By Stuart Wilson
Growing top line revenues is the easy part for many resellers in the Middle East. Ensuring that the bottom line margin remains healthy and scaling up the business in terms of staff resources and infrastructure is the tough part.
Focused growth|~|fgrgroup200.jpg|~|The US Robotics' Middle East channel dream team|~|Growing top line revenues is the easy part for many resellers in the Middle East. Ensuring that the bottom line margin remains healthy and scaling up the business in terms of staff resources and infrastructure is the tough part.
With vendors and first-tier distributors growing sales at a rapid rate in the Middle East, the scene is set for a new breed of forward thinking resellers to position themselves as market leaders in their respective business segment.
The generic term of ‘reseller’ is fast becoming obsolete as channel partners look to differentiate their business offering and position themselves as solution providers offering a compelling and unique mixture of product, software and services.
While there is undoubtedly a place in the market for volume product resellers, the Middle East is now witnessing a distinct segmentation in terms of partner categories. Vendors are playing a key role in driving this process, introducing specialist channel programmes offering resellers a range of rewards for focusing on specific vertical markets or horizontal solutions.
Bearing this in mind, it was only natural to take a look at fast-growing resellers at either end of the partner spectrum. The product-focused fast-growing resellers of US Robotics have little in common with ERP implementation specialist Algosaibi Information Systems (AGIS) at first glance, yet there are similar issues underpinning their ability to maintain and accelerate sales growth in 2006 and beyond.
US Robotics recent partner awards event in Cyprus highlighted exactly what can be achieved when a vendor fully commits to its regional channel, engaging not only with first tier distributors, but also taking the time to reach out and communicate with the second-tier resellers, building a powerful channel community in the process.
“The great thing about our channel is the sense of community that we have built,” said Sumit Kumar, regional manager at US Robotics. “This two-day channel event not only helps to build up team spirit but also shows our appreciation for the distributors, resellers and retailers that have helped us grow our business in the Middle East.”||**||Hiring challenge|~|fgrsingh200.jpg|~|Manjeet Singh, regional manager at AGIS|~|Resellers such as Dubai-based New Trend and Quality Computers continue to produce impressive year-on-year sales growth for US Robotics in the region. According to Ashok Kumar, managing director at New Trend, the ability to boost sales is down to not only an enthusiasm for the products the reseller carries, but also an unwavering commitment to the customer that manifests itself in an exceptional level of service.
This commitment to customer satisfaction is the common thread that links together all of the fast-growing resellers (and solution providers) operating in the Middle East. Manjeet Singh, regional manager at AGIS, explained: “In 2005 we grew our staff 10% and boosted our sales 40%. The pipeline is strong for 2006, the market is buoyant, we have good reference cases and are expanding our presence geographically.”
AGIS recently celebrated the completion of its 100th ERP implementation in the region but has no intention of resting on its laurels during 2006. “We will look for sales growth of at least 40% during 2006 as well,” added Singh. “Competition is there between solution providers and integrators but the pie is getting bigger. By maintaining our focus on specific verticals and operational excellence, there is no reason why we cannot achieve this.”
For resellers and solution providers looking to scale up their Middle East business there are still some limiting factors: the availability of capital and labour. In the volume product segment, ensuring that the business has adequate working capital and a large enough credit line to support increased demand remains a challenge. If the current growth rates are to be maintained in the region this is an area that vendors, distributors and resellers need to focus on.
For solution-focused resellers such as AGIS, where skilled staff play a critical role in the implementation of projects and also the influx of service revenues, recruitment remains a challenge. “In terms of growth, the only constraint is people,” said Singh. “If we hire more we can scale up, but this is not always easy. The key for us is to bring people on board and embark on a process of constant training to keep them motivated.”
The opportunity is there for resellers and solution providers in all areas of the Middle East channel to sustain their sales growth in 2006. However, there is a danger of growing too fast unless proper business processes are put in place to ensure that the growth is sustainable and stable. A failure to get the fundamentals of the business right can result in major problems further down the line. As always, it is vital that resellers keep a careful watch on their overall profit margins. It is all too easy to be seduced by top line growth, believe that business is booming, and not realise the long-term implications for the balance sheet. At the end of the day, growth is good, but profits are better.