A core team of ERP specialists that left Arthur Anderson in 1996 finally realise their dream in the Middle East at Exact Software
In middle of June 2011, the core team of Exact Software Middle East, led by Nizar Badwan, bought out the management stake of the Netherlands based parent company Exact International. The local subsidiary which had since 2002 existed as direct sales model was now “green to go” to change into an indirect, distributor-reseller, VAR based model.
Why did Badwan and his team buy out the parent company’s shares and change the sales model for a solution that today exists in 15 countries across the Middle East ? The story goes back more than fifteen years to a time when Badwan was working in Arthur Andersen in Denver, USA.
At Andersen, Badwan’s forte was in the alignment of business and IT strategy in enterprise customers. He worked with organisations to define their IT strategy and keep it in sync with business strategy. He also worked on implementation of business solutions aligned with business outlook.
Badwan and the core team moved to the Middle East in 1996 and brought with them Great Plains Dynamics ERP to an as yet virgin market for business solutions. After setting up as a local office and distributor, they found the market to be devoid of VARs and the only resellers that existed were pure box pushers. Over the next four year’s Badwan developed the market for VARs and groomed them to be consultants, implementation and support partners for the ERP solution. The customer base reached close to five hundred by the year 2000.
In the year 2000, Microsoft acquired Great Plains Dynamics and Badwan’s team ceased to exist in the Middle East as a local supporting entity. “Somebody moved my cheese and we needed to go find new cheese,” Badwan reflects.
In 2002, the same team that left Denver in 1996, regrouped as Exact Software Middle East, and operated as the local subsidiary for the Netherland based ERP vendor. They set up the operation as a 100% direct sales model and engaged directly with small and medium businesses in the region. That is until middle of June 2011.
After working in the region for just under ten years, Badwan and his team felt that further penetration in the market required them to go indirect. There were also VAR partners like Compusoft, Afcom, Emitac and others, from Badwan’s Great Plains business stint, who wanted to engage with Exact Software but could not do so because it was built up as direct sales operation.
In June 2011, Badwan and his core team, still loyal to each other since 1996, bought out the parent company’s management stake and cleared the formal route to transform to a 100% indirect sales model across the region.
Globally, Exact Software operates in 40 countries and has an installed base of 180,000 customers. But it exists as an indirect sales model in only two other countries, US and Netherlands. Now Badwan has added Middle East to that select group of operations justified on the basis of scale and go-to-market opportunities.
The first industry groups on the business development road map are manufacturing, wholesale distribution, professional services and human resource management. As with any other indirect sales operations partners would fall into two categories: VARs who would invest in consulting and customer support activities; and resellers who would go down the opportunity or trading route.
On priority, Badwan is looking for channel partners who can get Exact into accounts where they have failed to penetrate till now; or VARs who have industry specialisation – a key expectation of customers today.
What are Badwan’s credentials now that he has taken the first step in his go-to-market vision? Badwan and his team have nine years of first-hand experience in implementing these solutions across the region, which they are ready to pass onto partnering VARs. For the other category of resellers, Badwan is looking at tapping into business contacts developed during the Great Plains stint from 1996 to 2000, when they operated across the region in the same indirect sales manner.
The installed base of customers is a referral point where Exact has good reputation and proven track record of software performance. From the revenue point of view, the annuity of license renewals across the installed customer base is the supporting income to keep operations moving till the indirect channel ramps up.
Some of Exact’s leading customer names include Electric House Establishment in Saudi Arabia, Gulf Investment Corporation in Kuwait, Nutrecia Middle East in UAE, Eagle Industries in UAE, Eli Lily in UAE, amongst others. The customer base is also built up from multinationals like Siemens and Loreal, which are large enterprise customers on an aggregated global basis, but on a local scale fall into the small and medium business segment.
The core modules of the solution include manufacturing, accounting and human resources. Across the Middle East, Exact also has an office in Kuwait.
Looking at the bell shaped curve of software licenses versus the number of establishments, the extreme points are set at 5 users to 1,200 users. But the sweet spot is set at 20-30 users. In the Middle East a 20-30 user license falls into a small and medium category, but this would be different in the US or Europe.
Is Badwan going to open up the customer base to partner’s from the outset? “Today if I hand over a customer to a reseller that can’t support them – I will probably lose the customer and eventually lose the reseller. So it’s a lose-lose situation.” Once Badwan sees a strong community of resellers that gives everyone confidence, and he can introduce to the customer, “the customer will benefit, reseller will benefit, and I will benefit.”
For now Badwan’s local operation will have their hands-full managing the roll out of Exact Software into the channel. But over the months once the roll out has stabilised itself, and the community of resellers familiarised themselves with the product and the core team, will there be more software products in the pipeline or a business name change? Even for Badwan that is still work in progress.