation, and vice versa.” Limited customer knowledge at this level should play into resellers’ hands — as long as they have the service and support frameworks in place to deliver credible added value. And that will mean healthier margins. “Channel players can increase the amount of margin they make on virtualisation sales by offering managed services, effective product bundling and optimisation of client infrastructure,” says Frost & Sullivan’s McDonald. “In selling virtualisation solutions, partners that have invested in additional resources like

“There is no doubt that server virtualisation will be getting momentum in the next couple of years in the Middle East market,” says Kaddoura. “There will be a lot of push on hardware consolidation and optimisation. We will see the introduction of bigger machines that will require more processing power and higher memory capacity.” “Virtualisation is still largely limited to enterprises, and we find that progressive enterprises or companies battling space constraints, performance or power issues [currently] invest in it,” says Mehta. “Enterprises today run on a mixed environment of virtual and physical. We expect to see an increase in [the adoption] of several of our products that enable a common management and resource orchestration between virtual and physical servers.” But while Mehta says adoption remains sluggish at SMB level, other players expect to see a rise in demand for desktop virtualisation. “Virtualisation solutions will definitely gain momentum in the Middle East over the coming year, especially as customers look for better utilisation of their existing infrastructure investments,” says Alpha Data’s George. “We also believe that although most customers are looking at server virtualisation, desktop virtualisation will become more important in the coming year.” „

(27) // CHANNEL MIDDLE EAST_JUNE 2010 _www.itp.net_


The buying and selling of products outside of a designated territory can create havoc for authorised channels, but just how seriously are vendors taking the matter in the Middle East? Channel Middle East brought together a handful of the top product suppliers in the region to find out how they are addressing parallel importing and whether the grey market can ever be positive for the channel.

(30) // CHANNEL MIDDLE EAST_JUNE 2010 _www.itp.net_


There are suggestions in the channel that grey market activity is actually getting worse in the Middle East. What are the reasons for this? YOUSSEF EL ARIF: We do believe it is becoming increasingly ‘active’ in this part of the world. Resellers are always eager to have this technology here as early as possible to offer the market, however by the time the technology reaches our region the market is almost served. This is one of the main reasons for grey market activity. Moreover, resellers are able to receive enhanced deals from sellers abroad due to lower costs. Sellers enjoy low margin sales since they have a lower OPEX when they sell to the unauthorised regions. They do not have local presence and after-sales support because they do not invest in those markets with resources and money. They simply achieve quick and easy deals, which is, of course, appealing to the buyer. KHWAJA SAIFUDDIN: Grey market sales are no longer limited to China. All manufacturers have to compete with grey market players as they expand into emerging markets in Asia-Pacific, Eastern Europe, the Middle East and Latin America. Grey market sales actually take place only when there is room left by the authorised distributors for grey players to come in and fulfill market

> Felix Baretto, LG

We spoke to: Youssef El Arif, national account manager at Belkin MEA; Felix Baretto, business manager of the PC division at LG Electronics; KV Narayanan, channel manager at HP Middle East; Khwaja Saifuddin, director sales MEA and South Asia at Western Digital; Nader Redjeb, sales manager MENA at Foxconn; Shashank Sharma, sales director for the Middle East and Africa at Packard Bell; and Dan Smith, general manager for integrated marketing for the Middle East and Africa region of Xerox’s developing marketing operations.

demand. Where there is a lack of availability of genuine products, price disparity or the product is significantly cheaper in other parts of the world, grey markets are usually found to be actively operating. FELIX BARETTO: Market dynamics have changed a lot in the few years where accessibility across the globe to any product can be availed by paying in cash. The economic conditions that have prevailed over the last year have put stress on global players to look out for new avenues to move their stocks for liquidation. NADER REDJEB: The major reason is the pressure of the target and the market share. Every sales person is facing this challenge daily. He might not be able to make an aggressive offer based on a killer price to his market because he needs to keep the price level for the coming months, but he doesn’t care about the other regions where he can play this game. On the other side, the distributor is looking to make a profit as fast as possible, and in the absence of any control or aggressive rebate plan from the vendor it will not hesitate to purchase grey goods. SHASHANK SHARMA: Grey activities could increase when there are price or supply discrepancies between countries. Due to this,

opportunistic traders can see opportunities to indulge in grey imports. It is up to the brands to be consistent and maintain a balance. What steps have you taken in the past year to address the issue of grey marketing in the Middle East? KV NARAYANAN: Over the past year, HP Middle East has taken several major steps in order to address the issue of grey marketing. Firstly, serial number tracking and retention of serial numbers for a period of two years is a mandatory clause in all HP contracts. HP Middle East has also employed severe loss penalties and termination of contracts for those found engaging in grey market activity. Finally, we have ensured that we have a local presence in every country within the region, and have also built the capability to drop ship products in countries, ensuring local availability, uniform pricing and service centres. Each of these steps has contributed to a reduction in grey marketing in the Middle East. NADER REDJEB: The first thing to do is a loyalty plan and this has to focus on the profit base. We have to convince our distributors of the value of the official market; that the support and the after-sales service are more important than even a 20% difference on the grey market price. We add our aggressive

(31) BY ANDREW SEYMOUR

// CHANNEL MIDDLE EAST_JUNE 2010 _www.itp.net_


DAN SMITH: Xerox has a series of compliance officers who work with our partners to ensure that counterfeit and grey market consumables are identified and then appropriate action is taken. There is a route for our partners to contact these officers and work with them to protect customers from the poor level of quality and service that comes with grey or counterfeit. In addition, Xerox works closely with law enforcement officials, such as

> Nader Redjeb, Foxconn

> KV Narayanan, HP

rebate plan to that and if the distributor will think on the long term then it definitely won’t turn to the grey market. We have to educate the distributor.

customs and excise, as well as legal counsel internationally to investigate any developments in the grey and black market. YOUSSEF EL ARIF: At Belkin we are continuously expanding our presence in the region to have our products widely available in different countries and offered by locally-based distributors. We have succeeded in various key markets and are proactively working to fulfill this task in other markets. Also, we are customising benefits for resellers in the respective countries to make it very attractive for them and to ensure they do not get lured into buying from unauthorised sellers.

