Lefatshe, 3Com set growth targets

By Christelle du Toit for Lefatshe
Johannesburg, 16 Sep 2008

In three years, black-owned IT solutions company Lefatshe wants to be able to either list on the JSE, or be in a position to sell the company for a profit.

At the same time, networking solutions company 3Com wants to commoditise the South African market to the point where it can get a foothold in an environment that has for years been dominated by competitor Cisco.

Key to both these ambitions will be a new partnership between the companies, where Lefatshe has taken on 3Com's H3C offering as exclusive South African solutions partner.

This is according to Noedine Isaacs-Mpulo, CEO of Lefatshe, and Derek Wiggill, regional sales director for Africa at 3Com.

"This market has a particular religion," says Isaacs-Mpulo, referring to its fondness for Cisco products and services. "Ours is to bring an alternative religion, and it takes evangelism to build a brand."

This evangelism is to be targeted at government, which, notes Isaacs-Mpulo, "needs a set of alternatives [to Cisco]".

According to her, Lefatshe has identified four key strategic networks in government that it would want to pursue.

Setting goals

"We've obviously done some segmentation in terms of the networks we want - it's not about winning everything. Lots of customers are so brand loyal you can't change their minds, so you're not going to win every battle, but you want to win strategic battles and we want our fair share of the market."

Isaacs-Mpulo says she made it clear from the beginning that she had "quite an aggressive growth strategy" in mind for Lefatshe.

The company decided to back H3C as it would take it too long to develop an alternative product, "and we would still not be competing on a level playing field".

Even though H3C is an unknown brand, she notes, Lefatshe is willing to invest in it as it has the potential to take the organisation "from a minion to a serious contender".

In terms of investment, the company is training up people in H3C skills, as well as investing in marketing activities.

In turn, 3Com has doubled its domestic sales force for the product, and has committed to a reciprocal brand investment.

The 3Com picture

Wiggill says the reason 3Com went with Lefatshe as a partner is that it is "unpolluted".

He says it wanted a partner that would "bet the farm" on H3C's success and, through this relationship, 3Com can focus on its other business, knowing the H3C business is taken care of in SA.

"There are not many networking companies that would go with an exclusive relationship - we wanted someone to invest in, who we could pass the value on to."

According to Wiggill, SA has a disproportionately high number of Cisco clients, compared to the rest of the world, where H3C, for example, holds the number one market position in China for enterprise stackable switch ports and router units.

He says, while there is a lot of pent-up demand in the South African market, the company does not aim to emulate the rest of the market in terms of market share any time soon, as this would negatively impact service levels.

"We will choose business, but over time we want to commoditise the market," he says. "At the end of the day, a switch is a switch and a router is a router - let's price it where it should be."

In the first year of the Lefatshe partnership, he explains, the key will be to get the product known - what he calls "the thin edge of the wedge" - with expansion happening in time, "in a responsible, sustainable manner".