Datacentrix CEO explains strategy shift

Technology is changing in South Africa, the market is moving forward, forcing IT companies such as ICT solutions provider, Datacentrix (DCT) to adapt accordingly, the company’s CEO explains.

On Tuesday (17 April 2012) Datacentrix reported a decline in operating profit to R123.45 million for the year ended February 2012, from R124.44 million before.

Basic earnings per share increased by 0.7% to 46.4 cents and headline earnings per share increased by 1.3% to 46.9 cents.

In its earnings report, the company said its results reflected its transformation from a largely single vendor, product transactional business, to one that is a services-led integrator.

Speaking to Alex Hogg in a Moneyweb podcast, Datacentrix’s CEO, Ahmed Mahomed elaborated on the company’s results, and how the company has shifted its strategy in the past five years.

Shift in strategy

Mohamed explained that there’s been a significant shift in technology over the past few years, where more affordable tech has led companies to find out ways to draw more value from IT departments.

Datacentrix, traditionally a hardware vendor, has in-turn had to adapt to that environment, where simply moving hardware from supplier to customer is no longer as lucrative as it was, previously.

“The traditional infrastructure business was really single-vendor dependent…it’s really more a logistics function in moving products from one end to the other with a couple of services wrapped around it at the very basic level,” Mahomed explained.

“Moving hardware from the supplier to the end user customer…it was very lucrative for us, we’re not apologetic about it, but the market is moving on, IT is a dynamic area and we’re adapting accordingly.”

Datacentrix’s outsourcing and resourcing business units showed double-digit growth in the groups financial results – a segment which the Mahomed cited as “up to 50% of our revenue stream.”

“Essentially we’re providing a total solution to a client, so it’s not just moving hardware components, but providing the end to end solution to a client.”

“That’s what we’ve been doing for the last five years and that’s the reason you see the results, and the 50% change in mix from just a pure hardware business, to a more service-orientated organisation.”

Looking ahead

Moving forward, Mahomed said that the company would continue to focus on the transformation to a service-orientated business.

On Wednesday (11 April 2012) the company announced that it had signed a three-year R9 million outsourcing deal with leading black-empowered coal mining company, Shanduka Coal.

Datacentrix will provide the majority of IT support services to Shanduka Coal’s offices in Mpumalanga, KwaZulu-Natal and Gauteng – in-line with the CEO’s stated focus.

“That strategy is on the way.”

Datacentrix’s share price showed no change on the JSE at time of publishing, trading at a solid R5.00.

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Datacentrix CEO explains strategy shift