IT sector ripe for consolidation, says new CEO

SA’s IT sector is ripe for further consolidation as bigger players seek to create a one-stop shop for services as varied as cybersecurity and remote data storage in a weak economy, says Werner Kapp, who takes the reins at Dimension Data after the departure of Grant Bodley.

Kapp, a more than twodecade veteran of the company who has been Bodley’s righthand man since 2015 when he was appointed COO, said the shake-up in the industry, which is also taking place overseas, is an opportunity.

“We are seeing that there is consolidation,” he told Business Day in an interview after he was named boss of one of the pioneers of the SA IT industry that traces its roots to 1974. “I wouldn’t be surprised if there is more consolidation happening. We see that as an opportunity. We’re not on the back foot.”

His comments come as Huge Group, a smaller publicly traded IT group, canvasses shareholders in software group Adapt IT to back its R800m takeover offer as part of a growing trend in the industry to offer a wider suite of products.

Other deals in recent months include Gijima’s acquisitions of T-Systems’ business in SA late last year.

Other players in the industry include EOH, Telkom’s BCX and Altron.

“When the market is being consolidated, it means it’s tough for certain players,” said Kapp, who started his career in IT in a call centre before joining the company in 2000. He is due to take over on April 1.

Kapp, an avid long-distance runner who has taken part in the New York Marathon, takes over at a time when the company is facing a high-profile racial discrimination lawsuit from its former chair.

Andile Ngcaba, a former director-general of communications during Thabo Mbeki’s presidency, has taken Dimension Data, which was valued at R77bn at its peak in 2000, to court alleging racial discrimination and violation of an equal pay undertaking. Dimension Data denies any wrongdoing.

Speculation has been swirling that NTT could sell Dimension Data, its only division focusing on Africa and the Middle East that was left out when NTT merged its global businesses into one mega technology provider, a move that could possibly pave the way for Dimension Data to return to the JSE, where it fetched R77bn at its peak in 2000.

“I have fairly big shoes to fill. It ’ s a daunting task. I was part of positioning the business where we are today and I’m incredibly excited about where we can take it. The company is poised for growth,” Kapp said.

Asked whether the company would list on the JSE, Kapp did not dismiss the idea, simply saying the company had “no immediate plans” to do so.

Outgoing Dimension Data CEO Bodley, a former game ranger, said there was nothing sinister about his departure.

“Six years as a CEO is a long time. I’ve achieved a lot of what I wanted to achieve. I wanted to leave on my own terms with my head held high. I’d rather leave a year too early than a year too late,” Bodley said.

“I’m very fortunate to have an incredibly strong leadership here. None more so than Werner, who has been my COO for the past six years. He’s always been a sort of designated successor to me,” Bodley said.

Bodley can lay claim to a number of accomplishments during his tenure, most notably Dimension Data’s effort to simplify its business, consolidating its various brands such as Britehouse, Internet Solutions and ContinuitySA under one name, and reducing duplications.

I WANTED TO LEAVE ON MY OWN TERMS WITH MY HEAD HELD HIGH. I’D RATHER LEAVE A YEAR TOO EARLY THAN A YEAR TOO LATE