Almasa has chosen to spin off its value division leveraging on industry stalwart Roger El Tawil to deliver on the move
Over the last two years Almasa IT Distribution has been restructuring itself towards putting more emphasis on its value added business and clearly segmenting its internal operations into volume, value and retail focussed activities.
The value division has existed within Almasa IT Distribution for the last seven years as a business unit and has been growing at a double digit growth, albeit on a small revenue base. In order to create a more direct focus on this side of the business, Almasa IT Distribution has been restructured and the value added operations, vendor and partner relationships have been consolidated under Almasa Value Distribution as a separate business. Industry veteran Roger El Tawil is now heading this company as its Executive Director.
“The unpredictable nature of the market had a significant impact on everyone’s business, so Almasa took this opportunity to evaluate and refocus for growth going forward,” says Mehdi Amjad, Executive Chairman of Almasa Holdings.
El Tawil was initially brought on board as a consultant and after jointly evaluating the pros and cons of Almasa IT Distribution’s value business with Amjad, has now taken on the responsibility of managing the business as a standalone business entity. “When you are a division in a bigger machine of distribution driven by components and volume, you are not getting the right level of focus, leadership, investments,” was his logic for recommending Almasa Value Distribution business spin off.
“The result in this evolution was to give the value business its own identity, leadership and management approach while the IT distribution arm focuses its core business of volume distribution,” adds Amjad.
Announced in October 2011 along with his formal appointment, El Tawil has been quick off the mark. His first year game plan across 2012 is built on a few strong basic principles of vendor and reseller partnerships and geographic reach.
The first basic principle is to focus on strategic vendor partnerships around products and solutions from HP Procurve, Avaya and Gateprotect. Amongst the three vendors, the relationship with Gateprotect is the newest and its portfolio is meant to be complementary to HP Procurve and Avaya directed at the small and medium business. For Avaya it is the full unified communication convergence portfolio including telephony, video, data, wireless as well as contact centre solutions also directed at the small and medium business.
Is the unified communication business being under leveraged by channel partners? El Tawil believes so. The key is to focus along with vendors and in the direction of vendors. “You need to align with any vendor that you are going to work with. You need to align to their strategy. You have to sit down and plan and measure. At the end of the day, vendors want incremental business.”
On the contact centre opportunity – every government entity, every service provider, almost every large enterprise in the region has a contact centre. Almasa Value Distribution is looking at offering social media along with contact centre solutions.
“It is definitely an area of growth. Social media players like Facebook, Skype, iPhones and email on the move, are changing the way we communicate today. Everyone in the small and mid market wants to leverage their business and personal tools and get the most out of unified communication space.”
However El Tawil is also clear – the enterprise solution space is being left to the vendors and tier one system integrator and reseller partners.
With value added distributors like FVC, Westcon, Secureway Network, Computerlinks, Optimus Telecommunications well into the game, is there a risk that Almasa Value Distribution may be too late into the market? “It is never late. When I joined Avaya eight years ago, we said no one knows Avaya and no one knows the brand. Was it too late? No! There is always room for another player,” he remarks.
The value added business model is more or less similar amongst the various players in the regional market space. But El Tawil believes the differentiation from others will come from Almasa’s people and partners, decision making speed and consistent results. “A lot of vendors are under pressure. We want to be there to support this pressure and really deliver to the market. Yes we lost a bit of share but we are ready to take it back.”
“Every vendor also goes through the process of revisiting and consolidating their distribution strategy. This is very normal these days”, and El Tawil should know this since he previously served as Avaya’s Channel and Marketing Director for Middle East and North Africa.
Should Almasa Value Distribution have been spun off earlier? “Yes, the sooner the better”, he admits. But with regional markets expected to revive in 2012, the timing of Almasa Value Distribution’s entry into the market is still on track and on time.
What will the Almasa Value Distribution business model look like? On a relative scale, FVC is categorised more as a niche player and Westcon a broader player. El Tawil expects Almasa Value Distribution to progress more towards a Westcon type approach with a vendor portfolio skewed towards support and services for small and medium business in the collaboration space.
The second basic principle being adopted by El Tawil to bring Alamasa Value Distribution upto speed is to reinforce relationships with key VAR partners which may not have been a leading priority during the focus on top line growth of previous years. In this respect, El Tawil received overwhelming support from old and new prospective partners during Gitex 2011.
One of the cornerstones for Almasa Value Distribution’s go to market confidence is its ability to leverage on credit facilities, geographical reach and financial reserves of both Almasa IT Distribution and Almasa Holdings. “It is upto me what services I need from the organisations. It is not based on what is available. What I need, I will take and if they do not have it, I will build and I will invest in it.”
“While leveraging the infrastructure, experience and support of Almasa IT Distribution and Almasa Holdings, Almasa Value Distribution has the opportunity to operate independently,” adds Amjad.
An observation that El Tawil has made while switching from the vendor side of the fence to the channel side is the deterioration in loyalty standards. “Everyone is shopping, hunting and deal making. But you really need to work to build your business and have the right partners around you. Long term success is not going to come from shopping around.”
