For the industry today, a technology by itself means little. It is the focus on value added support and consulting that appears to be the draw. Over the past few months, most key technology players in the region have been investing towards building up their play in the consulting and services space, moving right up the technology value chain. But is the eternal conflict between the merger of the two main practices -- business consulting and product/technical consulting worrying the customers at all? And more importantly are they buying into this proposition?
The Middle East region technology market is moving up the value chain, with most of the large vendors having put plans in place for beefing up their technology consulting business. Microsoft for example is looking at offering its customers both business as well as technology consulting, without actually making a direct push for its products in all cases. Cisco Systems Middle East General Manager Ghazi Atallah shares that Cisco is soon going to focus its technology consulting activity around its Centre of Excellence currently being set up in Dubai, where it will showcase to customers what transformation technologies can do for their business. Hewlett-Packard has established competency centers in Lebanon, KSA, and UAE and at the business/IT strategy level, the Invent Centre in Dubai takes the company?s strategic consulting business forward. Similarly, Sun Microsystems and a host of other companies (that already have a strong presence in consulting in other developed markets) are also going the same route. Today the game is all about delivery of value for the customer. Numbers are also indicative of the move towards consulting services. The MENA IT services market reached US$1.87 billion in 2004, which is a YoY growth of 14 percent from 2003 according to IDC data.
IDC?s Senior Analyst, IDC Middle East and North Africa Philip Van Heerden says there is a clear move in the Middle East industry towards the combination of IT and Business consulting as a continuous trend -- like for example IBM and PwC Consulting. ?Similarly, Accenture"s change of business model also indicates that the convergence of business processes and technology can be delivered to the customer more effectively from one source,? says Van Heerden.
Typically, rising investments in complex technologies like ERP, BI, content management, wireless networks, security and storage are seen to be creating a gap within in-house IT department expertise, which is leading companies to seek technology consultants for support.
?Traditionally, larger organizations in the Middle East have relied on in-house IT departments to run (and to some extent develop) their IT infrastructure. For IT services vendors, the use of in-house IT staff has been a major inhibitor for penetration of these organizations. Nevertheless, as product investments move towards more complex technologies, the skills gap within organizations widens. Rather than continuously investing in re-education of in-house staff they are using a number of vendors and other third party organizations to either help or guide their initiatives in areas where skills are lacking,? adds IDC?s Van Heerden.
Also, the higher cost of using a third party support service for implementation and support for new technologies is often offset by faster and better quality of implementations, say industry insiders.
Well-diversified Middle East-based Al Ghurair Group?s CIO Hatem Al Sibai agrees. Though the Al Ghurair Group itself has always invested in an in-house IT team for both consulting and technology development, it has considered outsourcing to consultants and service providers for some niche projects, especially in areas where the company does not have in-house expertise. But more importantly, Al Sibai believes that smaller companies stand to gain more from involving technology vendors as their consulting partners.
?While we have preferred to maintain our expertise in-house, for a smaller company technology vendors could add a lot of value. They can use technology consults to get a grip of new technologies and also gain access to right skill sets through them. However, companies need to maintain the balance,? he adds.
Open source service provider Opennet Managing Director Tewfik Zitouni also believes there is value to be culled when companies balance their IT advisory team with representation from vendors, service providers and in-house IT members.
? The customer will still be the one dictating what the solution should look like in terms of which vendors will be present in the solution. However if the customer does not have a vendor presence, the service provider will by default use the vendors they already have partnerships with or ones that creates the highest value to them,? Zitouni adds. He is of the belief that this emerging partnership model will see a much stronger client-vendor relationship emerge in the Middle East market.
For vendors per se, building the business in consulting is also becoming both a sales imperative and a "Delivery Best Practice" for all technology firms, notes META group Middle East Consulting Director Azzam Al Dari.
?Client organizations are increasingly demanding solutions to their problems, not sheer product functionality or technology excellence. Solutions require deep knowledge of the client"s industry and therefore involves around being able to solve a customer problem,? says Al Dari. He also adds that today it is about being able to offer a set of tools, methods and skills to effectively use the elements of strategy, process, technology and people to develop comprehensive solutions for client problems.
