|~||~||~|New IT budgets have been set for 2006 and the amounts that enterprise clients are planning to spend are not exactly chump change. While high oil prices have undoubtedly increased the spending power of many indigenous enterprises within the Middle East — including the public sector — 2006 could well be the year when the need to ‘sweat’ some of the existing IT assets becomes a top priority.
New vendors coming to this region are quick to talk about the greenfield opportunities that exist — massive new IT projects where the infrastructure is being built up from scratch and the opportunity to secure a massive deal is very real. Undoubtedly, the percentage of projects that fit this criteria is higher in the Middle East than in more mature markets such as the US and Western Europe, but we are also starting to witness pronounced changes in buying behaviour in this region.
Many customers are no longer prepared to put up with ‘rip and replace’ proposals from vendors, reasoning instead that they have spent so much on their existing infrastructure that they need to implement solutions that drive more value from the kit that they already have in situ. I’m not a big fan of the phrase ‘sweating the assets’ but I believe that it will become the raison d’être for many new IT projects and RFPs in 2006.
For vendors dealing with CIOs and IT managers, this will require a radically different sales methodology (and mentality) that demonstrates an understanding of a customer’s existing IT architecture and offers an appropriate solution that meets their immediate business needs. To date, it has been tempting to ignore these boring deals and chase the greenfield opportunities instead. After all, who wants to do a project where you’re hampered by what’s already in place, when you could be doing a brand new project with no constraints or limitations?
While ‘sweating the assets’ is not the most exciting option, if done correctly, it provides vendors and integrators with an opportunity to create real customer intimacy with their clients in the region. Going in and talking to CIOs, understanding their pain points and delivering solutions that solve them, is a great way to increase the chances of getting some repeat business further down the line.
Vendors sometimes have a tendency to spend too much time extolling the benefits of the ‘next best thing’ as opposed to spending time identifying what is actually the ‘best thing’ for their customers. There is actually a big difference between the two. A couple of software vendors have expressed some concerns that their sales were looking pretty sluggish for the fourth quarter of 2005 and it is unusual to hear such statements in this region. Don’t get me wrong, IT investment will increase in 2006 and the overall market remains buoyant. However, vendors need to get closer to their customers if they want to succeed and increase their share of the wallet.
As the market reaches critical mass, vendors also need to refine their strategies for covering the entire region as opposed to concentrating their resources on what they perceive to be a few spending hotspots in the Middle East. You can bet your bottom dollar that a CIO in the UAE gets bombarded with marketing material and seminar invitations from vendors in a way that a CIO from a country such as Yemen or Egypt would find hard to believe.
Only a few vendors have really managed to tap the huge potential that exists in Saudi Arabia. Some still try to serve the market remotely through poorly trained partners resulting in shoddy implementations that reflect badly on the vendors involved. There have been some excellent implementations in the Middle East and also some poor ones where the project has failed to deliver the benefits promised. In the past, it was easy to ignore the failures and focus instead on the success stories.
As the proportion split moves away from greenfield projects to those intended to ‘sweat the assets’, vendors need to make sure that they truly understand the requirements of the CIOs and IT managers that they are dealing with and precisely why a specific project is taking place.
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