Inside Systems Integration

By root

Systems integration (SI) has traditionally been a crucial specialty in the IT industry, requiring players in this segment to go beyond the services they scope with solutions they take to market.
Ask a systems integrator what the greatest challenge is when it comes to developing sustainable revenue streams in the Middle East and you will get a variety of answers, ranging from the usual irritants (rapid technology evolution and ever-fluctuating market conditions) to embracing the business models enabled by the rise of the cloud.
However, two issues currently influence the SI landscape in the region more than any other: the need to raise their game on the services front; and the struggle to get reliable and committed financing. Finding a solution to the latter is largely out of their hands, but many industry watchers will tell you that SIs have a lot to do when it comes to balancing technology know-how with a flexible and innovative service offering.
“Whilst it might be a bitter pill to swallow, the reality is the greatest challenge faced by many SIs today is one of complacency,” said Glen Ogden, regional sales director, Middle East, at A10 Networks.
“There was a saying in the 1970s that you never got fired for buying Big Blue – IBM – and for a time, this was true. In those days, as long as you had Big Blue in your portfolio, everything would be good. However, those days don’t exist anymore and whilst modern SIs have been successful offering ‘run of the mill’ technologies based  on market leadership, the cycles of success for these SIs grow smaller as continuous innovation from new emerging vendors renders yesterday’s brand name technologies obsolete.
“SI’s who fail to adopt these innovative technologies, many of which offer extremely compelling financial models – for example, zero licensing and thus reduced operational expenditure (OPEX) – will eventually see their market share eroded, especially as their target audience, today, is now far more savvy.  SIs must look to the future, and invest in taking on new technologies and being able to deliver cutting edge solution to their customers.”
The fact that it is also a rather crowded market is another factor that is impossible to ignore. Developing a service orientation is crucial, according to Manish Punjabi, channel marketing manager MEA at Alcatel-Lucent. Smart buyers will check up on potential SIs on social media before they even make contact with salespeople. IT managers can switch between suppliers at will. Service should be an obsession for any SI that wants to differentiate itself.
“Traditionally, an SI is limited in the amount of margin it can make by simply reselling an undifferentiated solution,” said Punjabi. “Therefore, the role that an SI plays in the future will be limited by its own ambition. In my opinion, the best evolution path to differentiate and create compelling margin streams moving forward might include a consulting model, managed services and an outsourcing model.
“The common theme in all of these paths is [having] sufficiently trained and experienced staff. However, to achieve a level where customers trust the SI to deliver strong implementation and service teams capable of any of these elements requires laser-focused attention and financial investment.”
And that can be a vicious circle. As Stephan Berner, managing director at specialist security SI Help AG, said, one of the main challenges remains the unwillingness of banks and financial institutions to play an active role in channel financing.
“In the region, channel economics are still very much value-added distribution driven and resellers are especially dependent on their VADs for financing large deals,” said Berner. “This will only change once banks in the region become accustomed to IT leasing and financing. This will depend on transparent financials on the part of the resellers and greater trust on the part of the banks.”
Berner said the skills shortage is another frustration for SIs. “For us, it has made finding the right people to further strengthen our market position as the leader in IT and information security a demanding process. This was, and still is, challenging as our resources are hand-picked and the hiring process is quite strict. The good thing, though, is that is helps us to re-assess our internal procedure and processes, which is needed for success in the long run.”
The good news is that SIs have been highly successful at spotting the services and technologies with long-term potential: security, infrastructure/ data centre, and business intelligence/analytics – three high-margin/high-growth areas in which there are still few specialists, according to Mario Veljovic, VP solutions MENA at Global Distribution FZE.
“Another big opportunity is to evaluate new emerging vendors entering the market – and being critical with the established vendors,” he said. “There are a lot of great products out there, which will improve customer satisfaction with regard to price, quality, TCO and service, and will produce more ROI for the SI to reinvest in its capabilities.”
Perhaps the cloud remains the most exciting option for SIs that are looking to innovate – although this, too, requires up-front investment in infrastructure. Leading players such as Dimension Data are already reaping the rewards.
“From our perspective, the managed cloud platform is a unique strength available to our clients not just globally, but also within the Middle East,” said managing director Youssef Fawaz at Dimension Data.
“The combination of the technology, the workloads, sales enablement, billing and contracts all form part of the solution.  To add to this, the management component of the cloud solution ensures that SLAs are met without fail and that upgrades are managed on behalf of the client – all of which is supported by an opex based model.  With no capital expense, the managed cloud platform has the ability to expand with your business without having to procure a huge amount of technology upfront.”
“There are opportunities emerging here in terms of networking setup,” said Faisal Husain, founder and CEO of Synechron. “A simple logic behind this is that implementation of any new technology in an organisation demands some kind of infrastructural solution. For migrating to cloud, customers need support in terms of hardware and a committed service. SIs have an opportunity to act as advisers on top of their core deliverables. In this way, they can move beyond SI to Service Integration, to serve customers better.
“SIs can also connect with suppliers to enable themselves to serve as solution providers, building personal cloud models that can cater to the individual needs of organisations.”
Venkat Raghavan, general manager at Al-Futtaim Technologies, said the cloud is also a game-changer because it simplifies the solution, potentially threatening the SI’s business at the same time as presenting new opportunities.
“SIs that adapt to the new cloud services should have an advantage with enterprise customers,” he said. “They can reinvent their current business models by setting up cloud channels to deliver new service offerings that reduce infrastructure cost and improve time to market for their customers. Professional and managed services from the SIs which can enhance the lifetime of customers’ IT investments will be the key differentiator for expansion and sustainable margins.
“The right solution in the right market is the basic mantra for the success of the SI channel. In certain countries across the region, construction and infrastructure-based projects are continuing to grow – in KSA, and UAE, for example – and will offer a good yield in implementation and technology services. Likewise, certain verticals like hospitality and banking solutions based on the cloud and managed services will be attractive to SIs.”

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