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Sun 2 May 2004 04:00 AM

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The power of local touch

Getting close to both the channel and the customer is a popular vendor dream. Turning this dream into reality can be an expensive rollout exercise. In the Middle East markets, not all vendors are prepared to splash the cash to get up close and personal in the local markets.

When it comes to building a solid market presence in the Middle East, vendors need to place a heavy emphasis on building local touch. Even the most channel-friendly vendors need to back their partner relationships up by building in-country operations to support the channel and provide assistance to end-users where requested.

The benefits that local presence brings are applicable across the IT spectrum from vendors of commodity IT supplies right through to those selling complex high-end software.

In the software space, it is frequently the closeness of a vendor’s relationship with partners and their joint ability to reach out to customers that determines success. Recent conversations with Saudi Arabian software integrators highlight the fact that not all vendors are prepared to make a meaningful commitment to building a local presence. Rather than pushing sales and marketing concepts through a dedicated channel, some vendors prefer instead to target end-users direct through focused events and hope that building this demand will pull in implementation partners where necessary.

While there is a large untapped customer base to target, this approach can reap rewards. But, it is a short-term sales fix and does not build a sustainable long-term channel mechanism for driving demand and building consistent order pipelines. The popularity of the end-user focused roadshow run by vendors in Saudi Arabia is also now facing the real danger of creating ‘event fatigue’ among the major customers many are targeting.

It is important not to tar all vendors with the same brush. One vendor that has broken the mould for building regional office infrastructure is Dutch midmarket ERP vendor Exact Software. It has committed to an aggressive expansion plan that will see it open six offices across the Middle East during the next 18 months spanning Saudi Arabia, Kuwait, Qatar, Oman, the Levant and Egypt. These will be real offices with a decent number of staff at each branch, not the one-man-band traveling salesman that some vendors like to count as a national presence. It is worth bearing in mind that Exact Software’s channel-to-market is predominantly a direct sales model, making local staff a vital part of any strategy to increase sales in the region.

Hardware vendors can also benefit from investment in local touch — be it through locating dedicated staff in each national market or ensuring that distribution partners follow an in-country channel development role rather than selling remotely from a distance and leaving national partners to look after themselves. The conundrum faced by many vendors is that local touch is not cheap. Invariably, it is an expense and the potential rewards have to be factored against the costs incurred before a decision can be made.

In actual fact, the dream channel partner for many hardware vendors offers a low-cost infrastructure based around centralized warehousing and excellent logistics yet gives the appearance to partners and customers of being in-country with excellent local services availability. It is a conjuring trick of the highest order but one that some distributors are starting to pull off. These distributors are characterized by excellent links to the reseller community through all communication forms — be it web-based interfaces, e-mail, phone, fax or even mail shots. The strength of this reseller community and the distributor’s ability to feed through vendor information, technical support and services where necessary is a compelling proposition.

It remains important to understand the importance of the Middle East market to major vendors in a wider global context. The fact remains that some markets represent too small an opportunity to justify putting in a national office and providing the value that local touch brings. This is not to say the market is unimportant, just that there are other more pressing — and more valuable — market opportunities elsewhere in the world to pursue. The Middle East region also remains a fragmented series of national markets characterized by different cultural environments and sales practices. Adjusting to national idiosyncrasies is a time-consuming and often costly process for vendors to go through.

The propensity to invest in building local touch depends on market size, existing vendor landscape, growth opportunities and the ability of the local channels to provide support and services. Given the current growth rates in the Middle East IT market, expect vendors to start stumping up more cash to build their regional infrastructures. It will be a subtle evolution though, not an overnight transformation

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