Our Thoughts and Experiences on the Market Challenges of Global Operations for IT and Technology Teams
As we announce our newest global entity, Techary FZCO, operating within the United Arab Emirates, we thought it a good time to share our thinking behind our continued global expansion, the challenges we’ve seen in our market, and some of the work our teams at Techary are involved in to help solve these problems.
We’ll start by reiterating our ‘Doing differently’ approach at Techary: don’t stand still, don’t do what others do, and work on solutions that solve our customers’ largest problems.
The globalized nature of the world is ever-increasing.
Recent examples include supporting a scale-up customer, where we helped a digital infrastructure provider scale from a team of 5 to 300 in less than two years, in over 10 countries. Our work with finance firms that operate in more than 100 global trading locations requires a continual globalized effort to ensure seamless operations and improve time to market. In most globalized firms we work with, central IT and Technology functions are still owned from either a single HQ location, or if the team is global, it’s usually still limited personnel working from regional locations.
The teams we interact with most are Technology, Procurement, and People/Human Resources. Most firms we work with are looking for an IT vendor that operates in the same capacity they do, supporting their organization across the globe with either a central or regional team.
The Problem
What is the Problem?
The IT ‘channel’ doesn’t allow our industry to operate in the same way as the customer. These are challenges we see when operating globally, from the customer’s perspective:
- Lack of central relationship/account management
- Lack of global commercial structure (vendor discounts may not be implemented globally)
- Operational effort required to align standardized products — different geographies have different SKUs/requirements
- Delivering a compliant, global solution, reducing the operational overhead on the front-line IT teams
These challenges are mainly focused on the VAR (Value-Added Reseller) side of Techary’s operation. Essentially, this is where Techary acts as the ‘IT Channel’ provider to offer end-customers access to leading technology from over 40 vendors. One of our focuses at Techary is adding the Value in Value-Added Reseller; we believe our approach to globalization is one of the key value-added items from a reseller model.
If we were to summarize the issue, from what we hear directly from our customers, it would be:
We want a globally aligned operation, supporting our global business and creating standardized, streamlined processes while ensuring we’re compliant and gaining the best commercial value proposition.
Sounds simple enough, but in reality, it’s hard to achieve this outcome navigating all the components to deliver the desired outcome.
The Challenges
Vendor Commercials
“We’re buying the same product, just in a different region, why is there such a commercial difference?”
That’s a question we’ve seen countless times from internal teams with limited exposure to international operations on the customer side.
There are several answers to this question, but most align to the challenge of coordinating vendor pricing globally. This essentially is an account alignment problem created by our industry. Unless you are a very large enterprise (probably over $50m in annual IT spend), your organization is most likely aligned to local reps with OEM vendors, and your reseller contacts geographically. In your main geo, vendors apply specialized commercial pricing to your account, which is passed through the channel, via the reseller, to you as the ultimate ‘end user’. When you operate in another geography, the same commercials are not applied.
There are two commercial methods you can look to explore for an international requirement:
- Buy in your ‘commercial geo’ and ship
- Buy locally and do not benefit from aligned commercials
Reseller Alignment
Let’s say you need to deliver goods to your UAE branch, but your IT team is based in the UK and US. Your UK support team likely supports the UAE operation. Your UK reseller contact deals with the UK team, and you effectively have two purchasing strategies:
- Purchase in the UK and ship to the UAE
- Purchase in the UAE with delivery to your UAE site
These are the challenges we see customers face with. When reviewing requirements, we look at these six core components to look to determine the best option:
- Cost Analysis
- Time Sensitivity
- Compliance and Compatibility
- Logistical Simplicity
- Vendor Relationships
- Support and Service Levels
By evaluating the requirements for the customer, often, when combining all factors, we can suggest the most effective route to market for the requirement, using our team’s experience in meeting the overall needs of the scenario.
