Happier days at Didata as it rides out the recession - TechCentral

Happier days at Didata as it rides out the recession

Jeremy Ord

Jeremy Ord is looking more relaxed than he has in years. It’s not unsurprising. After the torrid years that followed the technology collapse earlier this decade, Didata has begun outperforming the expectations of investors and stock market analysts, and consistently so.

In spite of the worst worldwide economic recession in decades, Didata’s share price is trading near to a multi-year high, and the Campus, it’s sprawling head office in Bryanston, north of Johannesburg, is a veritable hive of activity.

Margins are still tight — the bumper profits of the late 1990s will probably never reoccur. But business is good, with signs that the recession is easing. The IT sector has weathered the storm particularly well, Ord says. “You haven’t seen the dramatic fall-off we saw in the last bust,” he says. “I think IT has come a long way and now is well and truly a enabler for business.”

When the technology bubble burst after 2000, many businesspeople were angry with their IT suppliers, Ord says. They felt they’d wasted money preparing for the Y2K date-change switchover. And they didn’t trust their IT suppliers, who tended to bamboozle them with techno gobbledygook.

That has all changed in the past eight years. “People realise for the first time that IT is an important part of what they’re doing.”

That’s not to say the sector has escaped entirely unscathed. Didata’s product sales have been badly hit by the downturn. But its diversification into value-added services has cushioned the effects of the economic crisis. Software companies and pure product distributors and resellers haven’t been as lucky, Ord says.

Didata and companies like it have reinvented themselves. “We had to, after our margins fell through the floor. The whole relationship between IT companies and their customers has changed. We now have to add value and be seen as a true partner to business.”

The IT industry — and Ord includes Didata here — became “too arrogant”. “We had this view that we were kings of the world and everyone was in awe of us. There was so much hype. But you can’t bullshit guys anymore.”

The hype might have evaporated, but things are hotting up in the technology sector again. Convergence between telecommunications operators and IT companies is created interesting new market dynamics.

Incumbent telecoms operators all over the world have been moving into IT services as the margins in their traditional telephony and Internet businesses come under increasing pressure. In SA, Telkom tried to buy Didata rival Business Connexion, but the deal was thwarted by the Competition Commission.

Could Didata be for sale if the right offer came along? The group has an interesting position in the market. Not only does it operate a worldwide IT services business, it also owns a particularly successful telecoms business in SA in the form of Internet Solutions. “You can never say never because ultimately that has to be decided by the shareholders,” Ord says.

He says Didata is in a far stronger position in the IT services market than its telecoms rivals. “We understand this market, we understand global business, how to manage big global clients.”

Ord says he is excited about the changes that are happening in SA telecoms. “After years of nothing happening, it finally looks like the industry is going to start moving. We will see a lot of consolidation.”

He doesn’t rule out Didata playing a role in that consolidation, but declines to spell out if the group has specific acquisition plans.  — Duncan McLeod, TechCentral


  1. Internet Solutions, besides being Dimension Data’s lifesaver as a cash generator, is also the poison pill that protects the company from any local acquisition threat. Any likely suitor will probably be a competitor either IT services or telecoms. Which means an offer would have to come from a foreign company. If that happens, Ord could just call Julius Malema for a press statement.

  2. I don’t think IS is as much a cash generator as people think, if anything the relationship is the reverse.
    Most of IS large business leads and skills comes out of DiData, and given the aggressive pricing strategies on their ADSL products, I believe they have made only marginal profit on it for some time.
    Verizon initially tried to match the IS model entirely with their own IP Connect services, and they failed to make any profit.

  3. Perhaps I should have made clear that I meant to refer to the past: the dot-com-crash years, when DDT’s survival was in considerable doubt and most of its global operations were loss-making. IS in South Africa was one of the very few profitable divisions and arguably saved the group from disaster. Didata for years couldn’t afford to sell IS, simply because IS kept it afloat.

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