Ahmed Farrag, general manager, Saudi Arabia, Sun Microsystems.

DUBAI, 26 October 2004 — At Sun Microsystems Middle East & North Africa (MENA), change is in the air. Determined to transform itself from a hardware company to a solutions provider, Sun has increasingly been highlighting its growing range of software and Linux solutions. The company took advantage of the recent GITEX exhibition to demonstrate its new outlook.

“Sun and its partners utilized GITEX to address regional business concerns, including how to secure information, reduce cost and complexity and manage enterprises more effectively,” said Mehmet Iyimen, managing director, MENA, Sun Microsystems. “In addition to highlighting our software and Linux solutions, Sun showcased industry-specific solutions for sectors such as education and finance.”

During GITEX 2004, Sun promoted its range of Sun Ray ultrathin clients and Star Office software. With the recent announcement that the Saudi Arabian National Guard Health Affairs has purchased the largest-ever order of Sun Ray desktop systems and StarOffice licenses in the EMEA region, Sun experts were keen to discuss with government and private sector leaders the associated benefits and cost savings.

“Providing solutions such as StarOffice, which is Arabic enabled, and Sun Ray technology means we can assist organizations to significantly reduce their operating costs,” said Iyimen. “Sun’s desktop solutions are stable, easy to use and cost up to 70 percent less than similar Microsoft offerings.”

Appealing to players from small and medium size organizations, Sun has also had success with its Linux-based servers, which deliver full integration with infrastructure software and improve manageability. “Sun servers have been widely adopted in the Middle East, with customers ranging from oil companies and banks to governments and airlines. Our Linux offerings give mid-level enterprise organizations the opportunity to enjoy rapid implementation and full systems support, at a reasonable price,” Iyimen said.

It sounds like everything is coming up roses in the Sun Microsystems garden, so why have so many team members left Sun MENA recently and why are there so many rumors floating around about Sun’s regional market direction? Mehmet Iyimen sat down for a frank discussion about Sun’s regional situation, joined by Ahmed Farrag, the new country manager of Sun Microsystems in Saudi Arabia.

Iyimen has been in the IT business for 25 years, spending most of that time in the Middle East. He is in his seventh year with Sun. Coming into his current position at the company more than a year ago, he said that his focus during his entire tenure as MD has been on Sun’s regional evolution.

“During the course of last year, we did two things,” said Iyimen. “First, we put a lot of emphasis and focus into execution in order to be able to deliver the goods to contribute to the turnaround of the company. Second, we started the process of long-term planning for us to understand where we are in this region, where we have to get to, which areas we need to focus on and what we need to do different. We considered what the market really needed from us and how to define that market.”

The conclusions of that market research form the basis of Sun’s three-year plan, which was implemented from the first of July, the beginning of Sun’s fiscal year.

“The plan has three dimensions,” explained Iyimen. “The first part of the plan considers geography. That means all 19 countries in Sun’s MENA region and sales teams and execution teams focusing geographically on executing the strategies we are coming out with. The second dimension of the plan is the industry. We said that we needed some industry specialization for us to start talking about business, understand the business and then start relating our technology solutions or infrastructure solutions to business problems. The third dimension of our plan is to look at solutions not technologies. For example, because we are too much of a technology company we talk about ‘the data center’ and the customer says, ‘billing.’ How do these two things relate to each other? It is essential that we turn our technology into understandable solutions, technology and infrastructure solutions, where all the customer’s applications sit. Using our technology to develop solutions helps us to move up the value chain.”

To satisfy the requirements of the second dimension of the plan — industry specialization — Sun decided that it was necessary to build a bridge between their technology and the businessworld.

“There are now four people who report directly to me,” Iyimen said. “These business development managers are specialists in one of four areas — oil and gas, telco, public sector or finance and banking for the entire MENA region. This is our commercial focus and it covers about 70 percent of the Sun addressable market in the 19 countries.”

“That doesn’t mean we are not doing anything in the remainder of the industries,” he added. “Given the horizontal and wide relevance of our products, services and solutions obviously we are covering the rest, but the focus into those previously mentioned four areas is different. I also want to state that we have a fifth area of focus, which does not have a commercial agenda. It is purely non-profit. That is the area of education, which is very important to us. We want to participate in developing people and to aid in the development of the MENA countries. We have a lot of corporate programs in the area of education and our job is to execute and replicate those programs in this part of the world.”

