By Stuart Wilson
Selling storage is not an easy option for the channel but there are rewards. Major vendors explain their Middle East market plans for 2006 and the opportunities that exist for committed resellers and integrators.
Channel delivery|~|storageemc.jpg|~|Qais Gharaibeh, district partner manager at EMC Middle East|~|Selling storage solutions involves much more than boxshifting. Channel Middle East lined up some major vendors and VADs to find out more. Ashraf Helmy, StorageWorks product marketing manager at HP Middle East; Qais Gharaibeh, district partner manager at EMC Middle East; David Beck, storage sales manager at Sun MENA; Jocelyn Al Adwani, director at STME, and Suren Vedantham, managing director at StorIT provided the lowdown on developments in the regional storage channel.
CME:How important is the channel in the delivery of storage solutions in the Middle East?
SUREN VEDANTHAM (SV): It is absolutely critical, just as it is in any other IT segment in the region. This is because not many of the principal technology vendors are selling directly to end-users in the Middle East.
JOCELYN AL ADWANI (JA): The channel is the major route to market for the storage vendors. In the Middle East, the channel-to-market for storage solutions is still not that well developed. This is primarily due to the nascent nature of the market and the fact that vendors are still trying to assess the demand that exists.
QAIS GHARAIBEH (QG): The channel is of extreme importance to EMC as we attempt to penetrate the SMB sector in terms of minimising our time-to-market and controlling our cost of sale. We come up with attractive features at competitive process and the best way to sell this to SMBs is through the channel. This is why we are focusing on distribution and expanding the channel model — putting the right programmes in place to incentivise partners and increase their loyalty.
DAVID BECK (DB): Like everything else we deliver in this region the channel is an integral part of our relationship with the customer. The channel provides feet on the street, expertise, support capabilities and local relationships way in excess of what we, as a vendor, can provide to the customer on our own.
ASHRAF HELMY (AH): HP has an indirect sales model so our channel partners play a major role in the delivery of storage solutions. The partners are selling the solutions and providing the value-added services that customers require. It means more feet on the street and better reach — especially to customers below the enterprise segment.
CME:How are you looking to further develop your Middle East storage channel during the course of 2006?
DB: Since Sun acquired StorageTek in 2005 for US$4 billion, it also acquired a StorageTek team of 7,000 storage-focused employees and some great storage-focused partners. As a result, we now have some new partners who lead with storage — most notably STME.
JA: STME is looking to expand in the SMB arena, as this market is a large segment in the Middle East. We are actively sourcing channel partners who want to offer small bundled solutions based around backup, archive and disaster recovery.
QG: The way we plan to develop in 2006 is heavily dependent on the channel. We will maintain our enterprise efforts but will also look more at the commercial and SMB space. To penetrate these markets you have to rely on local partners and really enable them so that they become an extended sales arm of EMC and give us the coverage that we need. We will focus on working with our VADs and also engage in partner training.
||**||Complex sale|~|storagehp.jpg|~|Ashraf Helmy, StorageWorks product marketing manager at HP Middle East|~| CME:What sort of margins can integrators and resellers make selling storage solutions? Is it really worth the extra effort involved?
QG: It is quite attractive for any local IT company to look at storage as a business area to get into. The demand is there in the Middle East and it is not only EMC saying this, but also the entire storage industry. When partners evaluate storage against other IT sectors, it is clear that it is an attractive option. The storage market can still provide healthy double-digit margins for skilled partners.
DB: Ironically, whereas many people perceive storage to be a dull area, it’s a bit like insurance: a necessary evil, but it has some of the best margins in the business, especially as it is a major growth area right now and more of the IT budget is being allocated to storage.
JA: The actual hardware holds very little margin, the differentiators are with the services bundled around the product. The channel partners that we have tend to make a reasonable margin. As part of our commitment to channel partners, we provide them with the solution design, proposal and presentation skills as well as the installation and support — and this helps our partners to make margin.