SHASHANK SHARMA: At Packard Bell we want to be as consistent as possible in supply and pricing, and this is the best way to address the issue of grey products in the Middle East. We also do not want to dump any one country with more supplies than required, which could create pressures. To what extent does pricing play a role in either encouraging or preventing grey market activity? DAN SMITH: It is the key. A fair and balanced price around the world, secured with a currency-specific buffer should prevent this

GREY IMPORTS: A US$58 BILLION A YEAR INDUSTRY The industry might like to make out that it has the issue of parallel importing firmly under control, but studies commissioned by the Alliance for Gray Market and Counterfeit Abatement (AGMA) suggest that manufacturers are losing up to US$10 billion in profits annually to the grey market. In fact, at the last count, as much as US$58 billion worth of technology products were thought to pass through the grey market each year, a figure that has increased by US$18 billion in the last eight years. At its quarterly global member meeting at Cisco’s HQ in April, AGMA revealed the latest results of a grey market survey conducted with PwC. The survey identified the following errors or frauds which most contribute to grey market activities, according to AGMA members:

-

Misreported customer names in incentive claims Data errors from channel partners Non-existent transactions Sales or inventory timing difference Data errors from manufacturers/OEMs

“These study findings should serve as a wake-up call to all in the technology sector,” said AGMA president Ram Manchi. “Clearly, there is much more work to be done to educate manufacturers, channel partners and consumers about the issue of grey market fraud — as well as what can be done to lessen its impact.”

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SHASHANK SHARMA: Pricing plays a part, for sure. But the difference has to be big enough for the traders to do transactions and make money. If there is only a small difference there may not be enough bandwidth for the traders to do grey. KHWAJA SAIFUDDIN: In our opinion, pricing represents one of the main reasons behind all major grey market activity and since we believe that the grey market is caused by different pricing among regional markets we follow a very flat pricing structure on a global level, whereby each region is equally priced and delivered to. FELIX BARETTO: Pricing is one of the elements that contribute to the grey market, but there are various situations that can lead to it, such as the need for fast cash or to take a risk in an outside market for penetration reasons. Grey market activity may also be caused by a company wanting to have no after-

(34) // CHANNEL MIDDLE EAST_JUNE 2010 _www.itp.net_

> Youssef El-Arif, Belkin

> Shashank Sharma, Packard Bell

type of activity. While grey market activity has a number of causes, such as product availability and channel integration, its root is generally associated with large price differentials between markets.

sales service concerns or because it has excess stock availability. Have you ever taken action against a grey marketer? What sort of punishment can be administered? NADER REDJEB: This issue can happen every day, so we deal with it on a case to case basis. KHWAJA SAIFUDDIN: It happened a long time ago and we were able to immediately control the damage with a very strict warning to the source. KV NARAYANAN: HP Middle East has taken action in the past, whereby we have blacklisted resellers in the region and active communication has been relayed to the market. In addition, financial rewards associated with HPâ&#x20AC;&#x2122;s partner programme have been removed from these partners. FELIX BARETTO: In terms of the action taken, there has been blacklisting and stoppage for future supply. The source through which the company gets the products would also get in trouble for its act and jeopardise its future supply of products.

Are there any situations in which the grey market can ever be good for the channel? FELIX BARETTO: From a channel perspective, if there is no presence for a product in a particular territory then such an influx can help the product develop and penetrate, gaining market share. KV NARAYANAN: The grey market is not the solution if the channel wishes to make a positive impact on the region. There are other ways through which there can be a lot of positive work generated to ensure that there is a proper product reach to the consumer. YOUSSEF EL ARIF: In cases where the brand is not really represented in the market, the grey market can create demand among resellers and end-users. This may offer a chance for an authorised distribution structure to serve this demand. DAN SMITH: Xerox is committed to offering our partners a valid and long-term business model, as well as ensuring end-customer satisfaction. To this end we do not envisage that the grey market can be positive. Â&#x201E;


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A well-run rebate programme can do wonders for a vendorâ&#x20AC;&#x2122;s sales figures, not to mention provide its channel partners with additional income to supplement the revenue earned from ordinary resell margin. It is therefore in both partiesâ&#x20AC;&#x2122; interests to ensure that financial incentive schemes are implemented in a clear and compelling manner.

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> John Maliakal, Toshiba

ven with the best product or marketing strategy in the world, vendors still need to offer a compelling rebate model to motivate their sales channels and foster loyalty among partners. If anything, rebate policies now play more of a significant role than ever before in some market segments, due to the challenges that the channel faces in generating a satisfactory return on transactional margins. But developing a rebate system that achieves what it is supposed to without opening itself up to exploitation is rarely an easy task. Changes in price points, technology and general market trends mean vendors must constantly evaluate the relevance and success of the incentive programmes they operate. For most vendors, there are specific objectives that they expect to achieve from a rebate programme. In more instances than not it is usually a way of driving incremental business and earning loyalties from the partner. As well as playing an important role in encouraging partner loyalty, rebates keep them interested in winning new business. Khwaja Saifuddin, director sales MEA and South Asia at Western Digital, is adamant that an effective rebate programme will quickly prove itself to be a vital cog in the channel sales wheel. “These schemes encourage our partners to develop strong relationships with us as they benefit from having special rebates

