Reason to smile

Reason to smile

Richard Noone caught up with Steve Nola, managing director of Dimension Data, at the company's recent Forum 11 user conference in Coolum. Here's what Nola had to say.

This year's theme is "effective and efficient interaction". How did you come up with it and how does it reflect what Di Data's doing at a customer level?

If you look at what's happening right now in the market, it's not something that has evolved in the past six months. It's probably something that's been evolving for the past 18 months. With the excessive expenditure prior to Y2K and with the whole lead-up to the dotcom stuff, it got to a point - and we even believed it ourselves - that this thing can't be sustainable in terms of the amount of infrastructure being built.

That theme was very common to a lot of customers that we spoke to, exactly the same. What's been interesting is it's coming from the CFO because all of a sudden they're looking at the balance sheets and saying, "Geez our depreciation bill is going through the roof - how does that work?" So the theme was really pretty easy, it was a very common sort of thing that our customers were saying to us.

Di Data itself went through a recent downsizing. How has it managed to rein in its cost structures?

I guess there's two issues. One's from an IT side and we've definitely addressed that internally. The other one is more of a restructuring issue than a general, "we want to get costs out of the organisation". Our business has grown up very much as five separate organisations and has always been very branch-focused. But over the years there's duplicity points set in all these branches in terms of administration functions, line management etc. To really start addressing some of our enterprise customers that want to deal with us on a national level, let alone a global level, we have to take a national view of the business. So what we've done is exactly that, we've broken down the branch structures and made it more location-based, and as a result we've nationalised a lot of the functions. We've had a lot of efficiencies [from that] in terms of reducing a lot of middle management.

Security has become a major enterprise concern. Is security going to be a big focus for Di Data going forward?

It's a huge focus for us going forward, in a couple of areas. Everyone thinks of security in terms of firewalls, the perimeter defence side of it is one element of security. There are others like application security and there's the security policy itself - how you actually conduct yourself as a business. Those are areas we're definitely going to focus in, we see it as a big, big market.

Former competitors such as Solution 6 and Powerlan have abandoned the services market in favour of becoming software vendors. What do you think of the argument that the services market has become commoditised?

I think everything becomes commoditised if you can't add value around what you do. Our view is the services part of the business is a very critical one, and really that's what we lead with in a lot of cases in terms of our sell. The issue a lot of companies face is there's a big difference in providing a service and providing a body. I think a lot of organisations have had this mentality that body shopping is providing service. To us it's not our mentality. Our view is that to provide service is to look at a project in its entirety, which also means supplying the product and the logistics and project management associated with that, designing the solution and then maintaining the solution. To us that is a service offering, it's not just sticking a body out there.

How does Di Data address the competition issue, which has become so prevalent in a depressed IT market?

If you take the business from a vertical perspective, we have a lot of competitors ranging from large organisations to two-man bands working from the back of their garage. We've always had that issue in the industry and how we protect ourselves is we don't actually try to run ourselves into this silo mentality. If you really take [the business] horizontally and slice it across, we have very few competitors that can compete with us on a whole bunch of levels.

Industry rumour has it that Di Data Australia is under-performing compared to the company's other operations in the region. Is this true?

Not at all. Our performance is on par with the rest of the region. The interesting bit from a revenue perspective is that most of the countries report roughly the same sort of revenue numbers. Ours are somewhat skewed because of our distribution business that we have, but in essence our growth rates have been in line with other regions.

There has been a lot of speculation about Di Data and its distribution agreement with its subsidiary Express Data. In light of Cisco's decision to go direct to Gold Partners, can Di Data leverage any advantage out of ED?

We're no different to any other [Cisco] Golds, we face the same issues and the same pressures as any Golds have. There's a lot of hearsay about that, but none of it's true. We run two separate management teams. Ross Cochrane and myself are both joint MDs of the business, and our view is that ED would not have been successful if the integration side of the business was bleeding Express Data. We really had to take a very firm decision, saying it's two separate businesses and the integration part can't be given a competitive advantage. So the reality is that we do lose a lot of business to other competitors who buy a lot of product from Express Data - that's the reality of it. We get an account manager from Express Data who we share across many [integrators], so it is totally separate. We have the same frustrations as any Gold partner, and that's the way you have to run it. I think a lot of other companies have tried it in the past when they actually use distribution to fund an integration business and that's not going to work. If we did do that, most of the resellers would have walked away from Express Data, and ED's growth over the past four years has been absolutely spectacular. I don't think the resellers have an issue with it.

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