SV: A committed reseller or systems integrator with a professional business approach can certainly make margins that are as strong as any enterprise IT solutions provider operating in the market.
AH: It depends on the situation. If there is fierce competition from competitors the margin for both our partners and us is impacted. Our partners appreciate the investment we make in them because it helps them make margin through the integration of storage solutions.
CME:Are there enough storage skills in the channel to take advantage of the demand that currently exists in the Middle East market?
QG: There has been a great deal of improvement in recent years but we are still some way off where the market needs to be. Sometimes it is still a struggle in the Middle East to find the talent that can provide the services. EMC is hiring talented people and we’re also training up partners to create the skills pool that will benefit us in the future.
DB: Storage has long been a specialisation option for the Sun channel as we recognise there are specific skills a partner needs to master to win in the storage game. Understanding applications, networks and operating systems all helps in the evaluation of how to address a customer’s storage requirements. Sun has been driving the channel to become more focused on storage. It has not gone as well as we had hoped, so the addition of the StorageTek partners to our network should fill this gap.
AH: There are not enough storage skills in the market to meet demand — the market requires more. If you run a survey, you will find that many of the partners are actually over-utilised. I think in 2006 we will see the supply of storage skills catch up with the demand in the Middle East.
JA: Storage is becoming more complex as well as becoming the most important pillar of the infrastructure, so the channel needs to educate customers and provide them with the right solutions to enable them to manage the growth. There are very few channel partners focused purely on storage and we see this as an excellent opportunity to develop them.
||**||Selling tactics|~|storagejocelyn.jpg|~|Jocelyn Al Adwani, director at STME|~| CME:What is the business rationale that is persuading end-users to invest in storage solutions? Is it compliance or are they now realising the true value of their data?
JA: It is a combination of both. Many customers have witnessed the need to have certain records accessible all the time and for a certain number of years on the compliance side and others are realising the benefit of being able to use the information they store for data mining purposes. There have also been a few incidents regionally and around the world, which have highlighted the need for data to be stored and protected.
AH: End-users are starting to understand the value of their data and that is why they are now appreciating investment in storage solutions. People are now increasingly wary of the risks associated with losing their data. Simultaneously, the volumes of data that are being created are now growing at a phenomenal rate.
QG: Our message has not changed — we have just widened its scope to target a wider market segment. We are still talking about information lifecycle management (ILM) solutions and now we have started talking about making storage simple — ILM for the SMB. This is all about the consolidation of the storage environment, optimising the utilisation of resources and then looking at back-up, disaster recovery and archiving. It is all about making it easier for an SMB to look at and understand ILM.
DB: Compliance is something this region is coming round to, but it’s still early days and is not the big issue driving storage purchases. The biggest issue is companies realising that if they don’t have back-up and disaster recovery plans then a disaster can put them out of business. This and the high growth rates in storage requirements are the driving forces we see today.
CME:How much competition is there in the market to recruit the best partners to sell storage solutions in the market? How loyal are your partners?
SV: As usually seen in the growth cycle of any emerging industry, there is increased competition to establish and develop good partnerships. However, it all boils down to the vision, support capability, commitment and business value proposition that dictates the quality of a vendor’s channel.
QG: Right now EMC is in a relatively strong position. We are known as the market leader in storage solutions so partners that develop an interest in storage will typically come to us first. We haven’t had problems finding the right partners and we haven’t faced too much competition from other vendors. Usually we are in a privileged position where partners want to work with us.
DB: The enterprise channel generally is very small — everyone knows everyone and there are years of history, so yes, it is hard to find good new partners and many sell competing brands now. We would like to think that Sun has a great portfolio and a history of radical R&D that attracts partners to work with us. We guarantee that the ride with Sun will never be dull.
JA: Currently, vendors and channel partners alike all see the growth of storage and want to be part of it. Again it is not just about selling; there is consultancy and service needs to be met as well, which are the key needs in this region. It is certainly becoming more competitive as the market evolves.