For some companies, especially service providers, the involvement of the vendor can often define the way the business evolves and goes to market. KSA-based Al Suwaidi, which runs a Managed Security Services Business -- Information Management Technologies (IMT) -- based completely on Symantec technology, took the vendor into confidence before it rolled out its business in 2003. Symantec is now a key part of every pitch to a new customer and IMT believes the involvement with the right technology vendor can actually influence the business positively.
?The involvement of a vendor carries a lot of weight to persuade a customer to go with the proposed solution. As an example, when I joined IMT in 2003, I brought my knowledge of the Symantec products to the table in finding a security solution/ partnership for the group. Everyone knew who Symantec was, but getting them involved with the architecture design of the solution, persuaded the Al-Suwaidi IT committee to trust them and align our long term security solution roadmap with Symantec,? says IMT Senior Security Consultant, Fred Vyver.
Storage player EMC also maintains that the involvement of a strong technology vendor helps organizations keep ahead of the market. ? EMC is actively involved in consulting to ensure smooth deployment as well as to initiate transfer of knowledge. Often technology is currently developing faster than end-users can develop their implementation skills, so consulting services are required from organizations to bridge that divide,? says Mohammed Amin, Regional Manager for EMC Middle East.
UAE University?s Dean of the College of Information Technology Dr Rafic Z Makki says this region in general has been behind most other regions in the usage of technology because of the underdeveloped market for consulting services. ?Even the UN World Report on the Arab World shows that this region in terms of technology building and usage has been significantly behind other regions. Mostly operations of technology companies have been sales driven and I believe it is a good change to see the services-based model coming into play here,? says Dr Makki.
The university has recently established a CoE with Sun Microsystems and also works closely with Cisco on a similar project to help showcase technology to the industry. Consulting will also be a big part of the university?s offering to the market as part of its focus on building technology skills.
TAKREER?s IT Department Manager says that working closely with technology vendors and service providers has enabled it to stay ahead in the technology game. So far, the company has forged close consulting relationships with a number of major technology players.
Oil major TAKREER (Abu Dhabi Oil Refining Company) is a perfect example of how this region?s big players are culling value by using a mix of in- house and outsourced IT consulting. According to its IT Department Manager Fuad Al-Ansari TAKREER has been able to pioneer technology usage in its sector in more than one area because of this model. Not only does it help them understand the way the technology is moving, but it also enables them to judge the commitment and strength of the vendors and service providers to a particular project.
?Since Takreer has a relatively small team of IT (15 Direct hire), we heavily rely on in-house consultancy in the form of specialized contractors (around 10 contractors). For the same reason we outsource some of the operations that could be handled by external vendors as well namely, in the areas of hardware maintenance, network support and even in the case of some critical business application support,? Al-Ansari says. At the same time, the corporation has also considered outsourcing some of the other functions such as ad-hoc IT projects (development of the IT Strategy or IT security auditing) to external consultants.
Even as technology vendors speak of the rising levels of interest among enterprises to avail of consulting support, Al-Ansari says TAKREER has already been a forerunner in this segment, working with key technology players and systems integrators in defining its technology roadmap.
?We follow a system of running pilot projects when considering any investments in new technology. This helps us actually try and see a project at work before we implement it on a large scale basis,? he adds. For instance, the company is currently piloting anti-virus and anti-spam solutions from eight different vendors and will be making its decision based on the performance and result of these pilots. In the area of document management, TAKREER was the first among local Oil companies to tender and pilot a document management system from Live Link.
Al Ansari, as an IT Department manager sees value in working closely with and roping its technology vendors as a key part of the IT purchasing decision process. ?We consider the technology vendors as a source of information for analyzing various solutions especially if we are dealing with a new technology. Aside from conducting our own independent research we need to hear from the solution providers as to what they think about a particular technology and assess their capabilities in support and maintenance of the same solution,? he adds.
