By Stuart Wilson
Direct or indirect sales? Software giants explain the channel’s role when it comes to working with Middle East enterprise customers.
Defining customers|~|entkilani200.jpg|~|Bashar Kilani, software group manager at IBM Middle East, Egypt and Pakistan|~|Software vendors operating in the Middle East frequently talk up the importance of the channel in taking their solutions to market. Inevitably, in the enterprise account space, the engagement model linking vendors, customers and channel partners becomes more complex. Channel Middle East chatted with some of the big guns of the Middle East enterprise software space to get the low-down on the channel ecosystems used to deliver enterprise solutions to large accounts.
There are no hard and fast rules when it comes to determining the companies that fall under a software vendor’s enterprise account status. Each vendor has a different way of classifying enterprise accounts based on various factors.
Typically those that do make enterprise account status receive more direct attention from vendors. Direct in this instance does not mean direct sales. Rather, it means that vendors are much more likely to engage in direct marketing with their largest customers and assign an account manager to actively drive the relationship
“The worldwide definition for an enterprise account is a customer with 4,000 employees and above,” explained Bashar Kilani, software group manager at IBM Middle East, Egypt and Pakistan. “But this has to be tailored to different geographies and different markets. In the Middle East we do have to redefine the metrics slightly.”
While employee numbers can serve as a rudimentary measurement, vendors typically also look at specific factors such as the revenue potential from an individual company, the complexity of their existing IT environment or even the complexity of the solution that they are considering purchasing.
IBM has hundreds of customers that classify as enterprise accounts in the Middle East as does Oracle. Computer Associates has approximately 100 customers that fall under the category with Novell claiming a similar figure. Typically consisting of banks, telcos and government agencies, the strategic importance of this customer base should not be underestimated.
||**||Channel role|~|entoracle200.jpg|~|Ayman Abouseif, GCC managing director at Oracle|~|“From the 100 named accounts that we have in the region, we would look to make the majority of our revenues — between 70% and 80% — from this customer segment,” said Mahmoud El-Ali, Gulf countries manager at CA. “They are strategically important although the amount of sales they account for varies from country-to-country. In Saudi Arabia, five named accounts could theoretically contribute 80% to 90% of sales. To get that same split in Oman, we need to have 15 to 20 named accounts because of the structure of the market.”
In Western Europe and the US the very term ‘named account’ or ‘enterprise client’ strikes fear into the hearts of many channel players including systems integrators, IT consultancies, VARs and solutions providers. Many view this as nothing more than the list of companies that the vendor will deal direct with, disintermediating the channel in the process.
Major vendors operating in the Middle East are adamant that even at the enterprise account level, the channel has a vital role to play. With the largest customers, the buzz phrase is ‘channel ecosystem’. Sure, the vendor may lead a project and be the prime point of contact for the client, but simultaneously they are pushing hard to utilise the resources of skilled channel partners at every stage of the sales cycle.
Ayman Abouseif, GCC managing director at Oracle, explains: “The channel does engage with large accounts. These are managed accounts where we have a sales person assigned to understand what the client is doing, which vendors they are working with and what projects they have on the horizon. But this does not make it a direct sale.”
For Oracle, the Middle East and Africa (MEA) channel, and the services expertise and coverage it provides, has become a vital component in the regional go-to-market model. With the MEA region comprising some 75 countries, the channel remains the ‘eyes, ears, arms and even body’ for Oracle in the market according to regional channel director Hisham Esaadi.
“The service and installation business is a huge part of the MEA market,” he explained. “This probably equates to between US$300m and US$400m a year and the business is 100% channel-driven. Oracle does not compete in that space despite being asked by enterprise and non-enterprise customers to do the delivery for them.”
||**||The vendor's role|~|entmahmoud200.jpg|~|Mahmoud El-Ali, Gulf countries manager at CA|~|The fact that enterprise customers show a greater propensity to request that the software vendor itself carries out the implementation and provides the necessary services is an important one. Channel partners that see this occurring often believe that the vendor has stolen business away from them, when in fact, vendors are only performing these tasks because a refusal to do so would mean being locked out of the entire project.
