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BUYING RATHER THAN BUILDING
Dimension Data Americas, a $5.8 billion global behemoth that was No. 11 on the SP500 list, also has moved aggressively away from the old IT reseller model toward a cloud computing services model. But rather than build that all-important unique intellectual property itself, the company has completely redefined itself as a cloud computing power in the same league with Amazon Web Services with acquisitions that have forever changed the character of the company.
Dimension Data, which is owned by Japanese telecommunications giant Nippon Telegraph and Telephone Corporation, leveraged NTT's financial muscle to acquire well-respected cloud services provider OpSource and cloud expense management provider Xigo. Those deals have put the global solution provider, based in Johannesburg, South Africa, into another weight class. In fact, IT market researcher Gartner put Dimension Data into its Magic Quadrant for cloud Infrastructure-as-a-Service, competing with the likes of Amazon Web Services. "Not one of my competitors is even listed on that quadrant," boasted Dimension Data Americas CEO Jere Brown.
Competing against Amazon Web Services, said Brown, means not relying on the traditional feet-on-the-street sales model, but rather using "marketing analytics" to capture new customers. "It's a different delivery model than a traditional VAR has," he said. "If you are looking to transform your business to create a business that is less product-centric to one that is solutions- and services-led, it requires a business transformation and a whole new way of doing business. It means every part of your organization has to go through that transformation."
Brown, a 35-year IT services veteran, has implemented that kind of dramatic business transformation at Dimension Data over the past three years. The transformation has taken Dimension Data from what was once a reseller of IT products into a full-fledged IT services organization -- a technology services-led business with its own unique cloud computing services.
"We started out three years ago and said, 'What do we want our business to look like?' " said Brown. "We wanted to be solution- and services-led. We wanted to have deeper client penetration. We wanted to be a leader in the Gartner Magic Quadrant. We wanted to have high levels of client satisfaction. We wanted low employee turnover. We wanted to increase our go-to-market effectiveness, particularly our selling effectiveness. And we wanted to increase our profitable returns. Then we had a plan on how we were going to go about doing that, what we needed to change and how we were going to go about that change. We followed a very structured change-management process, a transformational program that had multiple work streams."
The companywide transformation has redefined every aspect of Dimension Data's business, even its vendor relationships, said Brown. First and foremost, it means Dimension Data is putting its own unique services intellectual property front and center with its own annuity-based managed services, said Brown. That has dramatically shifted "the balance of where our revenue comes from, what we sell, how we sell and how we attract new clients," he said.
It all comes down to a higher amount of the content and value created by Dimension Data, said Brown. "For us, enabling our relationships with our clients to drive long-term value around the services we deliver with our people, our systems and tools is really important in the decisions that we make around the partners we do business with."
The problem is many solution providers have hit the wall and don't have the financial means to make the transition to the cloud computing model, he said. "Some VARs that have been acquired have hit a ceiling relative to their ability to grow," said Brown, who has had discussions with a number of competitors regarding potential deals and found their economic and shareholder value wanting. "They don't have the financial means [to make the transition to the cloud model]. They don't have access to capital. They maybe don't have the right kind of leadership. So they are losing business to competitors who have gotten bigger or new competitors that are taking their clients by offering some of these new capabilities we are talking about."