We’ve also tried to solve some of these challenges, such as working with customers to align global commercial discounts, working with vendors to replicate and issue global pricing, aligning global account teams for a central relationship, and streamlining administrative effort (such as legals allowing all affiliate entities to trade between Techary and our customer).
Every requirement is different, but we see the best solution for the customer is presenting a range of options that we’re able to deliver upon, not based on the best commercial output for us, but the best and most effective solution for the customer.
Shipping, Not as simple as it seems
Most teams we see have opted for purchasing goods in the geography and look to ship themselves.
In technology deployments, this often leads to complications. This isn’t an extensive list, and if you’ve tried to ship technology assets at any point, you’ve probably ran into some of the below challenges:
Each shipment requires extensive administration effort, some examples include:
- Interco Terms: DDU/DDP
- Commercial Invoice: your purchase or intercompany sale
- HS Codes / Commodity Codes
- Shipment compliance certification (shipping a lithium battery, you’ll actually need a regulated person to pack the shipment)
- Insurance for the value of the goods
- Tax registration and IDs for the Export and Importer entities
- Legal signatories available for IOR (Importer of Record) and EOR (Exporter of Record) documentation
- Finance team availability for immediate payments for tax and duties to ensure goods are not held
- Local import certification and licensing for importing specific goods into the country
This highly administrative solution often presents teams with further challenges when they believe this may be the most effective solution to their issue. The teams may not have the administrative function or cross-department capability to organize such shipments. Could you gain a legal signatory to sign an import declaration today, for an entity in Brazil? Most IT teams that are left to deal with the issue are caught by the complexity of this task, leading to further delays impacting the deliverable.
We’ll issue a further blog post discussing IOR and EOR, with a more specific logistics focus shortly with more information on this topic.
Overall, our advice is to not overlook the complexity of shipping technology assets.
The Solutions
Evaluate the Options
We’ve explained the challenges we see customers faced with. When reviewing requirements, we look at these six core components to determine the best option for the customer:
- Cost Analysis
- Time Sensitivity
- Compliance and Compatibility
- Logistical Simplicity
- Vendor Relationships
- Support and Service Levels
By evaluating the requirements for the customer, often, when combining all factors, we can suggest the most effective route to market for the requirement, using our team’s experience in meeting the overall needs of the scenario.
We’ve also tried to solve some of these challenges, such as working with customers to align global commercial discounts, working with vendors to replicate and issue global pricing, aligning global account teams for a central relationship, and streamlining administrative effort (such as legals allowing all affiliate entities to trade between Techary and our customer).
Every requirement is different, but we see the best solution for the customer is presenting a range of options that we’re able to deliver upon, not based on the best commercial output for us, but the best and most effective solution for the customer.
Our Take Outs to Date
- Time: Some of our operational entities have taken over 12 months and considerable investment in onshore capability to be able to deliver the required service. Don’t underestimate the time that may be required to set up your own operations, as well as the time that can be wasted/duplicated by an inefficient operation.
- Ongoing Management: Managing a global business significantly increases your operational workload, ensuring your systems are scalable, can adapt to multi-tax rates, and ensuring you remain compliant with the different laws and filing deadlines for each region can be a challenge in itself. Don’t underestimate it.
- Search for the Optimal Solution: Similar to our review of the six core components for each requirement, it’s imperative to push for the optimal solution. You’ll likely meet many people along the way who, sometimes for their own ease/gain, are not looking at the right solution for the customer; they just want to sell you a product in a way that works for them.
Summary
Our approach has been to navigate and push back, to align a solution, and in our case, that’s why we’ve decided to invest and build out these options ourselves. Ultimately, that is the way Techary sees delivering the best optionality and end goal for the customer. It’s not a simple fix, but the right thing to do to offer the most comprehensive range of solutions to a customer.
We hope you found this post useful. If you wish to discuss any of the topics, or hear more about what we do, feel free to reach out to a member of the Techary team. Visit techary.com to contact us.