AH: Most of our channel partners are loyal and have been working with HP for a long time — none of them have moved towards the competition, especially in storage. Partners invest a great to deal to build up storage skills and they understand the superior nature of our portfolio. We get partners from competitors, not because we are pursuing them, but because they understand and appreciate the value proposition and the channel model we have. Some are coming over to HP from IBM.
||**||Margin makers|~|storagesuren200.jpg|~|Suren Vedantham, managing director at StorIT|~| CME:Is storage a hardware, software or services play for the channel? If it is now all of them, how has the channel evolved to meet this requirement?
AH: The channel is probably aware even more than us about the changing role of storage within end-user organisations. If you take any of our partners you will find that they carry a range of products from different vendors to ensure a complete solution offering and they have the necessary skill sets to bring it all together if this is what the customer requires.
QG: No matter how high the sales margins are on storage hardware and storage software, the biggest margins are usually to be found in services. All our partners are leveraging the strength of the EMC portfolio to find ways that they can expand service offerings.
DB: It’s evolved from pure hardware to most vendors looking at 50% software and services are inevitable, even if they are fronted by a vendor. Delivery in this market is typically partner driven but defined and managed by the vendor’s global standards and policies.
JA: It is most definitely all of them and most of the channel partners in the region are still at the hardware or software boxshifting stage. STME has evolved into an integrator taking on additional product sets to compliment our existing portfolio and opening up a consultancy unit independent of our sales department, in order to help customers to plan for the future. We also provide services independently allowing our competitors to sell the solutions and then providing them with installation and warranty support on the products.
SV: Depending on the size of their business, resellers have varying levels of expertise in these areas. Many of them partner with a value added distributor, who can enable them in terms of providing complete solutions including support services to clients.
CME:Are there any specific verticals, segments or geographies where the channel is not yet strong enough in the Middle East?
DB: If you look at the IDC statistics for the region four big verticals stand out: telecommunications, oil and gas, banking and government. Government stands out as the one vertical that is not clearly defined in terms of what the solutions are that they are buying — all the others have specific applications, which are used globally in those industries. As a result, government has been a lot more general in its approach to storage and as an application strategy develops, I think you’ll see more specific storage offerings developing and the channel adopting and investing accordingly, but this is basically a chicken and egg situation as the channel can hardly fix the government’s problems.
JA: At the high end in government accounts across the region the old approach takes precedence and therefore not much channel business happens there. At the low end in the SMB space there tends to be a preference again from buying a total solution including the servers and applications, so it is less developed from a customer side in terms of splitting out storage.
AH: Mainly we are looking to strengthen in the finance vertical. Country-wise, we are looking at increasing business in Saudi Arabia. Our focused activities are in demand generation or one-to-one customer meetings. All of our corporate representatives are visiting Saudi Arabia on a regular basis. We are looking to set up a relationship — like we have with Azlan in the UAE — with a VAD based in Riyadh, but we haven’t finalised anything yet. We are hoping to get an operation up and running in the next couple of months.
||**||Hot topics|~|storageopener200.jpg|~|The potential for selling storage solutions continues to grow in the Middle East|~| CME:What are the three biggest trends that will influence the evolution of the storage channel in 2006?
DB: Security and archiving are hot right now. Identity Management — managing the user access to what is on the storage, has also become a hot potato, and then SRM — storage resource management is particularly painful as the amount of storage that one administrator can manage has become a bottleneck for many IT departments as they double their storage volumes but can’t double their headcount. The single biggest issue in storage has been consolidation by vendors, server hardware companies recognising that storage is a big opportunity, storage hardware players realising they need to sell software and services, as that is where the margin is and acquisitions around this area. This will inevitably mean changes in vendors’ plans as they acquire new products and partners, not all of which they can keep.
JA: The issues of compliance will start to come down hard on customers in the region. Traditionally customers buy point solutions based on project requirements without looking at the entire infrastructure and the management of this will become harder. Management tools, consultancy and service will become the biggest requirements in 2006 and the channel needs to invest in quality training or partnering in order to provide the customer the best service.