DiData marshals services advantage for 2008

Dimension Data has posted strong local results on the back of professional and managed services growth but says product sales were held back by the soaring Aussie dollar.

DiData chief executive, Steve Nola, said the integrator saw Australian operating profits surge 38.4 per cent to $US29.2 million on revenue up 10.9 per cent to $US791 million for the year to September 30.

Nola said the "very pleasing" local results reflected the company's new strength in professional and managed services. DiData had been realigning its capabilities with the needs of the converged network, the converged client and multisourcing over the last few years.

"It was a reasonably successful year across all our major areas of focus," he said. "For us, it's really going to be now about maintaining the momentum."

Managed services revenue in Australia jumped 17.9 per cent and gross margins improved. The company reported new client wins and good customer retention as the reason. Professional services revenue leapt 33.3 per cent but margins shrank due to an increased reliance on sub-contractors, the company said.

That said, DiData locally managed to keep its overheads down, improving the operating margin to 3.7 per cent, up from 2.9 per cent in the previous year.

Product revenue was also limited somewhat this year by the strong Australian dollar, which ended the fiscal year hovering around the $US0.90 mark. DiData's distribution arm, Express Data, did less well in the second half of the year as a result, according to a DiData report.

"The dollar, as it goes up, means we do have to sell more locally, so that does have a negative impact," Nola said.

He expected more of the same for 2008, with an increased emphasis on things environmental as well as the ongoing push for convergence and efficiency in the datacentre.

DiData's Microsoft and Cisco partnerships would continue to be instrumental as the integrator jockeyed for position in the unified communications, video and remote application integration and converged networking markets, Nola said.

Security and digital rights management (DRM) issues would also increasingly come to the fore in managed services, along with operating system issues on the desktop.

"We're seeing a trend now towards a managed operating environment," Nola said. "How will you manage the diverse applications on the desktop?"

Dimension Data Australia is a subsidiary of the South African-based company of the same name. Globally, it reported annual revenue was up 23 per cent to $US3.8 billion, including a 25.8 per cent services revenue hike to $US1.5 billion.

Operating profit for the whole company was up 55 per cent to $US131.0 million, while gross margin was 21.5 per cent, up from 21.1 per cent in 2006.