E

Rebates are one of the channel tools we use to create the loyalty and the demand that we need to succeed in this market and preferential prices that allow them to grow their business,” he says. “In essence, these schemes offer a two-way support system. Retailers strengthen their business and in turn we help them increase profits.” While there was a tendency in the past for vendors to implement rebate programmes that were largely vanilla-flavoured and quite obviously lifted from the US or Europe, there is now an acknowledgement that such schemes need to be developed and structured locally to work best. Only recently, printer vendor Epson revealed that its dealers would be compensated for the volumes they do, taking into account differences in market size across the region. “Targets for the UAE and KSA markets vary from US$10,000 for Bronze partners to US$300,000 for Platinum partners, except the supplies category which ends at US$200,000,” explained Middle East channel manager Ahmad Qasem. “In return, the incentives percentage and structure varies according to partnership category, and goes from 1% up to 8%. This is an aggressive percentage and I

think it even exceeds what partners make on the upfront margins.” Hard drive vendor Seagate has created several initiatives specific to the Middle East region in order to make it more compelling for local partners. “We have different programmes per country, per customer type and customer size,” explains Ayman Al-Ajouz, channel sales manager for the GCC at Seagate. “They are mainly based on a set sales target and a rebate percentage given accordingly. Overachievements are rewarded with a higher rebate percentage. We always make sure that the targets set are reasonable, achievable and co-ordinated with the customer.” Storage networking vendor Brocade is one company that believes a channel rebate model will help its fortunes in the Middle East. It has just embarked on its first ever half-year rebate programme and insists feedback has been encouraging. It now plans to refresh the programme every six months. “Partners stay interested when they see additional margins come in the form of rebates,” says Ali Ahmar, regional sales manager MENA at Brocade. Like many vendors, Brocade’s rebate programme is by invitation only. In its case, rebates are pre-defined before the start of the qualifying period and shared with selected partners only. During the period that has just ended, all but one of the participating partners achieved their targets. “There is no cap on

(37) BY ANDREW SEYMOUR

// CHANNEL MIDDLE EAST_JUNE 2010 _www.itp.net_


> Ali Ahmar, Brocade

over-achieving the set targets, but they have to achieve 100% as a minimum to benefit from this programme,” says Ahmar. Over at WD, a strong degree of localisation has been taking place for some time as far as the company’s incentive programmes are concerned. It runs the SelectWD Partner Programme for internal drives and the Volume Incentive Rebate Programme for external drives, giving partners the choice of taking part in either or both of the programmes. Saifuddin says that through these programmes partners benefit from different pay-out

schemes. “We refresh these programmes every quarter and try to be as innovative as possible based on different criteria like partner feedback, demand, market conditions and the previous quarter’s results.” Mobile PC vendor Toshiba also believes that rebate programmes need to be modified quarterly to stay in tune with market developments and keep resellers inspired. It has not made any structural changes to its own programme since it started, but it is looking to widen it to focus more on partner loyalty. “Toshiba’s partner and rebate schemes work

together to achieve both quantitative and qualitative objectives that are derived based on the understanding of the market and of the customer,” says John Maliakal, country manager for Saudi Arabia and Libya at Toshiba. “Further qualitative objectives are added to ensure a healthy business.” The widespread deployment of rebate programmes in the IT channel has naturally raised the question of whether such schemes have become more financially important to partners than the transactional margin itself. Brocade’s Ahmar refuses to accept that this is

WHY IT PAYS TO KEEP THE REBATE RULES SIMPLE Rebate schemes have got to inspire and compensate partners, but one thing they can’t be is over-complex. Unless the programme is clear and consistent for both the vendor and the partner, the risk of running into problems remains high. John Maliakal, at Toshiba, says the PC vendor qualifies partners before they join its programme and attempts to make the goals clear from day one. T “argets and rewards are assigned depending on the channel partner’s category, which is based on volume and channel-spread among other things. Once the category is determined, the terms and conditions are set out straight, and they are associated with the product that the partners sell.” WD’s h Kwaja Saifuddin agrees that transparency is the key to ensuring that a rebate scheme doesn’t become over-complicated. He says every programme and manual is best when it is made as simple as possible.

W “ e tend to keep the Ts and Cs as minimal as possible, but ensure they cover all aspects of conducting healthy legal business practices,”he says. I“t is also important to have gatekeepers in any incentive programme to ensure the partners who are regular and committed are rewarded. These programmes are not meant to reward opportunists.” Most vendors agree that incentive programmes can reward partners for both value and volume. Again, keeping the rules of engagement clear should prevent partners from feeling that a programme might be too complex to part of. O “ ur rebate schemes contain a variety of elements that are tailored to our partners’ individual needs,”says Dan Smith at eXrox. I“t is not a question of complexity. It is about giving the reseller the right tools to benefit their business. Involving the reseller in the rebate process eliminates complications as they are engaged from the outset.”

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> Ayman Al-Ajouz, Seagate

> Ahmad Qasem, Epson

the case, however, arguing that both are equally important. “Front-end margins help the execution of the deal, but rebates add to the margins at the end of the rebate period by achieving pre-set targets, which maintains the interest of partners throughout,” he says. While that may be the case, there is always the danger that resellers may be tempted to use the rebates they accrue to discount enduser pricing. Brocade insists the terms of payment that its rebate programme is pegged to prevent this from happening. “The rebate is paid at the end of the tenure of the scheme, which is a six-month programme, and the resellers are not sure whether they will be able to achieve the pre-set quota to earn the rebates. So this prevents the resellers from discounting the end-user prices,” explains Ahmar. Seagate’s Al-Ajouz says his company seeks to discourage partners from using rebates to discount prices by doing three things: creating long-term relationships so that partners can build a sustainable business; offering the right margins to maintain profitability; and providing support with marketing activities to create demand in the end-user market. “Our aim is to build a long-term relationship with our partners and these rebates are one of the tools we use to create the loyalty and the demand that we need to succeed in this market,” explains Al-Ajouz.

