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Sun 3 Feb 2008 08:00 AM

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Out of touch

Vendors say regional enterprises don't understand the business of IT - but what do enterprises themselves think?

Last week I had a very interesting lunch meeting with the regional heads of several leading global software vendors. Aside from the usual industry chit-chat, one key theme emerged from our conversation - regional enterprises do not understand the business of software.

This doesn't mean that firms in the Middle East don't know what to do with high-end business systems, or how to install or run them - rather, it means they do not have a good idea of the issues that lie behind the creation, distribution and support for this software. At least according to these vendors.

The executives recounted tales of organisations saying "but this software costs you nothing to produce - so you can give me a 95% discount" while at the same time demanding free installation support and training for the software.

At the same time, these vendors are facing the same struggles as any other companies operating in the region - skill shortages, rising labour costs, and - in Dubai - spiralling rent and cost-of-living expenses.

The combined result of these two sources of pressure was to make these two firms extremely worried - a pattern that I'm sure is duplicated among many other vendors in the region. The prospect of falling margins on sales and rising costs for doing business means there is a potentially serious problem for vendors.

The counterpoint to this is that these firms should be adjusting their approach to suit the regional market - whether this means marketing their products in a different way, in order to help regional enterprises understand their value, or adjusting their regional presence to take account of rents and cost of living.

This is, of course, extremely easy to say - and incredibly hard to do.

Regarding the latter, like it or not, Dubai remains the best compromise between proximity to key markets such as KSA, and an attractive quality of life for expatriate workers.

As for the former point, this is a long, complex process, predicated on having large numbers of high-quality staff that understand the regional market - and also assumes that such an adjustment is possible.

Vendors say they are faced with an immature market that applies the formula for basic computers - power and ability rise, prices fall - to all aspects of IT. Until this changes, they will be faced with the same problems.

All this is the vendor view - but what do IT decision-makers have to say?

I'd like to hear from CIOs in the region - what do you think of vendor approaches? What do you think of the quality of their sales teams? And - most importantly - what is your view on how vendors price their software, and all the training, installation and support associated with it?

Write to me at eliot.beer@itp.com, with your thoughts - and what the solution, if any, is for these issues.

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