Software Business in the Middle East

This is a translation from Swedish in free style. The original post can be found here.

The journey from Sweden to China started on October 3, 2007. The travelers are Nino, Erik and Tim. The guys started their journey from Alingsas (Alingsås), that is 40 kilometers form Gothenburg. As guys wrote, they expect to ride for about 1’500 or 2’000 Swedish miles. One Swedish mile is 10 kilometers, so total distance is expected to be between 15’000 and 20’000 kilometers. The direct distance between Gothenburg and Pekin is about 7’100 kilometres, so I guess the journey distance is doubled because there is no direct road available if you go by bike, so guys will make many rides around in different countries.

The trip will take about 10 months. The starting point is Sweden and then the journey route will pass through such countries as Poland, Slovakia, Hungary, Bulgaria, Turkey, Iran and Pakistan. The final destination is China.

The usual question the travelers get is why they started this journey at all. The answer is simple – because they wanted and could make such very unusual travel. I totally agree with them – if you wish and you can doing something, then you would do it. We all will hopefully have a chance to sit at home when we retire and become pensioners.

Now a little bit more about journey organization.

Transportation

The guys go by mountain bikes with steel frame, strengthen wheels and tires protected from punctures. The bikes hold bags with cloths, tent and other necessary things.

Living

Travelers plan to stay overnight in the tent. If they cannot or do not want staying in the tent somewhere, they will take hotel, motel or any other place they find.

Food

During the first few days they plan eating special kind of “food for hunters”, that is three times more rich in calories than normal food. In the original post they call it kind of “frozen and dried”, but I am not sure if this would be a right translation to English.

When this food is over, the guys will eat whatever food is available in the countries they go through. I think the most extreme food will be in Pakistan, and I hope that all free of them got all vaccination and stomach pills.

Visa

By middle of September 2007 guys didn’t have all the visas in their passports. But since they are on the travel since 3d October, I guess that all visas are received. Anyway, I think they need visas only for Iran, Pakistan and China. If they decide to make a small break somewhere in Iran and come to visit Dubai for a few days, they do not need any visa to come to UAE.

In the beginning of October the son of good friend of mine in Gothenburg, Sweden has started the trip to China with his other two buddies. By bicycles. Their route looks like this: Sweden - Poland - Slovakia - Hungary - Bulgaria - Turkey - Iran - Pakistan -China.

The trip would take approximately 10 months, so they expect to be in China just before the start of the Olympic Games in August 2008.

Guys have their own blog, but they write there in Swedish. Here I will post information about the trip from their blog, or whatever I will know from them or their parents.

There are several sales channels we use to sell our product at the moment.

Personal Contacts

These are people I met during the first few months after I came to Dubai. Also, my partner has a lot of contacts. All our deals and major distributors in Saudi Arabia are found thanks to his contacts.

Having personal contacts is a good start for your own sales organization. Your contacts might help you finding an agent or distributor in a new country, but you cannot rely forever on sales done through your contacts. Sooner or later you would need to build your own sales organization – either as a network of distributors or your own sales staff.

Cold Calls

If you have a product with a price of about $130, it’s wasting of time calling to individual potential customers who might buy one license only. It makes more sense to call large organizations or institutions that might make volume purchase. It’s clear that customer gets discount in case of volume purchase, but it is less efforts for you to close this deal with one customer than to get the same money from many individual customers.

Five cold calls to individual customers out of hundred end up with the sale. One large customer out of four signs the contract – but this might take a lot of time. In our experience, one large customer signed the contract 12 months after the first call. Another large customer needed 6 months to sign the contract – but I guess it’s because we found common contacts who helped us making deal happened faster. Otherwise it would also take longer time. This statistics is only from our experience. It might work much better with cold calls in other countries or with another products.

Distributors

I guess this is one of the less painful ways to sell in case you find active distributors. You have no headache with your sales staff, whom you need to pay salary to, but amount of money coming to your bank account is almost double less – so far I haven’t seen a distributor who is ready to sell your products for less than 40-50%.

One of our distributors in Saudi Arabia is also responsible for the first line support – customer calls the distributor first, and they contact us in case they are not able to solve the problem.

Integration with Other Systems

In our case, it is the providers of Hospital Information Systems (HIS). For example, one of the HIS providers in Saudi Arabia has 30 large hospitals that use their system. In case we integrate our Drug Database with their HIS, we would get those 30 hospitals as customers too. And in this case, the first line of support will be held by HIS provider too – they would contact us in case of problems they are not able to solve themselves.

HIS provider might request additional functionality in your product, or new functions in your interface. In our case it was support of Oracle – before we had support only for MS SQL Server.

Sales with Other Product

One of our partners sells Point of Sales (POS) software for pharmacies. When POS is installed, it automatically sets up our Drug Database. From the sales of each copy of POS we get our money.

Recently my partner found a computer company that sells computers and other equipment to doctors and pharmacists. Soon we will try to work together with them having our Drug Database pre-installed on each new computer that comes to a hospital or pharmacy.

Other Sales Channels

What we haven’t tried yet is an advertisement in medical magazines. The problem is that almost all healthcare magazines are free of charge in this part of the world. I know how I read free computer magazines, and I do not think that doctors pay more attention to the free medical magazines they receive. Hence I am not sure if advertisement in such magazines make sense at all.

We also haven’t tried sales over Internet that is not very well developed yet in the Middle East. People do not trust much paying by their credit cards over the Internet. There are changes in the air – Internet and online payments become more and more common here, so we have already started working on our product web site with payment facilities online.

I do not know yet if it’s good or bad that we do not have our own sales department. It might happen that we will have our sales department in Saudi Arabia and then in Egypt, but we will never have it in Dubai and other GCC countries. The reason is that market of Saudi Arabia is very large. Egyptian market is large too, although the price for the product over there will be mush lower due to the living standard there. Market for Drug Database in UAE is relatively small comparing to Saudi Arabia and Egypt, so it might be easier to pay 40-50% commission for the distributor here and avoid having our own Sales Department.

There is also one interesting idea. Currently students have about 30% discounts for our product. The sales volume is not very large, so it might make sense to make special Student Edition that will be free for students. In case students use our software and they like it, there is a good chance that they will ask their employer to purchase a normal version for the organizations they will work at after graduation.