News

Dimension Data Boosts Its Cloud Cache with OpSource Buy

For Microsoft global alliance partner Dimension Data, the OpSource acquisition both takes the company to the cloud, and gives it a more multivendor presence up there.

• By Scott Bekker
• July 31, 2011

Dimension Data, a $4.7-billion Microsoft global alliance partner based in South Africa, radically expanded its cloud practice in July with the purchase of enterprise cloud pioneer OpSource (see "Dimension Data Acquires OpSource").

OpSource will become part of a new centralized Cloud Solutions Business Unit that will report directly to Dimension Data CEO Brett Dawson. According to Dawson, the time is right for Dimension Data to accelerate its cloud efforts.

"Market readiness for cloud services is being enabled by technology maturation, along with clients' needs for more flexible, services-centric, IT sourcing options," Dawson said in a statement. "Our decision to accelerate our focus on cloud services aligns to our long-standing strategy to become a services-led business."

Many strategic Microsoft partners have been moving gradually toward the cloud, and Dimension Data has been no different. "Over the past few years, Dimension Data has been building cloud-related skills and capabilities in the areas of virtualization, datacenter and storage, managed services and hosting and IT outsourcing -- all critical to enabling cloud architectures for our clients," Dawson said.

Dimension Data, which has won multiple Microsoft Worldwide Partner of the Year awards in different categories, including Systems Management Partner of the Year in 2011, specialized primarily in Cisco Systems and Microsoft networking technologies in the past. OpSource, however, has had a much more heterogeneous focus -- providing infrastructure and services around major technology providers' Software as a Service and cloud offerings since shortly after its founding in 2002.

In addition to achieving Gold Certified Partner status in the Microsoft Partner Program in 2006 and boasting that it had the first cloud solution to include Windows Server 2008 as a standard server option in December 2009, OpSource also had online service delivery certifications for Salesforce.com, WebEx Connect, Oracle databases, Red Hat and VCE, the Virtual Computing Environment, which was formed by Cisco and EMC with investments from VMware Inc. and Intel Corp.

"OpSource brings a rich set of services, a sound cloud architecture, and extensive experience in cloud services that will meet immediate client need -- in addition to a cloud infrastructure which supports development and growth in this space," Dawson said.

"We believe OpSource provides us with an accelerated time-to-market, as their infrastructure and services are well-established and tested. Dimension Data is now well-positioned to provide our clients with services that help them at each step in their journey toward cloud architectures," he said.

For his part, OpSource CEO and co-founder Treb Ryan sees a growth path for the Santa Clara, Calif.-based company in the merger with Dimension Data. "An understanding of IT integration across disparate multitechnology, multigeography IT environments is critical to evolving toward cloud-based architectures," Ryan said in a statement. "We believe that as part of Dimension Data, OpSource will be better able to capitalize on the global cloud computing market opportunity."

OpSource has 150 employees, 600 customers and operations in California, Virginia, the United Kingdom, Ireland and India. Terms of the deal were not disclosed, although Tokyo-based Nippon Telegraph and Telephone (NTT) was part of a $10 million round of financing in February 2009 that gave NTT a 5 percent stake in OpSource.

That would put OpSource's worth in the vicinity of $200 million at the time. Including the NTT investment, OpSource attracted nearly $50 million in venture funding between December 2002 and February 2009, including $20 million from Intel in September 2006.

The Dimension Data and OpSource combination has the feel of an arranged marriage, or at the least of one with a strong parental blessing. NTT has owned Dimension Data since making a successful $3.2 billion cash bid for the 12,000-employee company last July. At the time, officials with both companies pointed to NTT's ability to help grow the Dimension Data cloud business.

NTT had entered a strategic alliance with OpSource in November 2008, then reinforced the relationship with the 5 percent stake a few months later. As part of the alliance, OpSource public cloud platforms are hosted in NTT America datacenters in Virginia and California. The companies had already planned an expansion to NTT Europe datacenters in the third quarter of this year.