ARN: How do you see the future of broad-based distribution?
DS: If there was ever a good opportunity for distribution it is now. During tough times generally the tough get tougher and the marginal players go out of business. That is what you are seeing in Australia and I really believe that ultimately there will be two strong distributors: Express Data and Tech Pacific.
I believe Tech Pacific and Express Data will continue to dominate the market for broad-based distribution in Australia and it remains a key part of Dimension Data's strategy.
What about the second tier of distributors? Is there still a viable future for the niche distributor?
I have been put on record a few times as saying that you will have to get big, get niche or get out. Yes, there will be niche guys. You are either going to be a big player or you are going to be a very good player.
In distribution, if you don't have reasonable market share with a vendor then you are wasting your time. If you are only the number four or five player with a Cisco, a Sun or a Microsoft, and are not doing 30-40 per cent of a vendor's business, you just can't stock the product properly and you can't support it properly. You don't get mindshare from the vendor and you don't get mindshare from resellers.
So you can't really be a niche player in a mainstream market. You can certainly be a niche distributor in a new area of technology for a while, but as that technology becomes mainstream you will ultimately get swamped by the bigger distributors.
Smaller distributors truly have to add value, not just to the customer but also to the supplier. So long as a distributor adds value for a supplier there will always be a role for them. That is still happening right now; I don't see that changing in the computing industry.
Dimension Data also had a large systems integration operation. What do you see as the future of that part of the industry?
In the value-added reselling area you will definitely have a whole range of different players. It is a very different game from distribution.
When you are a VAR you can choose your target market, and so long as an organisation has that focus and can add value for that target market there is an opportunity. If an organisation knows what value they add in the supply chain and their customers want to buy it off them, then they don't need to be the largest player in that area to be successful.
Can you pinpoint a couple of major influences on the channel you have observed over the last 14 years?
Without a doubt the Internet would be at the top of the list. Certainly from our point of view the advent and pervasiveness of local area networks was huge.
When we kicked off 14 years ago, people were using a LAN to share a printer or a hard disk drive. These days everybody from a two-person organisation to a 20,000-person organisation has a LAN. Without doubt, the intranet was the biggest growth enabler for our business.
Do you consider the industry to have matured?
There is no doubt the industry has matured as an economic sector, as a group of professionals and as a group of businessmen. One area where it has really changed is that it's now harder to start up than it was 14 years ago.
Organisations generally want to deal with people who are likely to be around in the foreseeable future.
Do you see any future technologies or opportunities that the channel should be jumping on to?
I believe there is a huge opportunity in leveraging the Internet as a tool to make businesses more competitive and to drive the cost of doing business down.
There is a body of CEOs out there still sitting back after the so-called dotcom crash and they think their initial scepticism about the e-business dream has been vindicated and that the Internet is all a waste of time.
It really isn't. Anybody that has successfully implemented Internet-based business processes and methodologies knows it is a huge opportunity with enormous business benefits.
There are a lot of large organisations that could really make their businesses more competitive by using technology and that is a huge challenge and a huge opportunity facing all resellers in the world - to get out there and make the Internet happen for all organisations.
What are your plans now?
My plans at the moment are to pretty much do nothing until February next year. I am not really sure what I want to do but there are a few things I know I don't want to do. One of those is to start another company. I don't think I have the energy or the passion to do that again.
I certainly don't want to do nothing either. I'd go mad if I wasn't busy. Thirdly, I don't want to sit on any large company boards at the moment. I was on the Fairfax board for a while and I felt that if I had been knocked over by a bus, hardly any of them would have noticed I was gone.
It gets back to what I was saying before - if you are not adding any value, it's not worth anybody's while. So I think I would like to get involved in some smaller companies. I am already involved in two - Holly and eSign.