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Sun 24 Feb 2008 04:00 AM

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Ten minutes with… Jan Zadak

At HP's Software Universe Conference in Barcelona, Brid-Aine Conway talks to the company's EMEA senior vice president of sales and software about the Middle East market and how HP is growing its software side.

At HP's Software Universe Conference in Barcelona, Brid-Aine Conway talks to the company's EMEA senior vice president of sales and software about the Middle East market and how HP is growing its software side.

What was the driver behind HP's acquisition of Atos Origin ME?

If you look at the Middle East today, it's a consumer-oriented marketplace - the consumer drives a lot of GDP growth - I don't think it will slow down.

If you go back, what we did was, the first company we acquired in the Middle East was in Saudi Arabia where we fully acquired the Compaq computer services and integrated the joint venture into our HP SA operation; we then established our direct presence in Oman, last year we acquired NCS in Kuwait and part of NCS in Kuwait and Bahrain creating the joint venture which is now HP Services Kuwait and Bahrain.

At the same time as acquiring Atos, we were strengthening our position in Dubai as our centre of operations in the Middle East.

But we were also heavily investing in Saudi and overall in the Gulf countries. Meanwhile, we have significantly strengthened our presence in Egypt's Cyber City.

We are very happy about the substantial business growth over the last 12 months and over the last five years, significantly strengthening the number one position that we have in the Middle East IT marketplace.

Our focus on expanding services, which was done through Atos's acquisition, was in the core of what we actually want to do going forward.

We wanted to strengthen our capabilities in services to be able to bring the technology, implement the technology and get the business benefit extracted without changing our Middle East partner strategy.

What kind of spending do firms in the Middle East do on software and services as opposed to pure hardware devices?

If you look at the maturity of the market, the Middle East market is still undergoing a development and it will mature more over the next couple of years.

If you look at the proportion of software and services it's still in the lower range, but I am a very strong believer that the market will accelerate with maturation.

We also do extremely well in hardware - if you look at the market share in servers we have a market share of over 50% across all of the server categories and over 60% - 70% in some of the industry standard servers in some Middle East countries.

So we do exceptionally there, and also when it comes to printers or PCs in the Middle East.

We're now focusing on accelerating software growth. Without giving you Middle East numbers, the whole of Europe is now hiring 500 people into the software organisation.

We want to accelerate our capabilities to grow software substantially. And finally, we have the services growth, which partially is a growth through organic means, but a big part for us in the Middle East is really an M & A play.

We displayed that in Bahrain, in Kuwait, we have now displayed that in Saudi Arabia and for us this is really an area to catch up in terms of the overall market share that we can potentially win.

What is HP doing to promote the software side of its company?

Number one, we are focused on developing the capabilities of our customers, our channel partners and our internal organisations. We are looking at capabilities to be able to bring the value, implement the value and get the stuff done.

Secondly, we are very focused on making sure customers understand the business cases behind implementing certain software technologies, so there is a clear business benefit or outcome on whatever you plan to do in IT, when it pertains to hardware, software or services technologies.

Is there more growth through acquisitions in the Middle East for HP than in Europe or Africa?

The acquisitions strategy for the Middle East(ME) for services is stronger than it is for some of the other parts of Europe. First of all our market share is lower than what it could be or what it proportionally is in some of the other places.

We see that through inorganic means we can achieve our objective faster.

Secondly we see a growth opportunity because we believe the market will mature quite soon.
We believe that the investments that will go to IT in the ME fuelled by the oil price, for example or fuelled by what is happening in the ME in terms of transforming economies from oil-dependent to non-oil-dependent will accelerate investments to certain tech sectors, including IT.

How is the software side of HP being promoted in the Middle East?

If you look at the business focus, there were really two areas that we focused on in the Middle East in the past and that we are focusing on today. One is the Business Technology Optimisation (BTO) which is around helping the CIO to run the IT as a business efficiently.

The other is Open Call, which is is the telecommunications platform with industry specific solutions around service provisioning and management - this is where we were very successful in the Middle East.

So far, we have not been putting too much focus on developing our new view - the Business Technology (BT) business - so this is an area in which we are still putting our plans into the Middle East.

Are ideas like Service-oriented Architecture (SOA) and Software as a Service (SaaS) taking off in the Middle East?

We are making SaaS available obviously, but the leverage that you would see coming out of the Middle East versus some of the markets like the US or Germany or the UK is substantially limited. If you look at SOA the adoption is equal across the world.

Today, no enterprise can afford to put in any application that would not be SOA-compliant. Anything you are today building in your IT landscape has to be SOA-enabled if you're not planning to build something that will get you isolated as an IT island.

I don't see any difference between the Middle East and the rest of the world.

In terms of SaaS, is it connectivity or the idea of SaaS that is holding up its uptake?

I would say the maturity of the marketplace is still behind the US or some Western European countries.

I wouldn't say it's a show stopper but, the speed of adoption is definitely directly linked to the maturity of the organisation for the Middle East.

I would say that the customer would start looking at it as a more viable alternative [if the connectivity problem was solved].

That would enable some customers to put forward better business cases than today, you know, when you put all the cost of connectivity and access etc together, your business case can change quite substantially based on your connectivity capabilities and price.

Will that mean a dramatic exponential adoption of SaaS? I wouldn't think so, over the next year or two.

Do you feel the Middle East market will continue to grow?

Absolutely. I'm very positive about the economic climate overall, when it comes to first, the liquidity of the marketplace, the capability to invest and second, the areas in which to invest.

I think that the transformation from oil-dependent to non-oil economies is providing enormous scope. You look at financial services, telco services, healthcare, education, some of the near shoring centres that are being built - all that for me represents enormous business potential.

I equally see more and more red tapes being removed across the region, making business easier to do, as well as making it easier for companies to move in. When you see the way Dubai and some of the other countries has been transformed, this is very encouraging.

So I am positive from an opportunity point of view and extremely positive from a HP position because we, as the IT leader in the ME marketplace, we are acting from a leadership position.

And equally HP is very committed to re-investments, We have put in a lot of investments over the last five years. We still see a lot of opportunities for us to go and accelerate those investments.

Do you see emerging markets as a way for HP Software to make its mark?

If you look at the Middle East today it's a very consumer-oriented marketplace - the consumer drives a lot of GDP growth - I don't think that will slow down, I think that will keep pace with enterprise development.

My view is that all segments will accelerate - consumer and enterprise, and I equally believe that in the middle, between the enterprises and consumers, there will be a need for the niche SMB companies to grow and start playing a very important role, which you see today in a limited fashion.

The SMEs delivered by the connectivity capability and services availability overall will accelerate as well. So, yes, I would see acceleration of software and I would see acceleration of all business segments across the Middle East.

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