Even where vendors have their own professional services resource, they are frequently only deployed when there is no other option available or the client requires a skill set that does not exist in the regional channel community.
“Computer Associates has internal skills and resources available in the region, but our priority is to build the appropriate sales and service skills within the partner community,” adds El-Ali. “CA is not aiming to go into direct sales. That is why we have started training partners during the last six months to ensure that they deliver high-quality services to customers of all sizes.”
High quality is the critical factor that determines whether or not an enterprise software vendor will let a third party implementation or service provider loose on its valuable large accounts. Put simply, these vendors cannot afford for their reputation to suffer through a bad implementation. Therefore, if they are not confident that the necessary skills exist within the local channel, they will have no qualms calling in a global systems integrator or even taking on the project using their own internal professional services team if available. However, this is a last resort for vendors, with many paying special attention to the vital role that channel partners play in the delivery ecosystem used to serve large accounts.
“Our partners and resellers are very important in the promotion, customisation and design of enterprise solutions,” said Vinay Akhil, country manager for Bahrain, Oman and Kuwait at Novell. “We have several case studies and success stories from partners based on the deployment of Novell solutions in major enterprises. Resellers are Novell’s soldiers on the ground and play a vital role marketing our products and generating sales opportunities across the region.”
For Novell, finding partners that can help service enterprise accounts means not just recruiting resellers but also looking for companies with deep technical expertise in a specific solution area or vertical market.
“We have one company in Dubai that specialises in implementing Novell portal solution,” added Jamie Partington, country manager for UAE and Qatar at Novell. “Channel partners are quite happy with this type of focused relationship.”
||**||Local talent|~|entsap200.jpg|~|Phil Blower, sales director at SAP Arabia|~|The enterprise account landscape in the Middle East is complicated even further by the presence of local offices representing global multinational companies’ interests in the region. Many of these customers actually engage with major software vendors on a global basis meaning that software purchasing — even for installation within this region — is handled out of a centralised department in Europe or even the US. This centralisation is also reflected in the services they deploy to carry out implementations.
“In some cases these accounts will use a partner that they have globally,” said Phil Blower, sales director at SAP Arabia. “For example, some clients will fly in a team from Accenture as part of a global rollout. This is the model that some of the global multinationals use but it can be different for the companies that are indigenous to this region. These companies often use local systems integrators as their partner.”
With indigenous companies showing a strong interest in working with local partners, a new breed of regional systems integration powerhouses is springing up. This is a trend that the major vendors are keen to promote. Companies such as Raya that build deep vertical expertise and are prepared to operate across multiple countries are the partners that vendors really want to work with. Not only can companies such as Raya handle regional installations on their own, vendors are also in a position to matchmake them with local in-country partners that may not have the same depth of resources.
“This is a vital development,” continued Blower. “The development of that implementation partner network is absolutely essential. For many years, we have seen companies in this region not willing for European service teams to come in at higher rates. Raya is not unique, but its strength and coverage is rare in this region. We also have the other Indian IT services giants, who are partnering with local companies to front-end projects, making their mark in this region.”
||**||Channel ecosystems|~|entpartnovell200.jpg|~|Jamie Partington, country manager for UAE and Qatar at Novell|~|Serving the enterprise accounts is about much more than one software vendor, one IT consultancy or one systems integrator. These companies have massive hardware, software and service needs and above all else they want to deal with companies that make the process relatively straightforward for them. Channel ecosystems are starting to develop in the Middle East and vendors and partners alike — whatever field they operate in — need to make sure they have the right connections in place to maximise their sales opportunities.
“Alliances at every level are now very dynamic in this market,” continued Kilani. “I think everyone is now mature enough to understand that you could work with one systems integrator or vendor on a specific project while simultaneously competing against them on a new tender. It is all about maturity and ensuring that you always remain focused on delivering a compelling value proposition to enterprise clients.”
The enterprise account space remains the driving force behind the bulk of software spending in the Middle East. Partners that really want to play in this sector in the long-term need to ensure that they either have the right services internally — or know where to source them from — to meet the requirements of increasingly demanding customers. Channel ecosystems are the future model that will rule engagement with enterprise accounts. VARs, systems integrators and IT service providers should choose their friends wisely.