We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Sun 9 Mar 2008 01:45 PM

Font Size

- Aa +

Taking the competition seriously

Local enterprise dealers in the Gulf have only faced competition from other resellers in the region - until now

When it comes to depicting the structure of the corporate reseller channel in the Middle East then ‘inherently indigenous’ would be one of the more fitting descriptions that could be thrown into the ring. For a whole host of very different reasons, local enterprise dealers operating in markets such as the UAE have historically only had each other to worry about in competitive situations.

It is uncommon for IT providers from outside the region to set foot in multiple Middle East geographies in the way that has happened in Europe, for example. The issue of ownership, not to mention the viability of developing a satisfactory level of runrate business, understandably keeps many aspiring newcomers at bay.

The result of this is that each Gulf and Middle East market remains heavily dominated by national players that have grown accustomed to the rivalries they face and can probably predict exactly what they are going to be up against in any routine tender or bidding process that confronts them.

Signs that the market is becoming increasingly cosmopolitan are emerging every day, however. Although locally owned VARs will always remain the dominant species by virtue of their prevalence, the influx of more firms from outside the region promises to have a considerable impact on first-tier channel dynamics in the Middle East.

South African networking integrator Dimension Data this month became the latest force to establish a concrete presence in the region. I’m sure its entrance will have been noted with particular interest by Cisco Gold partners that now have another accomplished competitor to deal with.

The advantage for resellers or systems integrators of Dimension Data’s ilk is that as well as having the financial muscle and resources of a global parent behind them, they are guaranteed the support of key vendor partners with their own vested interest in having that calibre of partner regionally available.

Don’t forget that vendors have a massive influence over who the end-user works with — or at least who they are advised to work with. Any newcomer with the luxury of a global vendor relationship behind it will find that establishing a local business isn’t such the daunting prospect it would otherwise be.

Now, I’m not predicting a sudden change in the structure of the market because frankly that isn’t going to happen. Locally owned VARs will always dominate the landscape due to their length of tenure in the market, the power of relationships and an intricate market knowledge compiled over a period of years.

At the same time, their local awareness and comprehension of how business is done hands them an advantage that is too precious to quantify. The fact that many companies have elected to enter the market through acquisitive means — as Dimension Data has done with DPS — is reflective of this situation.

Keeping an eye on the customer and service areas that new entrants target when they launch in the market is going to be vital for local VARs and integrators wishing to preserve the imperious position they enjoy. The arrival of outside competitors will of course be a slow and gradual process, but any local resellers dismissive of what it could mean to their status may find that resting on their laurels is a major tactical error.

Dimension Data, for instance, has already confirmed that it will push heavily into the managed services environment, addressing an area that is still under-served by many large corporate resellers in the Middle East. It is not alone. European security reseller Integralis, another recent arrival in the market, has earmarked specialised security consulting and managed security services as untapped areas that hold lucrative opportunities. Dutch storage specialist ISIT, which has also burst onto the scene of late, has confirmed its intentions to begin marketing the ‘storage as a service’ concept that is quickly gathering momentum in mature markets and becoming talked about in Middle East circles.

The common factor binding these companies together is that they aren’t coming to the Middle East to simply compete with existing players on infrastructure sales or basic IT services. They have each spotted a gap for certain offerings that local players on the whole may not yet have exploited.

While the addition of more talented names will hopefully assist in raising channel standards further, it is important that indigenous VARs and integrators keep check of their ability to serve the ever-changing needs of the market. Brushing off the arrival of foreign integrators as insignificant — however slow the process might be — is a risky stance to adopt. They may know the competitive landscape like the back of their hand, but in a market where the dynamics are renowned for changing quickly, there’s clearly no room for complacency.

Digital magazine: Read the latest edition of Arabian Business online

For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.