Dimension Data, South Africa’s largest multinational technology services group, wants to double its revenue in the next five years, lifting turnover from about $6bn in 2012 to $12bn in 2017. At the same time, it has set itself a target of improving its operating margin to 7% from 5% now.
The group, which is owned by Nippon Telegraph and Telephone (NTT) after the Japanese communications giant acquired it in 2010 for R24bn, will achieve these aggressive growth targets through a mixture of organic growth and acquisitions to help it expand both geographically and into areas that are complementary to its business, CEO Brett Dawson tells TechCentral in an interview.
“The underlying message is around making sure it’s an aggressive growth story and aggressively positioning NTT outside Japan,” Dawson says. “We will look primarily for organic growth but will also look at acquisitions to ensure that as part the NTT group, we are more of a global player.”
He says Dimension Data will shy away from blockbuster deals, like its disastrous acquisition 12 years ago of US systems integrator Proxicom.
“The biggest strategic mistake Dimension Data ever made was [buying]Proxicom,” Dawson says. “You have to be careful as a CEO to propose those kinds of things. Acquisitions are highly risky.”
He says the group will be “more aggressive” in pursuing acquisitions but cautions: “You can’t buy your way to greatness. Making an acquisition is easy. Making them successful is a whole different kettle of fish, especially in a people business like Dimension Data.”
As for expanding geographically, Dawson says Dimension Data has identified six markets, “particularly in South America and one or two in Africa”.
“We have a list of six countries, but we’ll do two or three of these,” he says. “In some parts of the world we are also still too small. We need to be bigger in Europe and South America.”
Since its acquisition of Dimension Data three years ago, NTT has pumped an additional R1,5bn in capital into the business to help it “accelerate” its investment into areas such as enterprise mobility and cloud computing, Dawson says.
A key focus in the next few years will be lifting operating margins, which have remained fairly constant at around 5% since the NTT deal was concluded. To achieve this, Dawson says Dimension Data will find ways of improving the way it runs its systems integration business. This will involve both internal improvements such as standardisation of processes but also a focus on growing the size of the services business relative to product sales, where margins are thinner.
Also, new growth areas like cloud computing offer higher margins than traditional on-site IT services, Dawson says. “As you add one more client and one more virtual service, you get a higher-margin model [emerging].”
Dawson, who succeeded Jeremy Ord as CEO in 2004 (Ord is chairman), says he has no plans to leave Dimension Data for the foreseeable future. “I’m still enjoying it. I’m really excited about what we can do here in the next five years and about trying to create something new. Dimension Data has been successful in continuing to make itself relevant as the world has changed. The industry is at another point of inflection now. If we get this right, we can go through one more major market transition in my time here.” — (c) 2013 NewsCentral Media