Xerox declines to cite any specific examples of steps it is taking to ensure resellers don’t use their rebates to cut street prices, but instead puts the onus on the channel to ensure that the rules are kept to. “While it is difficult to legislate against this behaviour, we believe that the longer term benefits of this partnership with us far outweigh any benefits that may be gained short term,” says Dan Smith, general manager for integrated marketing for the MEA region of Xerox’s developing marketing operations.

If vendors set targets that are too high then partners can suddenly find that hitting their numbers becomes impossible As the majority of channel rebate schemes are linked to partners meeting sales targets, the lack of market visibility during the past year has created its own issues for vendors because it has made forecasting difficult. If vendors under-estimate the market capacity they risk losing out on sales, but if they set targets that are too high then partners can suddenly find that hitting their numbers becomes impossible. Seagate was one of the first vendors to realign its distribution structure in response to

the slowing market conditions last year and Al-Ajouz insists the company has also done due diligence on its rebate schemes. “There are fixed and visible indicators that we base our forecasts on, such as market trends, total available market (TAM) size and the partners’ share of Seagate’s sales,” he reveals. “Accordingly, we discuss and agree with the customer the reasonable target to be set. This is how we build our market visibility.” Its thought that some vendors in the volume sector have responded to the uncertain market conditions by readjusting their programmes so that sales targets are either less aggressive or are structured on more of an incremental basis so that partners can better predict how much they are going to make. Brocade’s policy, according to Ali Ahmar, has been to evaluate business over a current period rather than setting targets speculatively. “We have kept targets realistic by basing them on the forecast from the partner in combination with the historical performance from the last two quarters,” he says. Irrespective of the economic environment, rebate programmes are going to remain a significant tool for both manufacturers and their resellers in the Middle East. But as with any component of the channel sales and marketing strategy — including product and pricing — they need to be constantly adapted to ensure they remain effective. „


// CHANNEL MIDDLE EAST_JUNE 2010

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FACT FILE (43) // THE MARKET BY NUMBERS

SOFTWARE SHINES Business intelligence space weathers the storm

.... .. ...

Business intelligence B ( I)looks to be a solid area for the channel to invest in following confirmation that the market was worth US$9.3 billion globally last year, a % 4rise on the year before. That figure, which also includes revenues from analytics and performance management software, is the most conclusive evidence yet that the BI market was less impacted by the downturn than other segments of the worldwide software market. E “ ven though growth was nowhere near the levels of 2008, and by no means immune to the recession, BI showed that it is not as cyclical as many other software areas, recording healthy growth in one of the toughest years recorded in software history,”said Dan Sommer, senior research analyst at Gartner. According to Sommer, the dominant vendors continued to put BI, analytics and PM at the heart of their messaging. O “ rganisations largely continued their BI projects, hoping that resulting transparency and insight would enable cost-cuts and improved productivity and agility. However, there is no doubt that pressure has intensified on deal sizes and price points on new sales throughout the year,”he said. The top five vendors continued to account for more than 70% of the market, led by SAP which made revenues of more than US$2 billion from the segment. T “ he large vendors held their own. As IT is consolidating, BI spending often went to a few strategic vendors. However, the application-centric vendors didn’t have the same up-selling momentum as they did in 2008,”reflected Sommer. In the area of corporate performance management C ( PM), Oracle maintained its leadership with the former Hyperion portfolio, while SAS remained the leader in analytic applications and PM. In all three areas, IBM emerged as a strong contender with its services-led offering, growing its business % 4 1to US$1 .1billion and improving its market share by more than one percentage point in the process. Gartner believes the global market for self-service BI remains wide open, which should make for a compelling race in 201 0. A “ ll vendors, small and large, on-premises, open-source or in the cloud, are flocking to cater for this space,”suggested Sommer. W “ e see more buying from line-of-business, as dashboards and data discovery tools with in-memory analytics and ease-of-use visualisation has made it an attractive and fast value proposition to bypass IT.”

SAP HOLDS ON TO MARKET TOP SPOT Business software behemoth benefits from strong BI portfolio

_WORLDWIDE BUSINESS INTELLIGENCE SOFTWARE MARKET SHARE BY VENDOR SALES DURING 2009

Oracle 15% SAS Institute 14% SAP 22% IBM 12% Microsoft 8% MicroStrategy 3% Others 26%

SOURCE: Gartner

IBM READY FOR BI SOFTWARE FIGHT Big Blue defies the downturn to record 14% growth in sales

__WORLDWIDE BUSINESS INTELLIGENCE SOFTWARE GROWTH BY VENDOR DURING 2009

SAP -0.6% Oracle +5.2% SAS Institute +3% IBM +14% Microsoft +8% MicroStrategy +5% Others +3%

SOURCE: Gartner

>>

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EXPERT’S VIEW (45) // TOP TIPS FROM MASTERS OF THE CHANNEL

SAP RIPS UP ITS RULEBOOK SAP’s US$5.8 billion acquisition of Sybase could signal a shift in its longstanding strategy of growth through internal development rather than acquisition. It’s a wise shift given the market’s positive response to rival Oracle’s acquisitionbased strategy, says Warren Wilson, senior analyst at advisory firm Ovum. SAP’s ambitious move into mobile business apps could mark a change in its growth strategy

Sybase was an early leader in the database market and still maintains a strong position in the financial services industry. But it was eclipsed by other database providers years ago and, after a period of uncertainty, decided to stake its future on mobility. Over the past several years Sybase has built a strong and versatile platform that can deliver enterprise applications to a broad range of devices, from Blackberry to iPhone. With Sybase’s versatile platform, SAP can help customers derive more value from their existing SAP investments by extending them to a broad range of mobile devices. The move also furthers SAP’s strategy of supporting customers’ heterogeneous IT environments, because Sybase’s anytime/ anywhere/any application approach has resulted in a platform that is versatile enough to connect and mobilise a wide variety of applications and data, both SAP and non-SAP. Sybase, for its part, gains access to SAP’s in-memory database computing technology, which will dramatically increase the performance of its complex

