Words of wisdom for channel longevity

Life expectancy for IT companies in the small Australian market is often brutally short. Spinning from gold rush to famine, from leading edge to bleeding edge or just plain left behind, working in the world of technology has brought as many failures as fortunes.

Few companies have been around as long as Dimension Data, which celebrated its 20th anniversary in Australia last year. CEO Steve Nola has been in the driver’s seat since 2002, and can count back his time with the company to 1989, when he set up the Victorian branch of the company’s precursor, ComTech.

In this profile, Nola lists the five strategies he has employed to such success with the distributor and integrator.

The greatest temptation in IT is to follow the fad of the day, which encourages short-term thinking. Nola said this is a common problem within the industry – something he’s consciously avoided.

DiData has taken the opposite approach and always focused on the long term, a philosophy which underpins its strategy and is largely responsible for the company’s longevity, said Nola.

“You put very different foundations down for a business that you want to build for many, many years to come, rather than say, let’s maximise returns for the next year and then worry about what happens next.”

The first, and very familiar, point is to invest in staff. While this advice is frequently bandied about, none practise it to the same degree as DiData, which ploughs back 20 percent of its profits into staff training. Nola said he believes it is the highest rate of investment in staff in the industry.

Staff are particularly important for a disti-integrator as it produces no products of its own. “The thing that differentiates us from the next organisation is the quality of people that we have. You know there’s still 50 percent of staff in some form of technical support – in pre-sales, consulting or engineering,” said Nola.

“Especially when you are talk about deploying technology. It’s complex, it typically doesn’t go in nicely, there’s always going to be issues. And if you support your client and do it well, I think that’s the key to our success.”

The second tip is to pick your products carefully and stick to them. The same goes for selecting partners.

During his term as CEO, Nola focused the company on supplying IT infrastructure, and culled vendors and products that were either not likely to dominate the marketplace or were in areas where DiData wasn’t likely to pick up market share.

“Our portfolio of product is pretty narrow. We don’t sell [just] anything that crosses our desks,” said Nola.

A number of benefits flow from having a select range. It improves a reseller’s presence in the market, as it becomes somewhat synonymous with the technology. Nola points out that DiData is the number one or two player in the local market for each of its partners.
More importantly, it also simplifies investment choices. Instead of spreading training money across a wide range of equipment, DiData has been able to invest heavily in staff training and go-to-market strategies, which gives it a depth of knowledge and experience in its products – a useful competitive advantage.

Long-term thinking is particularly important here. While exciting, new products often pop up from vendors outside DiData’s collection, Nola has always resisted the temptation to jump.

Long after the joy of the initial sales has worn off, a reseller has to honour its servicing and maintenance obligations to its long-term customers, and if the vendor is inconsistent or – worse – disappears, the reseller is left in a difficult position.

“If you’re not really selling [a product] you are encumbered by a short-term position.”

When DiData decides to get involved with a vendor, it researches the vendor’s plans for growth, its commitment and spend on R&D and an analysis of its competitors.

The third piece of advice is: do your research. There’s no point limiting the number of products and vendors if you are backing the wrong horse. Read widely, learn from the field and talk to your customers, said Nola. From his own history, Nola knows how valuable a broad exposure can be in finding new solutions.

After graduating with an electrical engineering degree in the mid-1980s, Nola’s first employer was Telecom. The fresh recruit was rotated through several departments before landing in Telecom’s first foray into computing. Nola researched networking technologies, including WANs, LANs, token ring, Ethernet on coax and unshielded pairs. Nola impressed the right people and was assigned to a small four-person group responsible for designing and installing the first fibreoptic networks in Sydney and Melbourne. The project, which he believes was at the time the largest of its kind in the southern hemisphere, provided an incredible experience, said Nola.

“It was quite leading edge in terms of the scale of the deployment. The CEO [Mel Ward] came back and said, ‘That’s great, what apps do you want to put on it?’”

Drawing on his earlier networking research, when he had put in place several networks within his division, Nola suggested using the fibreoptic network to connect most of the Telecom offices together. Ward agreed.

“We deployed the first LANs in Telecom back in the late ’80s. And we really started to enjoy that big-scale deployment, playing with brand new technology, [although] a lot of it didn’t work terribly well. It’s a far cry from the engineering degree that I did.”