Datacom win the Best Growth Strategy award at the Deloitte Top 200 awards.
Datacom Group has been around the scene for more than 50 years in various forms — and it has never been one to stand still in the highly-competitive information technology (IT) services sector.
Datacom, established in 1965, has continually re-defined its market and expanded its business, now employing more than 6200 people in 30 locations around the world. The group operates in New Zealand, Australia, Malaysia, the Philippines, the United States and Britain, and has become one of Asia Pacific’s leading locally-owned IT service providers.
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Last year Auckland-based Datacom successfully implemented a new business plan, including reorganising its structure and getting closer to its customers. The ‘internal business transformation journey’ touched every aspect of the company’s operations.
Chief executive Craig Davidson said the market was now being driven by customer demand for digital strategy, transformation and disruption: “Our on-the-ground experience and deep domain expertise means we are starting to gain real traction as an active business partner with our customers, not just an outsourcing provider.”
Datacom’s longevity and dexterity was recognised last night when it won the 2degrees Best Growth Strategy at the Deloitte Top 200 awards. The group has accumulated an enviable record of having 21 years of continuous revenue growth and has just expanded into the United States and Britain.
One of the judges Ross George, managing director Direct Capital, said Datacom has thrived when ‘on paper’ it had no right to succeed given it competed with traditional global players, as well as many new ones with money to burn.
Datacom’s reworked ‘delivering for customers’ business strategy has seen it undergo tremendous growth — largely attributable to strong performance in the important Australian market where it has impressive government agency contracts, he said.
For the year ending March 31 Datacom increased revenue by 17 per cent to $1.29 billion and its net profit soared 79 per cent to $42.02 million. Its gross profit was $61.88m, and capital expenditure increased to $67.82m, up from $55.4m in the 2018 financial year. Full-year operating cash inflow remained solid at $71.25m.
Datacom, which operates six data centres in New Zealand and Australia, designs, builds and runs IT systems and processes for businesses and organisations. Based on customer feedback, the group now provides five service offerings — modern workplace, cloud functions, modern outsourcing, application resiliency and networking, and security. The solutions range from payroll to customer experience.
In its reorganisation, Datacom developed ‘four market-facing’ divisions — Australia Commercial, New Zealand Commercial, Public Sector Australia and New Zealand, and International. Each of these operated alongside group-wide Connect, Operations, and Products and Marketing teams.
Davidson said the new structure best prepared the business to meet current and future customer demands, as well as supporting the existing portfolio and emerging growth areas.
This included an emphasis on new approaches to professional services including software development, digital transformation, infrastructure automation, data and artificial intelligence/machine learning, network design and deployment, and cybersecurity.
Datacom completed expansion of its New Zealand data centres to enhance cloud services opening a state-of-the-art customer care and IT hub in Adelaide, creating 700 new jobs.
Working with the Australian Organ Tissue Authority, Datacom developed a platform that determines the most appropriate organ match for transplant patients. The system is a world first, and the platform will support all solid organ transplant programmes.
Datacom established the GovNext-ICT programme with the Western Australia State Government to connect ICT systems — so far 11 government agencies have joined the programme for a total of 137 physical sites around the state.
Back in New Zealand, six local councils have adopted Datacom’s Datascape cloud-based software solution aimed at bringing together a host of services and applications under one roof.
The group has also introduced Antenno, an app that enables councils and ratepayers to engage more directly with each other — the community can receive alerts and updates and let council know about issues that need immediate action.
Datacom is moving into containerisation — a cloud-based service for organisations with high-volume and complex security requirements. The group successfully migrated New Zealand Customs' border management system onto the service.
Finalist: Xero
Accounting software company Xero has been a share market darling for a decade, first in New Zealand and now Australia. It is riding high with its share price passing A$70 a share as it continues to gain customers globally and enter profit territory.
Xero reported operating revenue of $338.7 million for the six months ending September 30, up 32 per cent for the same period in 2018 and on track to topple $600m in its latest financial year. Its net profit was $1.3m compared with a loss of $28.5m in the previous corresponding period. There was a 30 per cent increase in annualised monthly recurring revenue to $764.1m.
