Can A $5-Billion VAR Become A Cloud Leader? Dimension Data Says 'Yes'

Dimension Data got to be a $5 billion VAR by providing complex IT infrastructure solutions on a global scale. But with the advent of cloud computing, the solution provider needed to make some radical changes internally to help position the company for the future.

It's not easy to turn the proverbial battleship, especially when it's a $5 billion battleship that touches all points of the globe. For Dimension Data, becoming a true cloud services provider to customers required a little bit of help, which it got when it acquired OpSource in late June, and lot of hard work, as seen in its a massive internal training initiative. Here's a detailed look at how they did it.

Dimension Data, ranked No. 11 on this year's VAR 500, had tinkered with building its own cloud initiative, but it became apparent early on that the company's best bet was to buy the expertise to get it up and running more quickly, Brown said. The big move, of course, was acquiring OpSource, the Santa Clara, Calif.-based company founded in 2002 that specializes in cloud and managed hosting services.

Since then, a lot of backroom work has had to take place to help integrate not only the solutions, but also the culture and people of OpSource and to bring Dimension Data's own employees up to speed.

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"A lot of work has been done over the last five months since we acquired [OpSource]. In our theatre alone, we've done a lot of education for customers," said Brown. "We started a 'Cloud 101,' we called it. We trained our entire team on what's different between public and private. Then we had training on OpSource, their solutions. We had a follow-up session on our go-to-market model, how to engage OpSource to build solutions for our clients. And the last training, going on now, is a structured approach. We want to preserve as much of the innovation as we can and apply some discipline and rigor."

Becoming a cloud provider has also meant adapting to cultural changes taking place in the market. Cloud companies -- and their employees -- aren't exactly the suit-and-tie crowd. Brown joked about preparing for a telepresence meeting in New York with his boss in Johannesburg, South Africa, when the OpsSource executives joined him wearing jeans and t-shirts.

"The guys hadn't shaved in a couple days. Culturally, that's different for us," Brown said. While he's not about to don something out of Ed Hardy or Abercrombie, Brown understands that Dimension Data has to look the part in order to be successful in the cloud.

"I've been in the technology indsutry since 1977. I've seen about everything, and we've adopted and adapted culture through the years," Brown said. "Folks coming out of college have a different perspective on their careers, their employers. They have different expectations on their work." Dimension Data has made significant changes to its recruiting techniques and Brown is well versed on studies that show college graduates expect to change jobs 2.3 times in their first seven years in the workforce.

Next: Transformation Breeds Success

"I came out of college looking for a lifetime job. Our parents went to IBM to work for 25 years. Kids now look for experiences, career development. What laptop do they get? Can they work from home? Is it BYOT (bring your own technology)? How many days PTO (paid time off) do they get? The expectations are different," Brown said. "We need to continue to evolve our company."

Last year, Dimension Data hired 3,600 new employees and plans to add 3,000 globally next year. About two-thirds of new hires will be technical positions, focusing on presales and services delivery. The remainder will comprise a mixture of sales and shared services roles. Many of them will be under 30, a further gentrification of the company as it moves into the Cloud Era.

"I was in Brazil [recently] and as I walked around the office, I thought I was back in college. I felt like grandpa back there," Brown said. "Brazil has 200 million people under the age of 35. If companies don't evolve, don't change, don't adapt, they will be [stuck]."

Like many other VARs venturing into the cloud, Data Dimension is first offering hosted e-mail, infrastructure and backup and recovery solutions. Eventually, but not for another two years, Brown sees a play for business applications in the cloud.

"Infrastructure's pretty easy, [and] e-mail. Many [customers] say they wish they didn't have to mess with e-mail. You can reduce TCO having someone else manage your e-mail. Disaster recovery, that's another easy area. You can go out to the OpSource Web site with a credit card and provision a server to upload your stash of music. Infrastructure as a service is the low-hanging fruit. We think there's tremendous opportunity in 2012, 2013, to see more opportunity for platform as a service. More areas that are complex or sophisticated," Brown said.

Like many VARs challenged with meeting the demands of tomorrow's IT infrastructure, Dimension Data faces the task of transforming its business while facing increased competition from new companies that can start in the cloud and smaller companies that can be more agile.

"[CRN's] story on service providers and how they're transforming really hit home for us. Dimension Data has been on a transformation journey the last several years. We make sure clients recognize the broad portfolio of offerings we have. We're not a traditional VAR. We're now owned by a global telecom company [NTT]. We have a strong on-premise offering but we're also building out offerings in every line of business: managed video, managed backup, managed mobility solutions. The evolution of that is based on our goal help every client in every phase of cloud adoption."

Next: Laying The Groundwork

While Dimension Data feels the need to transform, its customers feel their own pressures: to cut costs, to be more productive, to do more with less. It’s Dimension Data's job to help them get there at a global level, Brown said.

"They expect us to have those offerings and expect us have those offerings anywhere we do business with them. It's a pretty important part of our strategy. The thing we emphasize with our field sales team is understanding our clients. Our clients are transforming," Brown said. "There's plenty of economic pressure out there. I remember sitting in 2008 in my office in New York when Lehman Brothers went down. A month later, 100,000 [financial services] jobs were lost in New York. IT projects got tight. In 2009 and 2010, the market returned and spending increased. Folks that had been sweating assets need to complete those projects. In the last six months, our business continues to grow but there are economic challenges out there."

Even if many clients aren't ready to jump into cloud, Dimension Data is helping them lay the groundwork with data center and virtualization solutions today.

"We have seen growth [in those areas] tremendously. Preparation is virtualizing your data center, preparing your network to handle adequate traffic flow, having the right security solutions in place. Your readiness is the workload that drives the infrastructure and making [customers] aware of taking those thing to the cloud. A lot of companies that are spending and need to spend, you'd better prepare them for adopting cloud computing," Brown said.

In July, Dimension Data named Steve Nola CEO of its fledgling Cloud Solutions Group to help oversee the integration of OpSource's cloud offerings across Dimension Data. Nola was key in Dimension Data's Australian cloud push, which saw the acquisition of Sydney-based managed services, hosting and cloud player BlueFire three years ago.

Part of that mission involves looking at a whole new roster of cloud vendors, and figuring out which companies make the most sense for Dimension Data.

"[OpSource] brought to us a new perspective on potential partners in the marketpace. Whether it's a place that had billing engine solutions or orchestration layer partners. There's a whole net of new partners that are not part of our mainstream partners, the Ciscos, HPs, EMCs, etc.," Brown said. "It opened our eyes. Some partners of OpSource have become partners and are now part of our Dimension Data portfolio. We've also extended our [existing vendors] into new relationships. Our existing partners are transforming themselves. And we're evolving with them. Our relationship with them is changing. We have the advantage of OpSource's history. We've created a new evaluation process."