In a high-profile market of mergers and acquisitions, there are some low-profile companies getting on with the job very well.
Mention DTSL to industry long-timers and the reaction is likely to be “Who?” Yet here’s a service company with 150 staff — probably more Microsoft-certified engineers than most — and turnover of around $20 million. With an acquisition strategy (it recently bought the Digital Business Centre on Auckland’s North Shore), DTSL is showing average annual growth of 22%.
“Growth has been funded out of cashflow,” says owner Ian McGough.
“When I set the company up, there were three layers in the service market. I like to describe them as the gods (the multinationals), the mere mortals (Computerland, Axon and the like), and the other lifeforms.
“The mere mortals were tagging along behind the gods, trying to get their foot in the door. Where we were, the others couldn’t come down to.”
More particularly, DTSL doesn’t compete at the level of Computerland Corporate but does compete with its franchises.
McGough set up DTSL in 1997. He spent 16 years at Unisys as an engineer and customer services general manager. He knew Unisys was looking to oursource its desktop services outside the main centres on a non-strategic basis.
“I’d put a pitch to Unisys and a year later got the contact," he says. "In the process, I bought a Palmerston North Apple reseller, The Computer Shop, whose owners were retiring.
“Palmerston North was a good location to run the outsourced contract, though I had thought Unisys would split it into North and South Islands. But they decided to run it as one contract."
McGough hired Unisys’ regional engineers in nine locations, then opened a Wellington office because he lived there. “There was a restriction that we couldn’t play with the competitors but that was relaxed and we picked up more core customers,” he says.
Today, DTSL partners with multinationals such as Unisys, NCR, Sun, Hewlett-Packard and Datacraft across 16 locations. At the SME level, it works under its own brand, offering a full solution set around services, including procurement.
The company is a Microsoft shop – it is a certified partner - and Hewlett-Packard is usually the platform of choice.
It sells some one-off products, such as a corporate modelling tool that Fonterra uses.
“It’s been straight-line growth but that will eventually tail off,” McGough says. ‘We’re putting the profit into growth and geographical expansion.
“Our focus is on cost-effectiveness, fast cycle, and low overhead. Our differentiator is offering a nationwide service using our own staff rather than contractors. That way, we can better control priorities and appropriateness.
“Because we’re not a franchise, inter-company charges are not an issue — margins on margins.”
DTSL operates mainly in the 10–200-desktop space. Its larger customers include the Employers and Manufacturers Union, Guardian Health and Wakefield Hospital.
Last month it did all the infrastructure design and support for Microsoft’s TechEd in Auckland.