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Dimension Data: The High Growth Story Continues

NelsonHall recently attended Dimension Data’s ‘Perspectives’ event in Prague at which Dimension Data, a subsidiary of Japanese owned NTT, detailed progress towards its goal of doubling 2014 revenue to $12bn by 2018. In FY 2015 Dimension Data achieved revenues of $6.7bn, up 48% in the two years from FY 2013. CEO Brett Dawson confirmed that Dimension Data is on track to achieve its revenue target of $8bn in revenue by the end of the year, growing 17% in Q1 FY 2016.

Highlighted at the event were the benefits achieved from its 2010 acquisition by NTT. This not only enabled topline growth but it has helped Dimension Data shift from being a hardware-centric to a services-centric business, and one that is able to offer complementary services through the group, for example Dimension Data utilizing NTT Data in applications services and its research arm NTT i3 in cloud, security, infrastructure, and IP around machine learning.

Currently, around $1bn of Dimension Data’s overall revenues are generated from data center management services: its ambition is to quadruple this figure within the next five years. Although this would appear a lofty target, Dimension Data has a solid track record: in November 2010 Dawson shared a target of $7bn in revenue within five years. To achieve its $4bn data center services revenue target, Dimension Data will have to continue at its current rate of growth, which is partly acquisitive. Dimension Data’s data center business is currently stealing market share, both from larger competitors where the client relationship is a traditional IT infrastructure outsource, also from smaller competitors that cannot offer the same level of IP.

As part of its growth strategy Dimension Data is looking to:

  • Continue its ‘Simplify to Accelerate’ program across its global operations, with a common service catalog, a single set of reporting and consistent processing across the client base. The program was completed in Europe in 2014, the MEA region is being completed in H1 2015, with the Australian, Asia Pacific and U.S. operations to follow
  • Further invest in areas such as cloud data centers and automation of components of its managed services, to bring more activity into an aaS model. Last year Dimension Data invested ~$250m in its portfolio. And in the last three years it has invested a total of ~$750m in acquisitions such as NextiraOne, Nexus, Teliris and Oakton, for geographic and service expansion: a third of its recent growth has been inorganic. Looking ahead, Dimension Data intends to invest ~$100m each year for the next three years in cloud-based offerings.  Inorganic growth will also continue to play an important part in future growth, with Continental Europe and the Americas being the obvious target regions
  • Reduce the size of the tail of smaller accounts, particularly in its legacy regions such as South Africa, Australia and APAC. Smaller accounts in other regions are felt to offer greater opportunities for growth.

The focus on transforming Dimension Data’s offerings is illustrated by the fact that the top 100 people in the company have 45% of their bonuses based on transformation goals, which include growth in some key services areas - revenue growth in the last two years in some of these areas are impressive: 87% in data center services, 62% in other IT outsourcing and 50% in  ITaaS activities.

While increased collaboration across the NTT group has benefited Dimension Data, the journey is not complete; Dawson mentioned ‘hundreds of millions of dollars’ that Dimension Data could still potentially sell into NTT.

Dimension Data is winning contracts that are helping it gain mindshare. Recent examples in EMEA include a win with Amaury Sport Organization (A.S.O.), the owners of the Tour de France, to become its technology partner, and a partnership with Deloitte Consulting to provide and manage an IaaS layer with its Managed Cloud Platform (MCP) for Deloitte’s offerings around enterprise application and analytic workloads. It also has established relationships with the likes of Airbus and Unilever.

The ‘Simplify to Accelerate’ initiative is critical for Dimension Data to be able to shift from offering essentially regional services to being a global services provider that is a top of mind vendor outside Australia and South Africa.

Dimension Data, itself an acquisitive organization, was acquired by a larger acquisitive group (NTT Group’s other subsidiaries also include NTT Data Inc. and NTT Communications, the latter only partly owned). As a post-script., will we see in the mid-term:

  • An increasing focus on integrating various parts of the NTT Group into selected target large MNC accounts
  • A new Security services organization that leverages assets and resources from across the NTT Group?

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