Calculating the cost of profit

The fundamental backbone of any business transaction is profit. With competition in the Middle East building year-on-year with the increase of international brands setting up camp in the region, and more and more local start-ups in the integrations, distributions, and solution providers arena, the challenges to successfully execute IT partnerships continue to harden. CNME calculates the cost of profit.

Can you maintain cost leadership, service levels, solution quality, and deliver projects flexibly and to schedule? You’re worth your weight in gold, no doubt. But the differentiators can be few and far between, and during a time of economic belt tightening, the region may be asking for more damning evidence that your business is a suitable partner for a critical implementation.

Also, as trends become more and more specialised, it’s no longer good enough for a systems integrator to be well versed on a broad range of topics, the chosen partners must be certified in highly specific areas, be that cloud, mobility, social, or Big Data. Many vendors believe that systems integrators that are solely focused on a specific trend, to the degree that it can forecast user demand and profit capabilities, are valuable in today’s market.

“Red Hat selects partners who embrace an open cloud mentality as customers are increasingly looking for cloud capabilities,” explains George DeBono, General Manger, Middle East, Turkey and Africa, Red Hat.

DeBono highlights that particular interest in a trend that continues to see momentum can be a real attraction to vendors who may be looking to prove market leading quality to end users — in this instance, cloud capabilities.

“We look out for systems integrators that are increasingly building up their cloud capabilities — both consulting and infrastructure, as well as platform-as-a-service. Through our partnerships, the systems integrators are able to leverage innovative Red Hat open-source technologies, which give them and their customers flexibility, choice, cost improvement and future-ready technology platforms.”

Though, on the contrary, partnering with someone who has a deep industry knowledge and strong relationship skills are also highly sought after. As Hatem Bamatraf, Executive Vice President, Enterprise, du, explains.

“The successful partner nurtures existing relationships and drives a deeper wallet share through engagement throughout the organisation, rather than taking a product or a point approach. We may be using a cliché, but the ideal relationship with a customer is that of being a partner or an advisor, rather than a seller of products or solutions. Any partner who displays and demonstrates these elements will be more likely to succeed,” he says.

Weighing up costs
Though like all regions, the Middle East is still trying to work on a shoe-string budget, despite popular belief, perhaps, in other areas of the world. This can have a heavy influence on who a company partners with or which vendor a customer chooses.

Depending on the project, cost can be one of the key differentiators, depending on who the project involves, what solutions are involved, and what the scale of the project is.

“There is no doubt that cost is still a key criteria for migrating existing legacy systems,” says DeBono.

“But cost isn’t the only driver. Innovation, cloud readiness and Big Data are other major industry trends which are important to IT decision makers.”

Bamatraf feels that two key elements, combined with cost, are the crucial aspects of any integration.

“In any project, there are three key elements that affect the quality of delivery and these are time, resources and cost. There is always a constant balance and trade off on these elements and these affect the quality of the delivery of a project if any of the parameters are compromised. More often than not, trying to reduce cost will have a direct bearing on the quality of the delivery. The best approach in reducing cost while ensuring quality is to get more from the resources, deliver faster than promised and work closely with partners in negotiating better commercials during the execution phase.”

Revenue growth — best practises
The be-all-and-end-all of the project is to gain revenue. For both vendor and integrator, the success is measured in the margins. But the revenue may not always be birthed from the services and sales — over time, it could quite as easily come down to the longevity of the partnership, reputation and collaboration.

“Companies continue to look at how they best retain and grow revenue from their current customer base and at the same time are successful in attracting new customers. Through continuous innovation — in all industries — lies the promise to keep customers satisfied and engaged,” DeBono believes.

The path to profit needs to be laid with strong foundations. Considerations into each aspect are critical for success.