>>

The acquisition of Sybase is SAP’s second major departure from its strategy of growth through internal development. The first was even bigger: the acquisition of Business Objects in 2007 in a deal valued at US$6.8 billion. Had it not done so, SAP would have been at a major disadvantage in business intelligence, given Oracle acquired Hyperion and IBM acquired Cognos at around the same time. This second major acquisition comes just three months after the sudden departure of Leo Apotheker after less than a year as CEO and his replacement by Bill McDermott, then head of SAP’s field organisation, and Jim Hagemann Snabe, head of product development, as co-CEOs. So does it mark a major shift in strategy under the new leadership? The answer isn’t immediately obvious. Sybase and SAP have been working closely together at

least since 2003, when they announced plans to align SAP’s small-business ERP suite, Business One, with Sybase’s data management solutions. Little more than a year ago, in March 2009, they forged an agreement to use Sybase’s platform to mobilise SAP’s flagship Business Suite. Given that history, it seems likely that the acquisition isn’t sudden at all, but has been under consideration for some time. We think the acquisition may mark the emergence of a shrewd dual strategy rather than a U-turn: a combination of careful internal development and bold acquisitions. SAP’s internaldevelopment strategy has allowed it to retain its leading market share — by wide margins — in ERP, CRM and SCM. But the markets have viewed that approach as stodgy, while rewarding Oracle for its hyperaggressive acquisition strategy by driving its stock price dramatically higher over the last few years. As the pace of IT innovation increases, a strategy that draws on both elements — internal development and acquisition — should serve SAP well. „

.... .. ...

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event processing and analytics tools. In-memory capability should also allow Sybase to integrate transactional and analytical capabilities in single products.

Second major departure

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PEOPLE (47) // APPOINTMENTS AND AWARDS

::::

HAUBERTIN WEIGHS UP OPTIONS AFTER DECLINING ORACLE OFFER Sun Microsystems’ ex-Middle East channel chief evaluating his options as he looks to take on new channel development role following decision not to transfer to Oracle

S

un Microsystems officially began life as an Oracle company this month without its Middle East channel manager. Bruno Haubertin, the server vendor’s partners and alliances sales (PASO) manager for the Middle East and North Africa region, decided against making the switch and left his position at the end of last month. As we went to press, Oracle had not yet revealed how it plans to run Sun’s channel business in the region, but Haubertin said he felt it was a “good time” to stand down because Oracle was more of a directselling company than a channel organisation. Haubertin had been involved with Sun’s Middle East channel business for more than five years, managing the expansion

of its reseller base and overseeing the regional implementation of new channel programmes. He now intends to take up a new channel or business development role after deciding to put plans to launch his own company on hold for the time being. “My first project was eventually going to be to set up my own company and do some people development, recruitment and consulting, but it looks like I have got some other options,” explained Haubertin. “I have a few proposals in Dubai so I really need to spend a week on leave, think about it and make up my mind,” he said. Oracle made its move on Sun last year in a deal worth US$7 billion. The database software giant believes the merger will

RETAIL CHANNEL KIOSK VENTURE romate’s former sales

P

director for the Middle East,

Khalid Abuayyash, is embarking on a new venture that he claims will make IT retailers money. Abuayyash recently left the PC accessories vendor to launch Extreme Customization, a company that provides kiosks allowing gadget users to customise their mobile devices allow it to combine bestin-class enterprise software with mission-critical computing systems. Meanwhile, IT distributor Tech Access has announced that Sun Microsystems’ former MENA managing director Chris Cornelius has joined its team. Cornelius will serve as senior VP for sales and support in a role that will see him directly responsible for sales management, vendor and partner relations, services and support, and logistics.

with any design they want.

Bruno Haubertin is looking to take on a new channel role after leaving Sun

Abuayyash, who founded Jordanian computer store Fun Directory prior to his time at Promate, is now speaking to retailers in the GCC about introducing the kiosks in store. He is already in the final stages of doing a deal with one Kuwaiti retailer and is also exploring partnerships in Qatar and KSA. “There is no cost to the retailer except the space,” explained Abuayyash. “We provide a revenue sharing model with a minimum guaranteed to the retailer. No matter how

AMD GOES FOR EX-HP HEAD Bernard Biolchini chosen as replacement for Gaith Kadir as CPU vendor looks to meet “ambitious” regional objectives

C

hip vendor AMD has plumped for an external candidate to fill the vacancy of VP sales and general manager for the Middle East, Turkey and Africa region. Bernard Biolchini will take on the role after joining the company from control and automation systems company Invensys, where he served as president and general manager for EMEA. Biolchini has considerable understanding of the

PC market after also spending 15 years with HP in various sales, marketing and channel roles. “Bernard comes to AMD with a successful track record of delivering outstanding results,” stated Alberto Bozzo, AMD’s corporate VP and general manager EMEA. “His strong business development experience will help AMD meet our ambitious business goals for the region,” added Bozzo.

>>

much business they do, that The role taken on by Biolchini has been open since March, when AMD parted company with Gaith Kadir, who was in his second spell as general manager of the Middle East and Africa. Kadir’s exit was thought to be linked to a wider restructuring programme in EMEA. Biolchini’s arrival comes just as AMD refreshes its desktop and notebook platforms based on Vision technology. 30% more ultra-thin notebooks and 109 new mainstream Vision-based notebooks are due to be released in the coming months.

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minimum is guaranteed for them and above that there is a percentage. The machinery, the know-how and everything else is all done by us, so the retailer does not have to invest.”