With the new regional plan in place and the MENA market divided by industry, solution and geography, Iyimen had to look at how well his team could implement the strategy. It was decided that the way to address these vertical markets would be different than addressing a horizontal market with a set of bundled products for volume sales. For the new strategy to succeed, some changes were needed in Sun’s regional team.

“As a result of our new focus areas we identified areas of reorganization and restructure. We concluded that at all levels in MENA we needed to refresh our work force,” Iyimen remarked.

Sun Microsystems’ MENA teams in the sales, technical and management groups were evaluated and ranked. About 10-20 percent of the employees were found to be significantly overachieving on expectations. Unfortunately, there were also a significant number who could not meet the new standard. Some of those employees were asked to leave and others were started on programs for skill development. Recruitment is currently under way to fill skill gaps within the regional team.

“I can say that about 70 percent of my management team is new. We dropped nearly a dozen individuals from the technical community. Those headcounts are still part of my budget and we are hiring people to fill the new requirements,” Iyimen said.

The bottom line is that Sun is no longer interested in having its staff members concentrate on low level services.

“We need much higher technical skills for us to become the trusted adviser to the partner and customer communities,” Iyimen explained. “The ability to configure a cluster is not a differentiator. Our future success depends on something more. What’s going to make Sun stand out from today and toward the future are the kinds of intellectual property that we can build together with our partners and customers.”

Sun has identified about 150 accounts across MENA where it wants to focus attention. Not all of those accounts are currently Sun customers. As Sun does not sell directly in the region it is necessary that its 50-plus partners in the region commit to bringing their resources to support the new model. This involves creating new skill sets, new experience levels and new attitudes throughout the Sun community. One of the new attitudes is that at all levels it is necessary to bring in local talent.

“We are working to put an Arab into every available position in the Middle East. We are not interested in just importing the skills,” Iyimen commented. “We are actually bringing in a totally new generation of young people and we are developing them. What we want is Middle East-based, Middle East-origin people joining us and bringing their culture, and Sun giving them the culture of the business.”

In Saudi Arabia the implementation of Sun’s new direction will be led by Ahmed Farrag. A Sun team member for nine years, Farrag was Sun’s account director with Saudi Aramco for the last three years until he took over the role of country manager four months ago. He has stepped into the new job aggressively, making changes to Sun’s local staff and preparing Sun’s Saudi partners to participate in the new strategy.

“I have been interviewing Saudi candidates from all our competitors including Microsoft, HP and IBM that want to come and join Sun. We are also working to identify all genuine customer satisfaction issues and address them,” said Farrag. “In September, the whole local management team from Sun sat down at Al-Faisaliah and had a conference with our partners. We shared our three-year business plan and our vision and we enlisted their support. Since that date we have been working with them very, very closely to see where they fit in the new plan for MENA.”

The Sun partners are being evaluated in the same way that the Sun staff was evaluated. Every attempt will be made to include each partner in Sun’s new regional plan. However, Iyimen emphasized that if there is any sort of clash, in terms of culture, agenda or business model, then Sun and that partner will part ways. Sun expects its partners to support the three-year plan 100 percent. According to Farrag that is already happening. Partners are already advising Sun which verticals and customers they want to support and the Sun team will decide if such choices are the best fit.

“There is only one agenda and one plan,” said Iyimen, “and that plan is extremely dependent on the execution capabilities of our partners. If those partners cannot execute, we cannot be successful. We believe that there is a lot of commercial sense for our partners to become part of that execution, to become part of the plan and work with us. If they don’t see that advantage then that means we don’t have a case and we’ll have to move to the next option.”

Tough talk but Iyimen believes his aggressive position is necessary to blast Sun and its partners out of the complacency that has held back Sun’s regional growth.

“It’s a mindset change,” he asserted. “In the past, if you look at Sun, we were the kind of company that got used to receiving orders. So we built a team whose core competency was collecting orders. Now, what we have realized and what we are adapting to, is that the world has changed. We will have to sell our values. We are now talking about a totally different way for us of going to the markets and explaining ourselves and earning that business rather than waiting for that business.

“We plan to hold and improve our relationship with our well-established customers and markets, plus steal market share from our competition and also capitalize on new markets that are opening to us. What I do know is that our coverage in this region is no more than 25-30 percent. We can do better. There is a much bigger market out there but we will only be able to get into that market if we do our home work right and execute it right. Nobody is arguing about our technologies or our strategies. What everybody is criticizing is our execution. We know that and that’s what our three-year plan is going to fix.”

We’ll be waiting and watching.