Turn A Profit

Sustaining profitability is one of the key issues that Middle East channel players continue to have today. Profitable partners are essential to the success of a vendor’s business. But with declining margins and difficult market conditions, resellers are increasingly finding it hard to be lucrative. Reseller Middle East speaks to channel managers to learn their strategies to ensure partners are profitable.

One of the oldest problems for regional channel partners have been sustaining profitable businesses. With eroding margins, resellers now have to establish new strategies in place to ensure their operations stay more than just afloat. However, this is not as easy as it may sound.

Before devising strategies to become and remain profitable, a partner needs to first identify the reasons behind not being able to sustain this.

Zacky Vaz, regional channel manager, Fortinet, says, “Traditional channel partners often lose out for not acquiring specialised skill sets to deploy and support advanced technologies, which can help to drive profitability. Some of the key factors affecting partner profitability include budget constraints with end customers, longer sales cycles and competition.”

According to Elie Dib, senior managing director, METNA, Riverbed, profitability can be impacted by partners’ willingness to change.

He explains, “From the customer and even the vendor perspectives, business models have transformed in the last four to five years. Distributors have been adjusting to these changes but so far, the channel has been content to wait. They hope to invest at the right time when they gain a ‘clearer picture’ but need to recognise that by the time they choose to do so, it could be too late.”

Another reason thwarting partners’ profitability is also because of low availability of channel finance.

Dib points out that in mature markets, it is common for resellers to secure financing from banks. “However, traditionally, in the Middle East, it is the value-added distributors (VADs) that finance large deals. This makes resellers highly dependent on them. The performance of the VADs therefore is one of the most significant factors affecting the availability of credit in the channel.”