Dimension Data's Nexus Acquisition Shifts Balance Of Power In U.S. Cisco Solutions Business

Already channel powerhouses on their own, the blockbuster acquisition of $471 million solution provider Nexus by Dimension Data has combined the companies into a single solution provider and Cisco superpower, executives said.

"We're shaking up the channel community, that’s for sure," Dimension Data Americas CEO Mark Slaga said in an interview with CRN.

The deal, announced Wednesday, expands Dimension Data's presence in the U.S. by 40 percent, especially in the West, Southwest and Southeast regions, and increases the company's revenue for the Americas division by 50 percent.

[Related: Dimension Data Nearly Doubles U.S. Presence With Nexus Acquisition ]

"This is going to allow us to compete in a very different way in the marketplace. I'm sure a few knees are knocking, and that’s a good thing," Waheed Choudhry, Nexus president and COO, said in an interview with CRN.

Nexus, No. 78 on CRN's Solution Provider 500 and No. 80 on CRN's Fast Growth 150 list, will operate independently under the Dimension Data brand umbrella, led by current CEO Deron Pearson, who will now report directly to Slaga. The company will continue to execute on its business plans for the year, Choudhry said, and "plug into the power of Dimension Data," No. 11 on CRN's Solution Provider 500, to better serve its customers.

Dimension Data and Nexus each bring approximately 1,000 clients to the table, with only 17 overlapping customers with more than $10,000 in business.

"You think about the complementary and additives to what we do for each other in the market with our clients, there's very little overlap there and that, for me, is really exciting when you talk about bringing the power of what Nexus brings to our clients and what we bring to Nexus clients," Slaga said. "I think that’s the part that, ultimately, it would be nice to make a splash for the channel but where we ultimately want to make a splash is with clients."

Choudhry said Nexus plans to leverage the support of the Dimension Data team to continue to work toward its $1 billion revenue goal, while hitting 40 percent year-over-year growth last year. The acquisition means that the company can bring on new customers but also start new conversations with existing customers and execute a stronger business plan.

In particular, the acquisition takes Dimension Data's Cisco expertise and further solidifies it as one of the top Cisco partners in the world. In April, Dimension Data globally was awarded Services Partner of the Year, and Capital Partner of the Year by Cisco at its Partner Summit in Las Vegas. At the same event, Nexus was named 2014 Cisco Global Americas Partner of the Year, 2014 Cisco Nationals Services Partner of the Year and 2014 U.S. Cisco Capital Partner of the Year.

"I think from a Cisco standpoint, there's going to be a lot of excitement. It allows us to drive a lot more relevance to our joint customers both up and down the marketplace. More and more, as the industry pivots, our customers pivot," Choudhry said.

The CEO for one CRN Solution Provider 500 company, who did not want to be identified, said the deal shifts the balance of power in the Cisco solutions business in the U.S. market in Dimension Data’s favor.

’Cisco talent is very valuable,’ said the CEO, who also partners with Cisco. ’If you want to compete in large accounts you need Cisco talent. This gives them more Cisco customers and more Cisco engineering talent.’

Going forward, both Slaga and Choudhry said to expect organic growth from the combined company.

"We're going to continue to grow in our key verticals ... always looking to consider and explore those opportunities as they present themselves," Choudhry said. "We're very excited to be able to leverage the extensive portfolio. ...There's a lot of opportunity."

Slaga said that Dimension Data will be focused on an organic growth strategy to drive the company toward its goal of doubling revenue globally over the next five years and tripling U.S. revenue in the same time period. He said that the company may acquire a few smaller solution providers for additional capabilities, but it will be very selective and is not the primary growth strategy going forward.

PUBLISHED APRIL 23, 2014