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BUSINESS INSIGHT (49) // INDUSTRY-WIDE NEWS

::

NOKIA KEEPS COMPETITORS AT BAY AFTER GROWING QUARTERLY HANDSET VOLUMES Finnish phone vendor records 16% rise in shipments during the first three months of the year as analysts predict smartphone models will drive mobile market recovery okia led the mobile phone market during the first quarter of 2010 after selling more than 107 million handsets, according to research firm IDC. The figure represents an improvement of almost 16% over the same quarter last year when the Finnish mobile giant sold around 93 million cellphone units. IDC’s research fits in well with Nokia’s first-quarter results, which showed a profit of US$349m (US$464m) — a boost from US$122m a year ago — helped by ongoing demand for smartphone devices. The firm’s revenue also grew by 3% to reach US$9.5 billion, although it wasn’t enough to satisfy the expectations of both industry analysts as well as the market. According to several reports, Nokia’s

N

stock fell more 12% during trading in Helsinki following the announcement. CEO Olli-Pekka Kallasvuo also admits the firm continues to face “tough competition”. “In Q1, Nokia delivered both year-on-year net sales and operating profit growth. We continue to face tough competition with respect to the high end of our mobile device portfolio, as well as challenging market conditions on the infrastructure side,” said Kallasvuo at the time. But Nokia seems to lead the pack by a mile as Samsung, at the number two position, shipped only 64 million phones, based on IDC’s estimates. LG Electronics finished up in third place for the quarter, while Research in Motion (RIM) finally made its first appearance in

AE-based project portfolio management solutions

its international credentials by establishing an office in India. The company has already set its sights on achieving a 10% share of the market in its first year of operation. It reckons India lays claim to an US$80m project management sector, the top-five mobile phone manufacturer list after shipments of BlackBerry smartphones exceeded more than 10 million units. Rival Sony Ericsson followed closely behind. According to Kevin Restivo, senior research analyst with IDC’s Worldwide Mobile Phone Tracker, RIM’s entrance into the top five “underscores the sustained smartphone growth trend that is driving the global mobile phone market recovery.”

IT solutions provider with offices in Qatar and the UAE meets international standard for security management best practice

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U

provider CMCS has boosted

NANJGEL LANDS ISO BADGES nterprise reseller Nanjgel Solutions has received two certifications from the International Organisation for Standardisation (ISO) endorsing the quality of its information security management systems. The ISO 27001:2005 and ISO9001-2008 certifications are a major boost for the company as it embarks on strengthening its end-to-end security business for telecoms and large corporates.

CMCS EXPLORES NEW TERRITORY

Jude Pereira, general manager at Belgium-based Nanjgel Solutions, which has Middle East offices in Qatar and the UAE, says the certifications illustrate the quality of the integrator’s offering. “Based on the auditors’ findings collected throughout the certification process, we can state that the performance of Nangjel Solutions, coupled with the management’s commitment to operate this system, led to a

which should grow fivefold

Olli-Pekka Kallasvuo is leading Nokia’s charge, but admits the firm faces a battle

between now and 2013. CMCS’ strategy for the Indian market will be based on relationship marketing with lead implementers, vertical specialisation in five main industry segments and a focus on key government establishments where it already has proven case models. “The openness of Indian companies to foreign collaborations and mergers, combined with the size, dynamics and growth potential of the domestic project

successful certification process,” he said. “However, during this process, it was clear that Nangjel surpassed the required level and showed a mature and wellimplemented information security management system,” he added. Nanjgel regards the ISO27001 certification as particularly important as it covers the frameworks to design, implement, manage, maintain and enforce information security processes and controls. The accreditation therefore demonstrates Nanjgel’s dedication to protecting its clients’ information assets and maintaining the strictest security standards.

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management market, have been the basis of our move to the country,” explained Bassam Samman, CEO of CMCS. CMCS’ main area of product specialisation is Primavera, which is owned by US-based database software giant Oracle.

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// CHANNEL MIDDLE EAST_JUNE 2010

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CONSUMER ELECTRONICS (51) // RETAIL CHANNEL NEWS

JUMBO VOWS TO SIMPLIFY PRODUCT REPAIR PROCESS Sony retailer boldly claims that it is “redefining” customers’ after-sales service expectations with consumer electronics support centre in UAE

J

umbo Electronics has become the latest retailer to step up its after-sales service offering by opening a comprehensive customer support centre in Jebel Ali. The 70,000 square foot facility will service consumer electronics products and hold the accolade of being the only service centre in the Middle East region with the capability to repair and test Sony Alpha DSLR cameras. Jumbo will offer a pickup and drop-off facility as well as an instant service for minor repairs. It also claims to be “redefining” the customer service experience by promising informative and regular communication about the status of repair. “Jumbo ensures that all

our customers will receive updates on the detailed fault analysis and repair time within two working days of the product being dropped off for repair,” said Naraish Razdan, head of customer service at Jumbo. “We are offering convenient services such as collection and delivery of bulk items. Customers can find out the status of their item and even speak at our toll free facility [800JUMBO],” he added. According to Jumbo, the centre is fully equipped to repair a range of consumer electronics devices, including LCD TVs, digital still cameras, handy cams, laptops and MP3 players. It will also be able to repair home appliance products.

Elsewhere on the service front, Eros Group, the sole UAE distributor of brands such as Hitachi, Linksys by Cisco and Taurus, has launched a ‘delivery on demand’ concept for Samsung mobile products. With the introduction of this service, Eros will be running vans with Samsung mobile stocks to cater to independent retail outlets throughout the UAE. “This service will help facilitate real-time communication between the field and the central office thus ultimately benefiting the end-consumer,” said Deepak Babani, CEO at Eros Group. “Due to globalisation, supply chain management has become a tool for companies to

compete effectively, either at a local level or at a global scale. It has become a necessity, especially for distributors in the region, when it comes to delivering products at a competitive cost and on a real time basis,” he added. Eros also believes the service will lead to a reduction in turnaround time for stock availability, which will benefit dealers. It claims the service changes the norm of traditional “one-size-fits-all” offerings.

