A total of 300 Managers from mid-market companies around the region attended the road show titled – “Manager’s View of ERP” in the cities of Dubai, Jeddah, Riyadh & Dammam. The seminars kicked off by analyzing each country’s economy and future outlook followed by a look at what companies can do to compete more effectively.
The UAE economy and Dubai in particular has grown steadily over the past decade. Non-oil business makes up 70% of the country’s GDP and Dubai contributes the lion’s share. UAE’s success is largely a result of the Government’s sustained effort to diversify the economy. It has invested heavily in infrastructure, improved public services and reduced read tape, introduced investor friendly laws and actively sought foreign investment.
The UAE economy is competitive and most mid-market companies have implemented business enabling technologies like Enterprise Resource Planning (ERP) to improve efficiency and streamline operations. The sustained economic growth of the country and its investor friendly environment has resulted in a continuous increase in competition, particularly for mid-market companies. With their margins under pressure and their customer base threatened, these companies have turned to their ERP vendors to deliver wider product footprints encompassing customer relationship management (CRM), business intelligence (BI), supply chain planning (SCP) and specialist systems like Warehouse Management to make them more competitive.
At the same time, tier 1 vendors with their markets saturated have been luring mid-market companies into even greater investments in an ERP dream. The traditional ERP life cycle of 5 to 7 years has drifted towards 10 to 15 years. This is proof that mid-market ERP vendors have been able to satisfy their customer base. Another factor positively affecting customers is the global ERP vendor consolidation. This has resulted in fewer, stronger vendors with the ability to invest in ongoing product development.
Implementing transactions systems like ERP & CRM does help make a company more efficient but huge gains can be achieved when companies begin to use data from these systems to support their decisions. BI tools allow companies to extract data from their ERP systems and transform it into key information for Managers to gain insights into their business. They can use these insights to take proactive decisions to run their businesses better. Mid-market ERP vendors must offer their customers a cost effective, quick to implement BI tool to help them compete effectively. Most mid-market companies in the region are not using BI simply because implementing a 3rd party BI tool is an expensive, lengthy process that requires skilled in-house personnel.
Because of the competitive nature of the UAE market, companies here spend proportionately far more on ERP systems than their counterparts in Saudi Arabia, especially companies in the business of Wholesale Distribution, Trading, Retail and Batch Manufacturing. Another interesting statistic is that UAE companies spend multiple times more on CRM than Saudi Arabian companies.
A word of caution goes out to mid-market companies in Saudi Arabia. Unemployment has reached dizzying heights and the population is growing faster than the GDP. The Government has stated that the only solution is too open the economy, encourage private and foreign investment and impart necessary education and training to Saudi Arabian youth. It has started reducing red tape, improved infrastructure, refined company laws, implemented capital market law, reduced company tax, opened major areas of the economy and sold its stake in industries all with the intention of making Saudi Arabia an open, investor friendly market.
Competition in Saudi Arabia will increase BIG time if not already begun and will come from other GCC countries and beyond. Saudi Arabia is an extremely attractive market with a population of 25 million. Companies from other GCC countries have already begun to do business in Saudi Arabia encouraged by the GCC customs union that allows duty free movement of goods within the GCC. These companies are much better prepared to compete because they have been operating in open economies.
ERP spending in the GCC and UAE in particular is forecasted to grow in double digit figures. Wholesale Distribution, Trading, Retail and Batch Manufacturing will see the highest increase in investment. The bad news for mid-market companies is – if you aren’t investing in ERP systems, your competition is and they will be better positioned to threaten your customer base and win new deals.
About Sage
Sage is the 3rd largest global ERP and CRM vendor with revenue of over US $ 1.2 billion. It has over 4.4 million customers and employs 8000 staff.
