Exclusive: Understanding Datacom's Xcite'ment

It was one of the more stunning stories to come out of the channel this year. 

When CRN broke the news back in May that Perth reseller XciteLogic had collapsed, it was the last thing anyone expected. 

The company had been growing at 600 percent and seemed to have cemented its place as one of the top performing partner companies in Australia and a poster child for tech success in WA. along with a string of awards. 

So what went wrong? Sources revealed to CRN that Xcite’s stellar growth bred dangerous levels of hubris within the company, manifested in strained relationships with vendors, notably Apple. Even more damaging, was a large gamble on developing a standalone software business.

It’s this failed throw of the dice that is believed to have sent XciteLogic to the wall and administrators scrambling to find a buyer. 

They didn’t have to look far. Systems integration behemoth Datacom had been kicking Xcite’s tyres for the past few years. 

Datacom CEO Peter Wilson declined to comment as to what sort of discount he was able to buy Xcite for when it collapsed, yet there can be little doubt the timing had him and other key executives marvelling at their good fortune.

Rather than discuss the final price tag, Wilson instead stressed the value of Xcite’s IP, impressive customer base and existing footprint in the WA market as key selling points.“We decided to acquire them because we thought their products were great,” Wilson said.

He questioned reports the software business was Xcite’s downfall and said it was a profitable operation. He was unable to explain, however, the importance of Xcite’s software assets to Datacom which already has a substantial software business with several hundred developers across Australia. 

Around 30 of Xcite’s 75 staff have joined Datacom’s Perth office, along with four directors including former Xcite boss Tony Panetta, now director of education sales. Datacom now employs around 150 staff in WA, with just over 1000 in total across Australia.

Privately-held, Datacom turns over around $400 million annually, having grown an average of 20 percent year on year since the GFC. The company services organisations across the key verticals of government, education, financial services as well as energy and resources, a sector Wilson stressed has remained strong for the company despite the cooling of the mining boom.

“We’re still seeing healthy business over there.”

Key to Datacom’s success, Wilson explained, is having committed to transitioning the business to services seven years ago, before most of its competitors. It now derives 50 percent of its revenues from services, with a fast growing proportion derived from monthly annuity-style arrangements. 

“There is absolute disruption going on in the market - if your business doesn’t have a strong services business you’re going to struggle," Wilson said.

Datacom continues to invest heavily in its cloud business, and now has data centres in NSW, Victoria and WA with co-location agreements in Queensland, South Australia and the ACT. The priority moving forward, Wilson added was to grow organically, although he confirmed the company was viewing a number of potential acquisition targets. 

“We’re looking at a number of companies at the moment.”