When Main Street Goes Global, the Channel Does, Too
One macroeconomic trend picking up steam across the channel is globalization. As midmarket companies that solution providers typically serve expand their global operations, they are looking for the organizations that provide them IT services in their home towns to also be able to support them anywhere in the world.
That requirement has been driving partnerships between solution providers for years. But, now, those relationships are morphing into multimillion dollar mergers and acquisitions. Late last month, Dimension Data, a unit of the Japanese NTT conglomerate NTT, announced it is acquiring Nexus, a solution provider based in Los Angeles with revenue of $465 million, for an undisclosed sum.
Nexus gives Dimension Data greater reach into the United States, where it doesn't have much presence, as well as the state, local government and education (SLED) market, where Nexus has a strong customer base, said Dimension Data Americas CEO Mark Slaga.
According to Nexus CEO Deron Pearson, what drove the merger from the perspective of Nexus was the need to be able to support existing midmarket customers are that now going global. As such, they wanted Nexus to be able to deliver IT services on a global scale.
Slaga explains that the goal for Dimension Data is to become a $12 billion entity within the next two years. While organic growth is a significant part of the plan, the company's growth goals clearly call for additional acquisitions.
Dimension Data, however, is not the only global provider of IT services looking to expand its base, and Nexus is not the only U.S. provider of IT services being pressured to go global.
Taken together, these two trends are clearly creating a recipe for mergers and acquisitions across the channel on a truly global scale at a time when the valuations of IT services are finally starting to rise again. Put another way, the time may be upon us when the channel will need finally to go global or go home.
Michael Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.