2017 remained a disruptive year for the Middle East channel business. On one hand, the year witnessed a number of mergers and acquisitions while on the other, some businesses downsized owing to several factors including geopolitical tensions in the region, low oil prices and other macro factors affecting regional economies. This in turn caused extended payment cycles and financing to dry up, making it challenging for channel partners to finance their deals. Channel Post speaks with Industry Leaders to understand how they expect the channel to perform in the coming year, where better prospects lie and what needs to be done differently for sustainable channel business in 2018.
With upcoming mega events like Expo 2020 and Saudi Vision 2030 slated to offer tremendous opportunities for channel players, expectations for revenue growth in the Middle East still remain high, which is putting more pressure on an already tough market. In addition to this, IoT and cloud are offering opportunities for growth which means that the channel needs to have a good understanding of these enabling technologies. Digital transformation is also affecting every industry and putting technology and data at the core of business. Amidst the challenges of emerging business models and technologies, new competition etc., the channel is generally optimistic about their prospects in 2018.
Digital Transformation is creating a shift in technology and businesses have to be on top of emerging technologies to stay ahead in the race, adds Manisha G., Marketing & Communications Manager, Finesse. “The channel should look forward to the opportunities that increased adoption of converged infrastructure, software defined networking, cloud and mobility will bring. Further, emerging technologies like artificial intelligence and robotic automation will surely impact the way businesses are done,” she explains.
The General Manager at VAD technologies, Mario M. Veljovic describes 2017 as a challenging year for the channel, especially in the larger markets, such as KSA and UAE and the most pressing issues this year were channel credit and financing. “Channel players should look at countries that have a strong SMB and SME driven economy. Moreover, introduction of VAT in the region and an accelerated drive for automation across all industry verticals, will help improve the overall business climate in 2018 creating many opportunities for the channel community,” he adds.
Adding to Veljovic’s point of view, Samih Moussly, Channel & Alliance Manager MENA, ServiceNow says that cash flow remains a major issue in Saudi and customers in the Kingdom take about 8 months to pay partners. “This is putting a financial strain on partners that are looking to reinvest in the business.”
From a technology perspective, Moussly adds that despite generating low revenue compared to on-premise offerings, ultimately it is cloud that will provide the required push among partners for a steady revenue stream over the years.
Taking market intelligence into account, Help AG forecasts UAE to continue to be stable in the coming year and like other channel players, expects positive development of business in Saudi Arabia.
Hesham El Komy, Senior Director, International Channels, Epicor Software says that the channel will thrive well in Saudi next year as long as they specialise and focus on their chosen vertical. North Africa is however, a different story, as per El Komy.
“It has generally been very slow for the past few years mostly due to the spate of revolutions that saw changes in Governments across the region. This uncertainty impacted organisations’ buying decisions, which in turn has negatively impacted growth in the channel. That being said, countries such as Libya are pulling through as they recognise they have to rebuild their infrastructure aggressively, says El Komy.
To ensure success in the channel, there certainly needs to be a fundamental change in the way business is conducted. Channel players need to move away from having a ‘price first’ conversation and instead concentrate on how the technology they are representing can help businesses become more agile, gain a competitive advantage, and grow.
El Komy emphasises that it is imperative that channel players move away from traditional ‘box shifting’ business model and take a consultative approach, where they are seen more as trusted advisors and true business partners rather than just another supplier.
Coming to the cyber space, in 2017 there was not only an extraordinary increase in instances of cyber-attacks but also in the innovation used to bypass standard security measures. This resulted in a trend for vendors and partners to create and implement next generation security solutions that protect organizations against the unknown.
Considering the prominence that cybersecurity has gained in enterprise-level organizations and based on discussions with its key partners, SPECTRAMI expects 2018 to be another fruitful year. “We have seen more predictable channel business in the region overall in 2017, with channel taking a number of proactive initiatives in ‘enabling and self-sustaining’ to deliver the solutions,” adds Anand Choudha, Managing Director at SPECTRAMI. “Our customers have earmarked key projects in the coming year and we are confident that the channel will step up to deliver its best to the customer ecosystem.”
Governance, Risk and Compliance is also a technology area where more partners are starting to invest their efforts in. With the enforcement of regional and global regulatory standards, companies trading on a global scale, need to comply with different compliance standards.
Credence Security’s Regional Channel Manager, Chris Wiese summarizes that cyber security and GRC would be a priority in 2018. “GRC is a hot topic since globally, risk postures of organizations are being measured by auditing firms and penalties for failure to comply is a costly burden for organizations,” he further explains.
There has also been a significant shift from resale of product to services of any kind, and then more recently the transition from services to managed services offerings. However, partners are not closing as many big projects as was the case in the past to derive their margin.
Avinash Advani, Sr. VP – Strategic Alliances & Intl. Markets at StarLink, believes that the goal for partners needs to be to develop a strong services practice, and simultaneously look at incorporating next-generation margin-rich technologies into their portfolios.
“With our Managed Security Services offerings, we see huge opportunity in government and enterprise organizations. As is evident from the investment we continue to make in our Cyber Security Operation Centre in Dubai (CSOC), managed security services will be the main focus for Help AG in the coming year,” explains Stephan Berner, CEO, Help AG.
Finally, rewarding investment and engagement, like up-skilling and training, with financial and non-financial benefits like content syndication, events in local markets, co-market opportunities and even access to leads is a key way to building value for everyone.
Hozefa Saylawala, Sales Director ME, Zebra Technologies adds that certifications are one way in which partners can differentiate themselves and channel partners should be awarded according to the level and type of value they bring to customers and not on the volume they buy.
One can say that this year’s economic conditions have had something of a ‘cleansing effect’ on the market. Many traditional channel players who refused to change their business models from the traditional channel business have either scaled down or closed shop entirely. Partners that have been willing to invest in and build a niche business focused on a couple of technologies or verticals have really excelled in 2017. This trend is expected to continue in 2018 and those who can embrace change in their business model and focus on becoming specialised in either a technology or a vertical will set themselves up for growth.