Can a combined Dimension Data and NTT work?

Can a combined Dimension Data and NTT work?

There are many challenges with integration

Jun Sawada - CEO, NTT Inc

Jun Sawada - CEO, NTT Inc

Credit: NTT Inc

The integration of Dimension Data, NTT Communications, NTT Data, NTT Security and NTTi3 will create a technology powerhouse.

Such a powerhouse will span data centres, application and IT services, managed security, research and development, cloud and system integration under one roof.

Following industry analysis covering the why aspect of the deal, key questions now centre around the feasibility of such an agreement.

In other words, can a combined Dimension Data and NTT work for the customer?

“The integration will over time remove some grey areas and ambiguity and improve efficiencies in the way its security and cloud businesses operate,” observed Siow Meng Soh, technology analyst at GlobalData.

“For example, while it is sensible to consolidate the security capabilities under NTT Security, the three entities - NTT Com, NTT Data, and Dimension Data - need to maintain and build separate sales and consulting capabilities to be successful in the market.”

Specifically, the new entity gains access to the security practice, created following the previous acquisitions of Integralis, Secode and Earthwave, housing approximately 1,500 employees and security operations centres across 10 markets.

“With cloud, the new company will be able to offer a strong global capability from approximately 10 countries and 18 locations,” Soh added.

Furthermore, Soh said the combined entity stands to gain a strong unified communications and collaboration (UCC) capability, an area where Dimension Data led the group as well as many competitors in the market.

“However, there are many challenges with integration,” Soh cautioned. “With the movement of people, office locations and setting up business processes, there will also be the balance between stabilising the business vs. customer acquisition.”

As a new entrant, Soh said NTT Inc does not have the same “brand equity” as the other providers.

“This is exacerbated by the fact that each entity has made many acquisitions in the past, in different markets and they continue to operate with their own brands,” Soh explained.

“Very few companies have been able to pull off both being a telecom provider, which is the core of NTT Communications, and a network, software and system integrator, which is more the strength of NTT Data and Dimension Data.”

Post integration, and as reported by Channel Asia, NTT Inc will control a broad spectrum of technologies, backed up with extensive network coverage and more than 140 data centres.

In addition, the new entity will have 163,000 employees and US$38 billion in revenue with 53 per cent of business coming from outside the domestic market of Japan.

“NTT Corporation has taken another major step to foster collaboration across the three entities,” Soh said. “However, it is maintaining the management structure of NTT Data, management autonomy, and brand for now.

“This shows that the company recognises the difficulties in trying to achieve full integration in one go.

“As a result, the integration of NTT Data will take a longer time since it is retaining the current management and brand.”

Tags dimension dataNTT DataNTT CommunicationsGlobalDataNTTi3NTT Security

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