Australia: Dimension Data vs Vanco
The top men at two of Australia's leading network services providers -- Steve Nola, Managing Director, Dimension Data, and Grant Ellison, Managing Director, Vanco Australasia -- go head to head.
Nola: While Vanco is described as a leading global virtual network operator (VNO), it is probably safe to say that you are not that widely known in Australia. When did you establish a presence here, and what are the main services you provide to the ANZ market?
Ellison: Vanco Australasia provides managed network services (including the provision of convergence, hosting, and network security solutions) to large corporations. Approximately 300 companies across Australasia fit our model well and we are focusing on engaging directly with those organisations as opposed to following a broadly targeted middle-market strategy. Accordingly, there isn't actually a requirement for us to be "widely known" although the clamour to understand more about the positive disruptive influence of our business model has ensured significant increase in awareness of the brand.
As with all of our markets globally (we are now delivering managed network services to multi-national corporations in more than 120 countries) our growth in Australia and New Zealand was customer led. We commenced delivering services in this region in the late 1990s and we are now serving a significant number of large corporate customers such as Lend Lease, Accor, O'Brien Glass, and SGS, with extensive international and domestic requirements across Australasia, each of which has a tailored technical and services solution.
Ellison:
With recent acquisitions such as KAZ and Gen-i, what are your views on companies like Telstra and Telecom NZ pushing into the systems integrator space?
Nola:
I see this as a natural extension for the telcos, as margins have become really tight in their traditional voice services space. The telcos have been moving into data services, and now into convergent technologies, which require them to adopt a new range of integration skills and offerings. One of the quickest ways to do this is through both acquisition and partnership. As a systems integrator, there is an element of competition for Dimension Data, but also great partnership opportunities too.
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Nola: As a VNO, you stress that the biggest savings are coming from smart contract negotiations through Vanco with the incumbent service providers like Telstra and Optus. Why can't clients negotiate these contracts themselves?
Ellison: Procurement of telecoms infrastructure is one of Vanco's core competencies and is central to our ongoing global growth. Vanco grew 43 percent last year. Very few corporations can apply the focus, technical and commercial expertise, and resources that Vanco brings to bear in managing carrier relationships. We position ourselves as a route to market for traditional Asset Based Carriers (ABCs) as opposed to a true competitor (ie, we do not build our own network infrastructure for resale in direct competition with these infrastructure based businesses). As such, we are able to work transparently with our suppliers to identify the "sweet spots" where they genuinely have best-of-breed infrastructure or the appropriate technology to meet our clients' business needs. The upside for our suppliers is clear.
Ellison: Do you feel traditional ABCs will be successful in the systems integrator space? Why or why not?
Nola: Traditional ABCs will be successful, dependent on a number of factors. First, they must have an acquisition strategy whereby they make the right choices on who to acquire and also how well they integrate these entities. Second, their partnering strategy is very important. Those who are open to partnering will be more successful. Third, in the Australian market a lot depends on the ABCs' parent entities, either government or private, and the decisions they make on the direction of their Australian arms.
Nola: When Vanco first set up in Australia, did anything surprise you about the market?
Ellison: Probably the extent to which Telstra has historically been able to dominate the market with things such as the bundling of voice, data, and mobile whole-of-business agreements. Generally there is no commercial benefit for end users versus sourcing best of breed, and in many markets this practice is illegal as it tends to encourage predatory or anti-competitive pricing.
In addition, the prevalence of usage-based charging for DSL services surprised me.
Ellison: Dimension Data's business has a very broad product range, do you see this scope increasing?
Nola: No. The direction we are taking is to fill out our existing lines of business and also increase the maturity of our plan, build, and support services within each line of business. In our Data Centre Solutions line of business, we have achieved this with the recent acquisition of the SecureData Group's business, giving us considerable additional product offerings as well as service capabilities, particularly in the support, or managed services, area.
Nola: Vanco seems to focus on data network solutions. What's your plan for other technologies such as voice over IP (VoIP) and storage area networks (SAN)?
Ellison: Effectively, we see VoIP as another data stream, requiring an objective and commercially realistic approach to network design and hardware deployment. As a truly carrier- and hardware-manufacturer-independent company, we are not technology heat seekers. In most cases we find that a genuine business case for convergence will require elements (eg, end-of-life PBX, etc) rather than just pure bandwidth cost savings versus toll bypass or least cost routing pstn arrangements. We believe that public switched telephone network [PSTN] pricing will continue to improve competitively in the short to medium term across Australasia. The biggest drivers for mass adoption of converged solutions will be the movement of the carriers themselves towards operating converged infrastructure and de-commissioning legacy PSTNs.
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Ellison: Where are you most competitive in your service offerings and why?
Nola: We have a long history of success in our core lines of business -- networking, operating environments, and contact centres -- which is a great platform. However, I believe it is where we can combine our strengths and expertise across multiple areas that our competitive edge really comes to the fore. For example, we can combine very strong Cisco and Microsoft skills and build fantastic solutions encompassing both identity management and IP telephony.
Nola: You have been quoted as saying that Vanco's growth rates in the Asia-Pacific region have been in excess of 300 percent over the last two years. Is this also the case in Australia, and do you see this level of growth continuing in 2005?
Ellison: The 300 percent growth rate in the Asia- Pacific region includes Australia and New Zealand. We believe a similar growth rate will be achieved in 2005 with the VNO model being very positively received locally.
Ellison: How do you go about meeting global service expectations of large multinationals?
Nola: We have our Global Services Operating Architecture (GSOA) -- a framework that governs how we design, deliver, and support our services and solutions. The GSOA allows our entire global organisation to act as a single entity, sharing knowledge, experience, and resources, and it also provides relevant information with which our clients are able to make decisions in order to maximise the efficiencies and ROI of their IT infrastructure. Dimension Data also shares a common services delivery methodology that goes under the name "Primer", and we have a team of global account managers across all regions who work together on our specific global clients.
Nola: Given that Telstra and Optus are also market competitors, does it make it much harder for you to negotiate contracts on behalf of your clients?
Ellison:
We can only ever be a route to market for Telstra, Optus, or any other traditional ABC. We have positive wholesale relationships in place with all the major carriers in Australia and New Zealand and we are not building any competing infrastructure.
Ellison:
What is your position on the privatisation of Telstra?
Nola:
It's not our position to comment on what the government is planning to do in this area. However, I don't believe that the possible privatisation will have any impact on our existing relationship with Telstra.
Nola:
Are you truly vendor neutral? Or, in reality, do your consultants have their "favourite" carriers and equipment providers? Also, does vendor neutrality really offer a great advantage to clients these days?
Ellison:
Yes, we are truly vendor independent. This is a position we closely guard as we believe it is essential that the start, middle, and end point in any network design process must be the commercial and technical interests of our customers as opposed to the drivers of our potential suppliers. We sign no exclusive supplier arrangements or quota-based committed spend contracts with carriers or hardware manufacturers.
Ellison:
Who is going to win the Bledisloe Cup?
Nola: I think that goes without saying...
Nola: Following New Zealand's example, do you see Australia with a woman as Prime Minister one day? If so, who do you think it might be?
Ellison:
That's a tough one to call, Steve. I would say a woman as Australian prime minister is inevitable. I can't see any obvious contenders out there at this stage although I have a couple of staff who assure me they would do an exceptional job! Maybe the first step will be a female CEO at Telstra?
This article was first published in Technology & Business magazine.
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