Jumbo is strengthening its after-sales activities in the Middle East region

to emphasise the importance of maintaining high service

SAMSUNG OFFERS SERVICE LESSONS

standards. Members of the MENA delegation, comprising

Disties educated in customer care

S

amsung Electronics has taken a host of its Middle East and North Africa distributors to Korea in a bid

30 distributors and associates from across the region, visited Samsung’s customer satisfaction environment centre, domestic service centre and manufacturing facilities as part of what Samsung called a “benchmarking exercise”. Junewoo Lee, managing director of customer services MENA at Samsung, says service levels need to be constantly scrutinised: “Our service strategy calls for a significant increase in our service infrastructure and exposure to offer a better choice of products and services to our customers, while strengthening our position as market leaders.”

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// CHANNEL MIDDLE EAST_JUNE 2010

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PRODUCTS (53) // MARGIN-MAKING OPPORTUNITIES

[] MOTHERBOARDS

[] MOTHERBOARDS

SIX-CORE STRENGTH

STAKING A CLAIM

New motherboards support the latest Phenom II CPU

Vendor out to set new motherboard benchmark

ECS has launched its A885GM-A2 and A885GM-M2 motherboards as it looks to support PC users that want their systems to achieve peak performance. Both pieces of hardware are based on the latest AMD 880G/SB850 chipsets with a number of features to offer mainstream users “the most affordable” Six-Core system, according to the vendor. To meet the next-generation platform, ECS’ new motherboards are ready re to support the latest AMD SixCore Phenom II CPU, w which it says will allow users to get an additional 50% perform performance systems. over Quad-Core syst

Gigabyte’s latest motherboard, the GA-X58A-UD9, is now available in the Middle East after efforts by the company’s engineers to “completely redefine” the performance and feature-set of X58-based hardware. The product, which is distributed by Golden Systems, features a new 24 phase Unlocked Power design, 4-way graphics support,, including Nvidia SLI and ATI CrossFireX, ssFireX, as well as unique features, s, such as 333 Onboard Acceleration. ation.

WEBSITE: www.ecs.com.tw www.ecs.co _WEBSITE: ITE: www.gigabyte. gabyte. com.tw

ONE FOR THE ROAD MSI gaming laptop offers host of multimedia features The Middle East channel can expect to see more of the GT660 gaming laptop in the coming weeks as manufacturer MSI begins rolling it out across the region following its initial debut in Kuwait and Saudi Arabia. “MSI’s all new G Series gaming notebooks are equipped with Intel’s Arrandale notebook platform, powerful Intel core processors and top-end discrete graphics cards,” explains Sam Chern, marketing director at MSI. “System System performance and 3D image processing capabilities have been vastly enhanced and these laptops come with SRS Premium Sound for superior audio and video. All MSI laptops carry a twoyear warranty.

LAPTOPS

[]

[] LAPTOPS

BUTTERFLY EFFECT PB aiming high with Windows 7 consumer laptop Packard Bell has unveiled its EasyNote Butterfly xs laptop, which it believes is the ideal companion for style-conscious users who want a highly portable all-day notebook that is also fully featured for easy-to-use mobile entertainment. The model boasts a high-definition 11.6-inch display, HDMI port, advanced processing graphics and a built-in optical drive. According to Packard Bell, the 6-cell Li-Ion battery pack, combined with an Intel highperformance ance nce low-voltage processor processor, offers up p to eight hours of power away from m the electrical outlet. Storage space s on the Windows 7 device extends x xtends to 640GB. _WEBSITE: T TE: www.packardbell.ae ckkardbell.ae

_WEBSITE: www.msi.com

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// CHANNEL MIDDLE EAST_JUNE 2010

NEXT MONTH (54) // INSIDE THE NEXT ISSUE

COMING UP

THE MONTH OF JULY POWER GAME The market for UPS devices has matured during the past few years and that is leading the market’s top manufacturers to revise their strategies and roll out new channel initiatives.

THE BIG DEBATE In a special roundtable, a handful of vendors, distributors and retailers discuss the key challenges facing the consumer channel.

Registered at Dubai Media City, PO Box 500024, Dubai, UAE Tel: +971 4 210 8000; Fax: +971 4 210 8080; Web: www.itp.com Offices in Dubai and London ITP Technology Publishing CEO Walid Akawi Managing Director Neil Davies Managing Director Karam Awad General Manager Peter Conmy Publisher Natasha Pendleton EDITORIAL Group Editor Mark Sutton Tel: +971 4 210 8225 e-mail: mark.sutton@itp.com Editor Andrew Seymour Tel: +971 4 210 8320 e-mail: andrew.seymour@itp.com ADVERTISING Advertising Manager Kausar Syed Tel: +971 4 2108 361 e-mail: kausar.syed@itp.com STUDIO Senior Designer Michel Al Asmar

INSIDE VIEW

PHOTOGRAPHY

We speak exclusively to Emitac Group’s CEO Ballal Yaqub about the organisation’s strategy, market aspirations and regional outlook.

Director of Photography Sevag Davidian

Q2-Q4 2010

EVENTS

PRODUCTION & DISTRIBUTION Group Production Manager Kyle Smith Deputy Production Manager Ali Fahmi Production Co-ordinator Basel Al Kassem Managing Picture Editor Patrick Littlejohn Image Retoucher Emmalyn Robbles Distribution Manager Karima Ashwell CIRCULATION Head of Circulation and Database Gaurav Gulati MARKETING Marketing Manager Martin Chambers Event Manager Preeta Panicker

UAE

ITP DIGITAL

Channel Buzz Workshops Cancelled A series of scheduled workshops to help Dubai resellers take advantage of industry best practices has been cancelled following a lack of interest from the channel. Channel Buzz, organisers of the fortnightly workshop series, said it was “extremely disappointed” by the level of commitment from the reseller community, particularly as it was an initiative that had been requested by the channel. It confirmed that all future workshops had been axed, including the forthcoming session on inventory management planned for 8th June. In an e-mail to resellers, Channel Buzz said: “The workshop topics were determined in response to a poll of resellers on the Channel Buzz group on LinkedIn. Venue and timings was selected based on preferences and to suit the channel’s convenience. It is, however, now clear that the Dubai reseller community does not need this sort of skills training after all.”