TAKREER specifically sees value in building ties with two levels of technology providers. ?We first of all spend time with the principal vendors of technology to understand the industry trends, and secondly we also make sure we work closely with the second layer like systems integrators to make sure of support and service levels,? he says. So far, the company has involved majors like Cisco, Microsoft, MRO and Computer Associates, besides solution providers in its IT transformation.
The growth of consulting certainly means that an outsourced services model is not far behind to hit this region. While this may not take the route of the India or China type services model, technology vendors say that this will give enterprises in the Middle East an opportunity to hand over their non-core business areas to experts and retain core business processes in house.
Global pure-play services major EDS, following its joint venture with Abu Dhabi-based Mubadala Development Company created Injazat Data Systems to offer end-to-end services to this region.
?This market has historically been a buoyant one for consultancy, systems integration and support services. However, in recent months we are starting to see greater interest in "end to end" and "value-added services", where clients recognize the benefits of a "one-stop-shop" and a strategic, long-term relationship with an IT services partner. We"ve also started to see a ?blurring of the edges? between business and technology requirements and the need for certain professional staff to have experience of both facets of a client"s activities,? says Eddie Cunningham, Director of Sales and Marketing for Injazat Data Systems.
Interestingly, this model will see Injazat get access to EDS?s worldwide base of over 120,000 specialists and hopes to begin delivering total IT services and Business Process management services to customers in UAE, Oman and Qatar initially, expending in due course to other regions in this geography. EDS?s global clients wanting to be serviced out of this region will be offered the option of being services by Injazat.
Yet another global player -- IBM Global Services is also currently in the process of scaling up its business consulting operations in the Middle East. ?IBM clearly wants to be strong in both business and technology consulting and market intelligence tells us that clients are looking for a strong technology partner that can bring together a number of components together and help apply the collective knowledge to different parts of their business,? says IBM Middle East Egypt and Pakistan, Partner Business Consulting Services, Gerard Newman.
Similarily, HP in the Middle East already appears to have a strong consulting and services practice going. ?We already have a strong play. The services portion of the total IT market is a significant growth area in terms of IT spend dedicated to it, and we show worldwide and regionally stronger-than-market growth rates,? says Fawwaz Qadan, Manager of TS, Technology Services Organisation, HP Middle East.
Having has been offering its Adaptive Enterprise model for over a year now and Qadan says this helped the company change the market perception of it from being a box provider into a solution provider.
?Solution selling is not new, Customer lifecycle models are well documented and the longer a relationship exists the more cost-effective it becomes for both the provider and the customer. The relationship moves from a vendor into a business relationship -- a partnership, where trust and consultation takes place,? he adds.
Now comes the cruncher. With the ?blurring of the edges? between the technical and service-based consulting, how does one get around the possible conflict of interest?
According to IBM?s Newman, he does not see this as a case for concern as he finds clients more interested in kick starting their technology transformation, provided the consulting itself remains unbiased and free from being tied down to a particular vendor?s technology.
?There is of course a potential conflict of interest, so enterprises and consultants need to be adult about it. The trick to get the best out of this situation is not to worry about the conflict itself, but ensure it is managed right in a way that delivers value for the customer,? he adds.
Similarily, HP Technology Services is of the view that an open and multi-vendor environment support will ensure higher customer confidence. ?As IT outsourcing grows it is important that the provider is able to offer the confidence to the customer that their environment will not be compromised -- no matter the complexity of its make up,? says Qadan.
Some others like CA however, believe that a direct presence in the pure consulting space comes with a fair share of technology bias. According to the company, the strategy has been to open for an indirect role, working through consulting partners instead. In the Arab Countries, Computer Associates has decided to perform services implementation based on CA Architecture.
But perhaps the key to getting around this issue perhaps lies in the hands of the CIO himself. Al Ghurair?s Al Sibai has an interesting comment to contribute. While he says that most enterprises are open to roping in their technology vendors for consulting and services, they do maintain some restraint when it comes to product-based consulting.
?It is the nature of the beast. We have to understand that at the end of the day companies are trying to sell their products to us. But it is up to IT managers and CIOs to maintain the balance and use their discretion,? he adds.