“The Arab IT Market is a Gold Mine”

November 21, 2005 by admin

Mr. Maccotta, the Arab world is not an attractive IT market – is this a prejudice?

Maccotta: In my view, this is a myth and a misconception. According to third-party market researchers, the Europe, Middle East and Africa region is the fastest growing emerging market worldwide. For instance, the leading IT trade exhibition of the Middle East, Gitex, attracted more than 120,000 trade visitors this year with a 9.8 per cent increase over the previous event , making it the most important platform for industry professionals and businesses to network. This makes it obvious that the region’s IT services are on a growth path. In fact, the IT services market in Europe, Middle East and Africa (EMEA) is expected to grow from 206 billion US Dollars in 2004 to 240 billion US Dollars in 2009.

Which particular sectors are the key target areas for IT solutions?

Maccotta: Although the wholesale and retail sectors are predicted to be a core focus in the region until 2008, according to independent analysts, the education and healthcare industries always require continuous attention and upgrades, simply because such important verticals require continuity in the latest and greatest software support.

Which SAP solutions are particularly in demand among your customers in the Arab world?

Zalt: As we tend to work with larger accounts, SAP solutions for the oil, utilities, metals and chemical industries with best practice are popular, and we have developed a significant, dedicated resource base to cater for these clients. We are also seeing trends in our existing customer base towards products such as mySAP SRM, mySAP CRM, and SAP NetWeaver – Business Intelligence.

Cherry: In 2004, the demand for financial applications was the highest, compared to other ERP components. Multinational companies in the member countries of the Gulf Cooperation Council (GCC) – Saudi Arabia, the United Arab Emirates, Bahrain, Oman, Qatar and Kuwait – are now beginning to adhere to strict accounting and auditing standards. With issues such as corporate governance, deregulation and privatization as key challenges and the continued development of key sectors such as oil and gas and financial services, the Middle East will continue to see growth in demand for world class solutions. But the bulk of GCC companies are small or medium-sized and just beginning to automate their business processes. As the next generation of Middle Eastern leaders emerge, these companies – with the help of entry-level ERP vendors – are currently being primed to become bigger and more competitive as new entrants threaten their survival and profitability, and so, they too will look for world class solutions.

Is there also demand for SAP solutions beyond the wealthy Arabian peninsula?

Maccotta: Yes. SAP today has branches across Dubai, Egypt and Oman; with Saudi Arabia as the headquarters. We have more than 70 prestigious customers covering the entire region.

Cherry: The Kingdom of Saudi Arabia, Qatar, the United Arab Emirates and Kuwait remain the key Arab markets with Iran also emerging as an area for potential, especially given the new president’s aspiration to make Iran an attractive market for outside companies.

What differences in business practice need to be considered in the Middle East?

Zalt: The Middle Eastern market for large IT projects works on some fairly simple principles – trust, value and delivery. The pre-sales cycle here can be lengthy, as we work with potential customers, describing what we have achieved with other clients, our extensive track record for delivery in the region and our current deployment strategy. Whilst price is obviously important, the customers need to establish and depend upon their systems integrators and know that their project is in safe hands and that they can personally trust the team responsible for delivery.

What about the acceptance of new IT technologies among the population in Arab countries?

Maccotta: You have to take into consideration that technological advancements are dependent, for example, on the country’s gross domestic product or the literacy level. Market research shows that a significant dip in any of these contributing factors will have a tangible, negative impact on IT penetration. Having said that, recent findings for the IT services industry in the entire EMEA region have been quite positive since there is an ongoing change in the economic environment in various countries as well as an increase in awareness about the benefits of modern technology.

In early 2005, Axon implemented mySAP ERP in the Middle East location of the car manufacturer Nissan. Why was the Middle East first?

Cherry: It wasn’t an issue of the Middle East being easier or harder – it was simply an issue of business sense: Nissan Middle East chose to adopt the solution first as, they recognized the opportunities presented to them in terms of improved efficiencies across the business and in dealing with Nissan in Japan.

Atos Origin recently implemented SAP R/3 in 200 offices of the world’s largest oil producer Saudi Aramco. What experiences ensured the success of this huge project?

Zalt: The working relationship between SAP, Saudi Aramco, and Atos Origin was clearly a differentiator for the project’s success. For the initial big bang implementation of the largest single SAP implementation in the world, we brought together an excellent team of SAP experts. SAP committed some very good people to the project. The project received excellent cooperation involving all interested parties, from the top level commitment within Saudi Aramco to the related Government offices. Finally, the commitment alongside end user training requirement was impressive: We conducted hundreds of training classes for literally thousands of Saudi Aramco employees across a large geographical area to ensure everyone was educated and trained ready for the big day. In the end, the go live was remarkably smooth.

Where do you think your companies and customers will be in ten years?

Maccotta: We are entering a new era of computing, where IT is aligned with business strategy and used as a driver for competitive advantage rather than simply a tool to cost efficiency. Changes in customer needs and behaviour will be the most significant challenge and companies will shift their focus to innovative business models and integrated network of partners rather than new products and we expect to invest in improved customer relationship management capabilities to help meet that challenge.

Zalt: The demand for technology amongst our customers is very high. We have significant resources working on SAP NetWeaver-based technology now and see this as an obvious major growth area as our customers prepare for the Web-based service era. Another key area of growth will be outsourcing. Our outsourcing revenues have tripled in recent years. We are certainly looking to build on our lead in this area.
Cherry: We shall continue to focus on large organizations for whom SAP is their key enterprise business application. As the Middle East economy grows, we foresee a continued growth in the demand for ERP and ERP services. We are involved in programs such as developing a transport company in preparation for the 15th Asian Games at Doha, Qatar in 2006, enabling the expansion of a retail business or delivering new public sector initiatives.

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