12 Questions For Dimension Data Americas CEO And Nexus COO About Blockbuster Acquisition

Looking Toward The Future

On Wednesday, Dimension Data, No. 11 on CRN's SP500 list, shook the channel industry with its announcement that it had acquired $471 million solution provider Nexus IS, No. 78 on CRN's SP500 list, for an undisclosed amount. In the hours after it announced the deal, Dimension Data Americas CEO Mark Slaga (far left) and Nexus President and COO Waheed Choudhry discussed with CRN what the deal means for the two combined solution providers, why they believe they are a great fit to be a competitive force in the market and what other acquisitions might be on the horizon.

What are your initial impressions of the deal? What excites you the most about it?

Choudhry: It's been a pretty exciting day, and feedback has been completely overwhelming from the folks about how positive everyone is about this ... I know from the Nexus perspective there's a lot of things that in coming together through this acquisition will allow us to accelerate offerings to our customers, that allow us to touch our customers in new and differentiated ways ... whether it's managed services, managed cloud platforms, e-procurement, now a much broader international and global strategy that we can deliver to our customers.

What makes the two companies such a good fit for one another?

Choudhry: It really comes down to culture match, people match, our visions for our businesses, but more importantly our visions for our associates. I think that's what's so exciting about the coming together of these two businesses, is the accumulation of such great talent, great people, everybody focused on working hard ... but focused on the client first and foremost ... It's such a great match.

Slaga: We've got the same foundational solutions that we take to clients. Each of us brings some extra things that strengthen both sides: Nexus with some great industry vertical solutions ... and we bring the other parts around international and cloud and outsourcing complex managed services. But the No. 1 thing is the team and the culture -- 657 talented employees and really, truly, that's the part that for me is most exciting.

How is this changing the dynamic of the channel market?

Slaga: We're shaking up the channel community, for sure.

Choudhry: You said it well -- this is going to allow us to compete in a very different way in the marketplace. I'm sure a few knees are knocking out there, and that's a good thing from our perspective.

How is this going to change your go-to-market strategy?

Choudhry: Nexus represents a brand that is getting infused into the Dimension Data brand, and you know it's one of local client touch, very strong in the commercial marketplace, that is strong in health care and other key verticals, government, and education and retail. All those things that we do day in and day out don't change for us. That's our message to our folks. We've got a plan to get to a billion dollars and [Slaga] said to me very directly, "We want to get behind your plan because ... you can achieve your goals, and your people can achieve their goals."...So, nothing really changes, we are Nexus IS, a Dimension Data company. We're going to look to continue to execute on all of our business plans for the balance of this year and look to those ways that we can really plug into the power of Dimension Data and bring those new offerings to bear for our customers.

Is there a lot of client overlap?

Slaga: One of the things that helped us decide we were a good fit was that we both have about 1,000 clients each, and when we map side by side [with] our clients, we had a total of 17 clients that we were both doing more than $10,000 worth of business in. You think about the complementary and additives to what we do for each other in the market with our clients, there's very little overlap there. That to me is really exciting in talking about being able to bring the power of what Nexus brings to our clients and what we bring to Nexus clients ... Ultimately, it would be nice to make a splash with the channel, but we really want to make a splash with our clients.

Now that you're getting much bigger, how will you change your approach to your competition?

Slaga: The additional coverage would be the companies in markets that we're in, that we compete with today, that we can go against them more and then combine as we continue to organically invest. We added about 35 percent sales capacity this year. If we organically invest in the future, we can extend into other markets like we extended into these markets.

Last time we talked when Dimension Data acquired NextiraOne you said that it was the company's goal to triple U.S. revenues. How does Nexus fit into that strategy?

Slaga: For us, tripling the business over the next five years has two elements to it. One is our organic growth, and for us having a healthy, organic growth business is a prerequisite to thinking of anything or doing anything like this ... We're taking market share. I don't say that braggingly, we're not braggers, but we're able to compete. We're both organically growing, but bringing these two businesses together is where the other half of the element [is] of finding that right partnership. We looked literally for years to find the right match that shows on paper as a good fit for things like geography, but more importantly the culture fit. I think for both of us, we've been looking for that right fit for years, and this is it.

What kind of organic growth has Nexus seen?

Choudhry: We closed our year growing 40 percent year-over-year. Our growth trajectory is up and to the right in a big way ... We've been experiencing just tremendous growth and, for us, our 10 years of history has been purely on the back of organic growth. The plan we set forth and submitted and that Mark [Slaga] has committed to continue to invest in, has a lot of organic growth that is built into that. Getting to that $600 million mark this year is that first step in getting to a billion dollars.

Can you elaborate on how Dimension Data will be able to boost Nexus' growth?

Choudhry: I'd love to say that I think very strongly that with the access to the new portfolio of offerings that we can bring to our customers, this should absolutely accelerate towards that billion dollars, allowing us to touch marketplaces where we haven't had presence, both nationally and internationally, and especially leverage some of the key core expertise that we bring to the space of our vertical expertise, health care, retail, government and education ... In this coming together, we're really caring for the long-term stability and future of the core Nexus business, and ultimately providing for a lot of great growth opportunities for our current associates ... as we continue to grow, we're delivering what our customers expect from us, which is expertise.

You are both very big Cisco partners. What does this acquisition mean for the Cisco side of both of your businesses?

Choudhry: I think from a Cisco standpoint that there's going to be a lot of excitement. It allows us to drive a lot more relevance to our joint customers, both up and down the marketplace. The more and more the industry pivots, our customers want to drive simplicity into their vendor strategy and how they procure technology solutions, as well as professional services and consulting solutions ... I think Cisco is going to see that in a very positive way. Granted, there are competitive products that we both have in our portfolios that can still address the needs of our customers, but it's one of Cisco-first, and keeping the clients at the center of that conversation.

What can we expect from the combined force of Nexus and Dimension Data going forward?

Choudhry: [Nexus will] continue to grow in our key verticals, health care, government, and education and retail. As there are other verticals that make sense for us to deliver unique value to ... [we're] always looking to consider and explore those new opportunities as they present themselves. We're very excited to be able to leverage the expansive portfolio that Dimension Data brings to the table ...There's a lot of opportunity. Not just the next new customer, but with our existing customers to have a new and fresh dialog and conversation and really execute against the business plan. That’s what we're most excited about.

Will we see more acquisitions from Dimension Data in the near future?

Slaga: It isn't a big rollup strategy. We very selectively picked Nexus, and our focus is bringing them into the family and bringing the two families together. We'll be very select. There will be some that we do for other capabilities, but it's very selective. We're not in the market to go do a bunch of [acquisitions]; it's not the strategy. We'll do very targeted, select acquisitions.