Dimension Data Australia's proposed acquisition of Oakton has the potential to create a channel powerhouse. Here is what Dimension Data Australia CEO Rodd Cunico told CRN about the strategy behind the offer.
What is the strategy behind this move?
I've got a very strong view that as the global ICT market evolves, we'll ultimately end up with a world where ICT is fundamentally delivered as a service just like the utilities of today.
I believe that over time, many domestic ICT organisations will come under enormous pressure and struggle to exist. And ultimately what will be left is global service providers and global organisation that operate at very large scale. The companies that will ultimately survive will need very large balance sheets to invest in huge infrastructure to address the pay-as-you-go and consumptive services – and everything-as-a-service.
But I also firmly believe that as part of that, pure-play infrastructure suppliers will also be relegated and ultimately still struggle to exist. If you think about where the market ultimately goes, everything will be email-as-a-service, employee-collaboration-as-a-service, student-management-as-a-service: everything will ultimately be as-a-service.
Therefore, if you don't play in the application space and you don't have deep vertical domain expertise, and you just sell it, you won't have a role in the future. It will become less about infrastructure management and ultimately about information management.
The world is truly going to transform and to be relevant to clients and to be able to survive, you must have the combination of both. Pure-play application organisations and ultimately infrastructure organisations I think will start to struggle. What we’ve got here is the perfect marriage: the ultimate marriage, if you will.
So Oakton's key contribution will be application expertise?
It's more than just the application expertise. If you look at what they do, they've got the best industry and domain expertise in the country. They've got a large consultant workforce that is skilled across all aspects of consulting, business consulting, transformation, architectural consulting. They've also got a sales force that is very skilled at having conversations with business leaders: CEOs and CFOs.
Think about what's happening in retail. For a retailer to differentiate, it's got to understand client buying patterns, it's got to know you as a consumer – what you browse at home online, know when you walk into a store because it's created a loyalty program and they know which aisles you're walking down.
It's all about big data and analytics, so those concepts apply whether it's around healthcare, government, manufacturing or construction. To be truly valuable to our clients' future, you've got to have all of those capabilities across consultants and domain expertise. But also the domains of core business system technology or solution domains as well. For someone to have both of those capabilities at the scale we're talking about: I'm talking about an organisation that will have around 3,000 people in it and revenues in the order of $1.25 billion next year.
What will a merger with Oakton mean for your vendor relationships?
Microsoft and Oracle are really [Oakton's] two biggest technology partners. We're a very large Microsoft partner. We're a small partner with Oracle. So I'm very excited that this gives us a very significant and important relationship with a key industry player like Oracle.
What about Microsoft? Do your capabilities overlap?
We're more Exchange Active Directory and traditional messaging, whereas Oakton is far more CRM databases and the like. It's very much complimentary. That's one of the amazing and exciting things: there's effectively no overlap between the two organisations. That's significant on multiple fronts.
Will there be any job losses?
No. This investment was not based on cost synergies. It's very much an investment. We'll continue to operate Oakton very much as it is today.
Will the Oakton name change?
Whenever we've acquired companies what we typically do… the name will stay for the foreseeable future. We've got a proven track record of that. We've got several other subsidiaries where they simply operate as "a Dimension Data company".
Do you expect any of Oakton's offices to close?
No I don't, not in the foreseeable future. No change is envisaged.
What data centre infrastructure does Dimension Data have in Australia?
We have two public cloud platforms. We have our Melbourne one in NextDC facility and in Sydney we're in Equinix. We don't own any data centres but we leverage [NextDC and Equinix].
DiData was the first global hosting hosting provider for Cisco's Intercloud. How is this progressing?
It's all on track. In effect, what it does is take what is the best enterprise cloud platform in the world to a set of enterprise clients that we in our own right we might not otherwise have got to. It certainly broadens our ultimate market, but in an appropriate, channel-friendly way.
Much has been said about the risk of investing in infrastructure. What will be Dimension Data Australia's strategy?
We will be making potential investments on a continued basis. We'll be making some further announcements in the next couple of months as well. We see our balance sheet and our scale as a huge differentiator in this market.
I truly believe that most domestic organisations and even some of the big ones, they just won't have enough cash to continue investing in this market to compete with the Amazons and Googles on a global basis, and I believe for us that is a real differentiator.
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