Dimension Data Americas CEO puts Canadian service providers on notice

On Thursday, Japanese telecommunications giant Nippon Telegraph and Telephone Corporation (NTT) announced a US$3.2 billion bid to purchase Dimension Data, a global IT services and solution provider with a strong Canadian presence as one of Cisco Systems‘ larger partners in the country.

Dimension Data’s board has recommended acceptance of the all-cash offer, and the two companies hope to close the acquisition by the end of October, pending regulatory approvals.

In a conversation with CDN, Jere Brown, CEO of Dimension Data Americas, confirmed that the Dimension Data brand will continue under the agreement, with the company operating as a subsidiary with NTT led by the current Dimension Data leadership team. He also confirmed no North American layoffs are expected to result from the deal.

The following is an edited transcript.

CDN Now: Why are Dimension Data and NTT a good fit?

Jere Brown: I think there’s a couple of reasons. And if you look at it from the perspectives of the three primary stakeholders – employees, customers and partners – there are benefits for all three.

It enables our employees to continue to operate under our culture, under our Dimension Data brand as part of a larger global entity, continuing with the success of the mission we’ve been on in recent years. There’s great continuity from a leadership position, with the existing leadership and management teams staying in place. It allows us to accelerate growth of our portfolio with new service offerings, and it creates new career opportunities for our employees as Dimension Data continues to grow and build-out our Americas footprint. We’ve had tremendous growth in the Americas, and we continue to be committed to building that out.

It’s great for our clients. NTT is a well-recognized brand. Maybe not as recognized outside of Japan, but they’re a formidable, powerful company with a strong balance sheet, a strong set of services and clients that are global in nature. I think we can help NTT in that regard, with our global nature, our global experience and our proved record of delivering global solutions. The feedback from our clients has been excellent. Many of them are looking to integrate telecommunications services and infrastructure services to drive down costs, and to consolidate vendors, and I think this provides them with that opportunity. Many clients are moving into cloud offerings, hybrid clouds, and they’re looking for partners that can offer a wide variety of on and off-premise solutions.

It’s great for our vendor partners. As a large global entity, this gives them the opportunity to accelerate their revenues, to work with a company with a very large, broad set of offerings, and to move their products very widely and deeply into clients. We can give them greater global scale to distribute and support their products.

About 98 per cent of NTT’s revenue is from Japan, and the rest is from around the world, so they have a very small footprint in North America. It’s mostly hosting facilities and web operations. So there’s no redundancy, no overlap, no closure of facilities, no job loss, so it’s very positive for our employees. I’m not aware of any (NTT operations) in Canada. So we can help them globalize, because the market opportunity in Canada is very strong.

I think some of your large services providers in Canada might need to be on notice, because there could be a powerful opportunity up there.

CDN: You mentioned cloud computing, and it was mentioned prominently in the announcement as well. How will you be able to bring a more powerful and compelling cloud play to market with NTT behind you than you could have on your own?

J.B.: NTT is a bit ahead of us in terms of building cloud capabilities. Being a service provider with a wider breadth of hybrid and private cloud offerings gives our clients multiple choices, and our clients want and need more choices. Many of them are still struggling with what they should do, and I think the experience NTT has in the infrastructure space will give our clients more choices. We can help them along the way, working through the different types of consumption models they may see.

CDN: Could you give me an update on your Canadian branch?

J.B.: Every year since we’ve been in Canada we’ve had consistent growth, at or above market growth. Even in the tough economic conditions last year we were able to grow top and bottom-line, in the high teens or greater, and we’ve been able to take market share. Our Cisco market share moved up considerably. We’ve got a lot of technical talent, particularly in the unified communications (UC) space, and our capabilities are a differentiator in the market, both in UC as well as the collaboration suite as well as video, with Cisco’s acquisition of Tandberg. We’ve had consistently strong leadership from Wendy Lucas and Darryl Wilson. Since we opened we’ve probably tripled our staff and we’re in hiring mode right now. We’re looking for pretty strong growth in our fiscal 2011.

We started by leveraging Dimension Data’s multinational clients (with Canadian operations) and we’ve since expanded into the domestic market, which is primarily commercial, and we’ve done well there. We don’t have a public sector business at this time, and there’s certainly potential for consideration there in terms of growth.

Follow Jeff Jedras on Twitter: @JeffJedrasCDN.

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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