Datacom group chief executive Greg Davidson says there is potential for New Zealand technology companies to build critical scale by co-operation.
Auckland-based Datacom is New Zealand's largest IT services company. It has revenues of $1.3 billion and employs more than 6000 people.
"If you look at the TIN100, (a ranked list of New Zealand's top earning technology firms), few of the organisations listed there compete with each other," says Davidson. "Most of us are focused on growing globally and decreasing New Zealand's trade deficit. Finding ways for companies to co-operate and figuring ways to support them is important."
Datacom navigated the Covid-19 storm in relatively good shape.
"When it became clear quite how extensive the impact would be across all the countries we operate in, it was an intense period of time," says Davidson. "Boards mobilised in an attempt to understand the impact on the companies that they were responsible for. Executive teams had to contemplate some ugly revenue models and consider what steps they'd have to take if revenues took a dive.
"The key for us was getting as much information we could on what our customers were thinking.
"We wanted to know what they were experiencing and the challenges they faced. We were lucky making an early call to go to remote working. That meant we could focus on helping customers who were less prepared for the remote side of things or who had to do a lot more to do to survive lockdown. Some of them weren't ready to trade digitally."
At first the job was handling emergencies to help customers cope. Then it became clear that because Datacom is a service business, it had customers who suffered falling revenues. "We do work for industries, where revenues dropped to a small percentage of what they were before. All you can do is figure out what you can switch off to help them economise and find their way through."
We're looking at what a hybrid of the two ways of working might look like for a successful company.
Yet it wasn't all gloomy. Davidson says Datacom has many customers and they cover the full gamut, the customers are diversified. At one end of the spectrum there are airports, at the other end there are companies like Foodstuffs and NZ Post. "Their business volumes went through the roof. Their key message to us was that they needed their systems to keep up with demand that was placed on them", he says.
Datacom's Australian call centre business also had a busy year. "We have a big call centre operation over there. Among others, it does work for the Australian Government. As the pandemic took hold, we were asked to put more people on the phones to deal with the large number of enquiries. We knew that some companies had been hard-hit by the lockdowns and had people who could work in our call centres, so we contacted Flight Centre and Qantas and found the people to deal with an explosion in demand."
Davidson says the connection with the Australian business gave him one of the biggest lessons of the pandemic. "We have businesses in both countries, and we felt more connected than we ever had before. One of the things a virtual environment does, is that it reduces the barriers, it doesn't matter if the person is next door, on the next floor or in a different city. That all melts away."
This remote working experience has triggered company-wide discussions on the future of work. "We're asking ourselves what pieces of the new ways of working will we want to keep and what have we lost along the way by working digitally? We're looking at what a hybrid of the two ways of working might look like for a successful company," he says. "We know tech plays an important role in this. We might not have coped without the modern video conference and collaboration tools like Microsoft Teams or Slack and Zoom. The same goes for our broadband infrastructure. If the pandemic happened five years ago, it would have been a very different experience."
Bringing forward digital transformation
The Covid-19 pandemic saw many organisations brought forward their digital transformation plans.
Davidson says those already on the path moved forward two or three years in 2020.
Others who were at an earlier transformation stage became more focused on the importance of their strategies and their ability to keep trading. Here, 'trade' might mean dealing with customers, or government agencies dealing with citizens.
"Most organisations have redoubled their efforts to move forward. A lot of them have cloud strategies," says Davidson. "I hope this new focus will help them get a better understanding of the business benefits they are pursuing through their cloud strategies."
Not all digital transformation is on a grand scale. Many New Zealanders know Datacom through its payroll business. Davidson says it pays about one-sixth of the nation's workforce. During the lockdown many businesses that still run older on-premise payroll systems ran into problems paying staff when they didn't have physical access to their servers. Davidson says Datacom's cloud-based payroll platform saw a huge uptake of new business because customers needed something that would work seamlessly from either their phone or a home computer.
The payroll business illustrates the power of software-as-a-service, or SaaS, a key strategy for Datacom. The company may be a big cloud player in Australia and New Zealand, but on a worldwide scale it is tiny compared to the likes of Amazon Web Services (AWS). AWS specialises in Infrastructure-as-a-Service, or IaaS. This is a technology that lets companies use their own software and data to build systems in the cloud. IaaS gets a lot of attention. It's what often springs to mind when there is talk of digital transformation strategies.
Datacom has a substantial IaaS business.
It's an essential part of a comprehensive IT services portfolio yet SaaS gives it an entry into important regional markets. For Davidson, SaaS products offerings like Datacom's payroll and local government software, are an area where a local technology industry can thrive.
"For a lot of organisations SaaS-based products are the way to make a really big leap," he says. "Two of the areas we have made the biggest investments in is payroll and local government software. In New Zealand and Australia both of these areas are heavily influenced by the laws of the land.
"We've produced a payroll platform that is compliant and serves the needs of New Zealand and Australia. We have local government systems that are oriented to the needs of New Zealand and Australia. It was a conscious decision; we knew there wouldn't be the same level of global investment in platforms like that.
"And these platforms are sustainable for use to provide in these markets."
Davidson says local government has a huge need for modern platforms and the demand for payroll remains strong. "The question is what are the other areas where local providers can find a sustainable space and are there areas where we can scale?"