The third basic principle El Tawil is working on is geographical reach. Saudi Arabia is an important target market for him in 2012. The other geography he is focussing on is Africa for Avaya’s contact centre solutions. With more than forty odd telecom service players the opportunity for upgradation and migration of customer service platforms is considerable. In terms of logistics and operations, Almasa Value Distribution will leverage the existing reach of its volume counterpart.
Moving forward, the financials for Almasa Value Distribution will remain consolidated within Almasa IT Distribution for the next 12 to 18 months, after which they will be separated. If 2010 and 2011 have been the years of consolidation for Amjad’s Almasa Holdings, then 2012 will be the testing year for El Tawil’s Almasa Value Distribution. On the face of it appears all the ingredients of success are ready to deliver for El Tawil.
“The unpredictable nature of the market had a significant impact on everyone’s business”
An interview with Mehdi Amjad, Executive Chairman Almasa Holdings
Over the last three years, the revenue growth of Almasa IT Distribution has been negative. What were the reasons for this contraction?
Amjad: The unpredictable nature of the market had a significant impact on everyone’s business, so Almasa took this opportunity to evaluate and refocus for growth going forward. This year, Amasa IT Distribution moved away from volume, addressing Saudi Arabia from a value perspective. Consolidating and focusing the business to work more closely with strategic vendors such as Asus and Seagate, we have taken stock of our product and solution ranges as well as the markets in which we can deliver most consistently and expect to see growth this year.
What were the independent reasons for the recent restructuring of Almasa IT Distribution?
Amjad: The Almasa Value division has been a business unit of Almasa IT Distribution for the last seven years and has been experiencing double digit growth since then. In response to changing global and regional market conditions, Almasa evolved the value business to increase its focus and ensure that the needs of both vendors and resellers are being met. The results in this evolution was to give the value business its own identity, leadership, and management approach while the IT distribution arm focuses its core business of volume distribution.
What was the mandate for Roger Tawil when he was brought in as a consultant in the beginning of the year?
Amjad: Roger is an industry veteran with more than 15 years of regional technology and channel expertise. As a consultant he provided strategic direction to Almasa Value Distribution. As executive director, he continues to refine the strategy and execution of Almasa Value Distribution’s objectives – providing focus to vendors and partners, aiming to specialise in a solutions portfolio which brings value to the channel and transforms business while reducing cost. He is also building a strong team to address the needs of Almasa Value Distribution’s vendor and channel partners.
What was his recommendation towards Almasa IT Distribution?
While leveraging the infrastructure, experience and support of Almasa IT Distribution and Almasa Holdings, Almasa Value Distribution has the opportunity to operate independently – giving us the agility and dynamics to move faster and respond to both channel and vendor needs, as well as changing market dynamics. Roger recognized that Almasa has a great foundation and platform to take the value business to new levels.
Has the restructuring of Almasa IT Distribution been completed?
Amjad: Our evaluation took place in 2010, and we have proven ourselves to be very agile when we see opportunity in the market. We recognized that through a combination of market focus, correct solutions and strong relationships with vendors and resellers, there is a significant opportunity to be addressed. As a result, Almasa Value Distribution has become an independent company with the vision, leadership and product mix to address the strategic growth opportunities for both IT solution vendors and the channel sector.
What is the current market and business vision for Almasa IT Distribution, after the restructuring?
Amjad: Almasa IT Distribution delivers a strategic mix of leading technology products to resellers and retailers in focused markets in the Middle East through a proven channel network, with an array of international vendors including Asus and Seagate.
Is there a shift or change in the product portfolio of the volume and retail divisions of Almasa IT Distribution?
Amjad: Almasa IT Distribution represents an array of world leading vendors such as Asus, Asrock Intel, Seagate and LG providing in-country services to the region in order to guarantee reliable logistics support, responsive supply chain service and localized in-country services to customers in the region. In addition to focusing on key vendors and retailers across the region, we continue to evaluate new vendors to deliver in volume space.
What is your perception of the market expectations from Almasa IT Distribution?
We are expected to evolve and provide a mix of leading technology products to resellers and retailers in a timely, efficient and focused manner through robust processes.
What is your perception of vendor expectations from Almasa IT Distribution?
Vendors rely on our ability to offer secure credit lines, sound supply chain and on-the-ground market expertise who serve resellers on a monthly basis.
Vendor partner profile
Software and security: GateProtect
Peripherals and storage: Seagate
Networking: Avaya, HP Procurve
Components: Asus, Intel, AMD, LG, Acer
The vendor is a provider of next generation firewalls, end-to-end implementation using ISO NORM 9241 guidelines and ergonomic product design
Products: Next generation firewalls, Web and mail appliances, VPN appliances, Virtual appliances, Command centre, VPN client, VPN mobile
Solutions: eGUI Technology, Layer-8 technology, User authentication, Traffic shaping and QoS, High availability, Load balancing, Extended VPN, IDS and IPS, gateProtect statistics