Assistant Editor Vineetha Menon Group Sales Manager Ahmad Bashour Tel: +971 4 210 8549 e-mail ahmad.bashour@itp.com Senior Sales Manager ITP.net Nathalie Akl Tel: +971 4 210 8520 e-mail nathalie.akl@itp.com Internet Development Manager Mohammed Affan Content Manager Asad Azizi Web Advertising Manager Meghna Jalnawalla Creative Director Craig Willers

UAE 29th-30th September 2010: IT Leaders MENA Summit The IT Leaders MENA Summit is labelled by its organiser as the premier gathering for CIOs and business leaders across all industries throughout the Middle East and North Africa. The summit is designed for senior executives who want to understand how technology can transform their business, with the packed two-day agenda offering attendees the chance to engage in discussion. Guest speakers will focus on the hot topics driving the IT sector at the moment and outline how organisations can reduce costs by using technology, while industry professionals will discuss current developments in virtualisation and cloud computing. The IT Leaders series has already been hosted in a number of cities around the world, but this is the first time it has reached Abu Dhabi. It enjoys the support of brands such as IBM, Kofax, Adobe, Mahindra Satyam and Huawei Symantec. For more information visit www.kineticevents.net

ITP GROUP Chairman Andrew Neil Managing Director Robert Serafin Finance Director Toby Jay Spencer-Davies Board of Directors K.M. Jamieson, Mike Bayman, Walid Akawi, Neil Davies, Rob Corder, Mary Serafin

Circulation Customer Service Tel: +971 4 286 8559 Printed by Atlas Printing Press Controlled Distribution by Blue Truck Subscribe online at www.itp.com/subscriptions

The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication, which is provided for general use and may not be appropriate for the readers particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of the contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review.

UAE 17th-21st October 2010: GITEX Technology Week It might seem too early to be talking about GITEX but once the summer period is out of the way the year’s must-attend regional IT fair will soon come around! This year’s event is poised to have more of a celebratory feel than usual as GITEX is marking its 30th anniversary. According to organisers Dubai World Trade Centre, the 2009 edition of the show attracted 133,000 trade visitors and 3,000 international exhibitors, which it claims bucked the economic drift to confirm its status as a leading industry exhibition of global importance. GITEX will serve as a platform for manufacturers, distributors and IT companies to build partnerships and showcase the solutions that they believe will drive the market. Last year’s show saw new technology releases from Oracle, Panasonic and Microsoft so expect the world’s top IT vendors to use GITEX as a major launchpad once again. For more information visit www.gitex.com

_www.itp.net_

Channel Middle East is audited by BPA Worldwide. Average Qualified Circulation 7,567 (6 month audit Jul to Dec 2008).

Published by and Copyright © 2010 ITP Technology Publishing, a division of ITP Publishing Group Ltd. Registered in the B.V.I. under Company Registration number 1402846.


// CHANNEL MIDDLE EAST_JUNE 2010

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GET TO KNOW (56) // CHANNEL CHAMPIONS UNCOVERED

Shaheen Haque, Turkey and Middle East Territory Manager, Interactive Intelligence > What’s your career history in the industry to date?

> What do you enjoy most about working in the Middle East IT market?

I began working for statistics company SPSS in sales, as well as CASE tool vendor LBMS, before returning to SPSS to run the government sales team. I also worked for business intelligence vendors Seagate Software and AppSmart, and then joined OSS vendor Micromuse to look after the EMEA channel. This position landed me in Dubai in 2005 as the regional sales manager. IBM acquired Micromuse in 2006 after which I became the IBM Netool/Tivoli sales manager for ME and Pakistan. In late 2007 I joined Interactive Intelligence as Middle East territory sales manager.

The Middle East is such a dynamic, cosmopolitan and diverse market. I have enjoyed coming into the market at the height of the growth period - not only surviving but growing through the lull - and I am now looking forward to [the market] pushing out of the recession with even more growth. The best thing is the Middle East market is resilient and flexible enough to map onto the changing economic climate far better and faster than most other regions.

As regional sales head of contact centre software specialist Interactive Intelligence, Shaheen Haque has his finger on the Middle East channel pulse...

> What is the most valuable business lesson you’ve learnt? Learn from your competition! The IT market globally is just as much about knowing the competition as it is about knowing your customers and your own technology.

> What do you dislike most about working in the market? I don’t really dislike anything about working in this market. However, I would like to see a little more conviction in adhering to decision time scales, but I guess we have learnt to live and accommodate this!

> How would you describe your management style? The style I employ depends on the strategic goals of the organisation. In general, I feel my management style incorporates a mixture of both the authoritative and democratic ideals. I would say my style continues to evolve, especially with the current changes within the cultural and economic environments we have to operate within. I regard the free flow of communication between all levels in the organisation as being imperative. Without adequate communication, managerial style becomes irrelevant.

> What is your proudest moment to date? > How do you relax outside of the work environment?

Seeing the fruition of a host of channel activities initiated by me for Micromuse across Europe, eventually resulting in closer relationships with our partners and their customers, as well as organisation-wide recognition with an ‘exceptional work within the channel’ award.

I have two boys, one who is almost eight and the other almost two. They keep me busy acting as their chauffeur to keep up with their social calendar. I have also recently taken up squash.

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> What is your top channel tip for the next 12 months? Don’t forget to focus and build strong relationships with existing customers and partners. It is far easier to cultivate existing accounts where they have and use your solution already!


Channel Middle East - June 2010  

Channel Middle East - June 2010 - ITP Business

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