Dimension Data – an IT services ‘unusual suspect’

(By Anthony Miller – Wednesday, 13th May 2009 8:30am). It’s getting increasingly inappropriate to label South Africa-based (but London and Johannesburg listed) Dimension Data simply as a network product reseller. In its interim results today (to 31st March – see here), services revenues grew 21% and now represent 42% of the group’s $1.95b revenues. Just as well, as product sales were all but flat in constant currency.

DiData’s core services business (within it’s Systems Integration service line) is a mix of one part professional services and two parts managed services. The PS part is closely tied to hardware sales and barely grew 1%. However, the MS part grew 24%, with a huge chunk (I assume!) coming from traditional maintenance and support services. Boring, maybe, but what’s not to like?

The main drivers for DiData’s growth came from ‘converged communications’ (+21%) i.e. voice, video and data over IP, and Microsoft solutions (+44%) though I understand this includes product resale. Excluding the Feb. acquisition of UK-based Microsoft large account reseller, Teksys (see Dimension Data buys UK Microsoft reseller), organic revenue growth was 31%.

It’s very clear that DiData is intruding more and more on the turf of traditional IT services infrastructure services players – and even a little higher up the food chain. With the current market focus on cost reduction through data centre and network infrastructure rationalisation, we are sure to see DiData gaining ground.