The impact of Japanese Group NTT's $3.2 billion (R24.5 billion) acquisition of Dimension Data in 2010 is starting to show, as the SA-headquartered company with strong local roots invests heavily in key infrastructure and goes after some of the world's biggest global enterprises.
It's essential for IT service providers to invest in their own core infrastructure across a broad range of technologies, explains Dimension Data's CEO for the Middle East and Africa region, Derek Wilcocks. "NTT has given us the financial muscle to be able to do that. It enables us to go after some much bigger global clients," he says.
Already, in the past couple of years, the company has seen 30 new account victories in the category of 'massive' on a global scale.
Dimension Data now has access to the financial and human capital resources of NTT, as well as the credibility that comes with NTT - ranked 32nd in the Fortune 500 list of the world's biggest companies.
On the local front, Dimension Data has access to its family of specialist technology companies that it has collected over the years - Internet Solutions (ISP), Plessey (telecoms infrastructure), Merchants (contact centres) and Britehouse (software development).
"It's an unusual combination of assets in a changing landscape where telecoms and IT are converging in various ways, so we have the ability to pull those assets together into an outsourcing model for the client," he explains.
More and more, Wilcocks is seeing clients looking to their ICT partners to provide a solution for a 'business problem', rather than a technology problem or an operational problem. He says companies have started contracting Dimension Data on a fixed monthly basis, to understand, operate and then transform their IT environments.
Local ICT analyst Paul Booth agrees that being part of NTT provides enhanced levels of credibility, adding that being delisted and not having to disclose all material changes in its structure is a definite bonus. However, he believes the new level of scale the company has achieved is both its biggest advantage and its biggest risk.
"Its strength is in the scale of the business and the expertise, either within Dimension Data or within the larger group. But its main weakness could also be just this - its agility in reacting to changing trends," he says.
Acquisitions
Dimension Data now employs more than 20 000 people worldwide - about 14 000 permanently and 6 000 as contractors. In SA, it has 3 200 staff, and a further 750 throughout the rest of the continent and the Middle East.
In 2012, it reported revenue of almost $6 billion (R60 billion), and plans to double that to $12 billion over the next five years. Clearly, this will mean a number of acquisitions. Wilcocks says the quest to find the right targets around the globe has begun in earnest.
Software-defined networking does for networking what cloud does for computing.
Bradley Bunch, Dimension Data
To that end, it acquired US-based Opsource and Australian-based BlueFire and rapidly folded them into the Dimension Data cloud division, which Wilcocks says has pushed Dimension Data into the leaders' quadrant for cloud services.
"All customers are talking about cloud services," reports Dimension Data's chief innovation officer, Bradley Bunch. "The only differences in the discussions are in the workloads they're talking about."
Bunch says embracing cloud solutions is a 'no-brainer' for low-risk applications like testing and development, where there are also no physical assets that a company needs to sweat.
The second major sphere of technology that both Wilcocks and Bunch highlight for massive opportunities is in software-defined networking.
"Software-defined networking does for networking what cloud does for computing," enthuses Bunch, who says that it allows for a far more dynamic allocation of resources by centralising the functionality that typically sits on devices, allowing network administrators to shape traffic from a central control without touching the individual switches.
The expected impacts of software-defined networking will likely be stronger pressures on price, service levels and innovation rates.
"This will allow companies to very easily change cloud providers, for instance, because of the simplicity of reconfiguring the network," he says. This will mean clients can choose who has the best rates at a certain time of the day and re-route the traffic accordingly.
Bunch refers to 'trimming the edges' when explaining how Dimension Data is looking to capitalise on innovations like cloud services and software-defined networking to bring greater efficiencies to its clients.
Dimension Data has been regarded as one of the most 'Afro-optimistic' - making inroads before many of its peers.
Now, says Wilcocks, the company is 'starting to see some of the early moves paying off'. It runs its Middle East and Africa operations from hubs in Morocco (serving North Africa), Kenya (East), Nigeria (West) and Dubai (United Arab Emirates and the Gulf States).
Company strategy
Interestingly, he notes that more than 90% of the business to date in those regions has been with fully local clients, rather than satellite offices of multinationals. "This has very much been our sweetspot," he says, adding that the key verticals have been retail, natural resources, supply chain and logistics, and cellular operators.
Dimension Data also recently cemented its commitment to the Kenyan market with the R328 million acquisition of ISP AccessKenya.
But as the various presences across the continent mature, so does the company's strategy. Wilcocks points out that while the initial business model was to have local shareholding relationships, Dimension Data is now buying out these shareholders. This paves the way for bigger capital investments into these geographies, and better control over the delivery of services, he states.
With the ICT market on the continent expected to far outpace growth predicted locally, Dimension Data's ability to make bold investments and leverage its massive scale may well prove to be a winning formula in these emerging territories.
Closer to home, Wilcocks notes that, in the immediate term, the companies in the Dimension Data stable will retain their own branding and levels of independence.
"There are no immediate plans to consolidate the brands. Yes, there is overlap, but we're working to try to articulate it better and streamline the outputs," he comments.
As with any major international acquisition, it's difficult to predict the long-term impact of the NTT deal on the Dimension Data group of companies.
For now, it appears the Japanese parent entity is keeping to a 'business as usual' strategy - although perhaps it is more apt to say 'bigger business as usual'.
First published in the October 2013 issue of ITWeb Brainstorm magazine.
Share