Best of all, Xero’s subscribers — mainly small and medium-sized businesses — reached 2m, up from 1.58m in 2018.
Xero chief executive Steve Vamos said it took more than a decade to reach the first million subscribers and only two and a half years to add the next million, demonstrating the pace of Xero’s adoption across a number of markets.
Judge Ross George said Xero’s strategy continued to deliver global growth with strong financial indicators. Its business case was aided by the increased use of cloud technology by small to medium businesses and the digitalisation of tax and compliance systems. “Xero is a great innovation helping to reshape the financial services sector,” George said.
All Xero’s main markets continue to grow: Australian subscribers are up by 28 per cent to 840,000 compared with the first half of the 2018 financial year; Britain’s increased 51 per cent to 536,000; New Zealand’s up 13 per cent to 367,000, and North America’s rising 21 per cent to 215,000.
The rest of the world has 99,000 subscribers, up 52 per cent, with South Africa leading the way and further progress in Hong Kong and Singapore.
Founded in 2006 and listed a year ago, Xero is one of the fastest Software as a Service companies globally.
Vamos said Xero continued to focus on growing its global small business platform and maintain a preference for reinvesting cash generated, subject to investment criteria and market conditions, to drive long-term shareholder value.
Xero’s cloud-based, single unified ledger allows users to work in the same set of books regardless of location or operating system. Its key features include automatic bank feeds, invoicing, accounts payable, expense claims, fixed asset depreciation, purchase orders, bank reconciliations, and standard business and management reporting.
Xero has more than 200 secure connections with banks and financial service partners around the world.
Finalist: Scales Corporation
Christchurch-based Scales Corporation has been providing essential services to the NZ primary sector for more than 100 years and has developed a diversified portfolio across horticulture, storage and logistics, and food ingredients.
Its Mr Apple brand, nurtured in Hawke’s Bay, has become the shining star. Scales refreshed its growth strategy in late 2017 to focus purely on agribusiness and set a target of producing 4 million TCEs (tray carton equivalent; the measure of apple and pear weight, or 18kg) of its own-grown apples. It has already reached 3.8m TCEs in its total sales of 5.8m TCEs.
Managing director Andy Borland announcing the interim result said that the horticulture division has delivered an excellent outcome with apple volumes significantly ahead of forecasts. Total export volumes are likely to be consistent with the record 2018 crop, notwithstanding significant orchard redevelopment in the intervening period. “Our performance in Asia and near markets continues to validate our strategy towards premium varieties targeted to those markets,” Borland said.
Mr Apple New Zealand, which has 1160 hectares of its own planted orchards, has developed two new varieties Dazzle and Posy to add to its portfolio of 12 including old favourites Royal Gala, Red Delicious, Braeburn and Granny Smith.
The new varieties are specifically targeted for the Asian market with Dazzle producing high colour, sweet taste and big size, and Posy being a pinky-red, sweet apple harvested at the beginning of the season.
Mr Apple is New Zealand’s largest fully-integrated grower, packer and marketer of apples which are sent to 170 customers in 40 countries. In the six months ending June 30, Scales reported an increased net profit of $121.8m compared with $34.8m in the previous corresponding period, although this included gains of $93.2m from selling storage businesses Polarcold and Liqueo.
Scales formed a joint venture with Alliance Group for its Meateor New Zealand pet food business then bought a controlling 60 per cent stake in American processor Shelby Foods to improve its supply of raw materials.
Judge Ross George said Scales' growth in its core apple business was the result of a significant strategy call — to graft sweet red apples on to sour green root stock and change the destination from predominantly Europe to Asia.
“Scales' strategic shift from a commodity supplier to a premium fruit exporter has resulted in higher exports and lower carbon emissions. Its revenue grew 20 per cent on last year to $400m,” George said.
The supermarket said its staff caused her public embarrassment and distress.