06 Oct 2010
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FAQ: Datacraft Integral-Axon merger

After months of speculation, Datacraft confirmed this morning that it will acquire 100% of Integral-Axon.

Along with the announcement, the company sent out the following FAQ about how its business will change in light of the deal.

Why did Datacraft choose Integral Axon?

This is an acquisition of capability. We set out to acquire a company that provides strong competencies in IT Infrastructure Management to complement our Network Management focus. We also want to grow our Application Development business and connect it with our infrastructure capability. Integral Axon fulfils both these objectives - plus adds further synergies.

In addition, we want scale to address the needs of our New Zealand clients, and need a full service offering. What’s very exciting about this transaction is our Lines of Business, client base, geography complement rather than compete. In fact, it enables us to leverage new growth opportunities across the public sector and commercial markets.

There is a lot of talk about the Cloud and many businesses are considering going to the Cloud, but the challenge for most is not what to do when they get there, but how do they physically transition. The merger brings together complementary offerings to create an end to end portfolio that positions us as an ideal migration and transition partner. Our plans are to navigate the journey to Cloud services for our clients providing a blend of on-premise, private and hybrid cloud offerings.

In summary, our strengths, objectives and capabilities are very much aligned. We see this transaction as the creation of a major new player in the domestic ICT services market.

How much business overlap is there between Datacraft and Integral Axon?

There is very little overlap. Integral Axon has a strong presence in Auckland’s commercial markets,

while Datacraft has strong relationships with government and enterprise clients in Wellington. Our

joint goal is to leverage new growth opportunities across the public sector and commercial markets.

Will Integral Axon be merged into the Datacraft business or will Integral Axon operate as a

separate entity?

We have a 30, 90 and 180 day integration plan in place to ensure a very smooth transition for both

our clients and our employees.

What is the joint strategy for Datacraft and Integral Axon in light of future market trends in the

ICT industry including SaaS, IaaS, and Cloud Computing?

Both companies have a clear view of the journey that clients have to undertake to be in a position to

leverage Cloud-based services. We are well positioned to assist and guide our clients along that

journey.

Are you concerned that another New Zealand IT company has been acquired by a foreign

company?

Our philosophy is to act local and think global. We work with our local clients as if we are part of their business, but we ensure they have the best of what they need to achieve their objectives.

Why have several of Integral Axon’s executive leadership team who have a financial stake in the company opted to exit the business?

The previous owners have opted to exit the company and handover responsibility for the transition to the Datacraft management team. They have been responsible for the successful growth of Integral Axon to this point, but believe it is appropriate to step aside as the company is integrated into Datacraft and the Dimension Data Group. The Datacraft management team will use their knowledge of the Group processes and practices to transition the company into a single operation.

A number of key senior Integral Axon employees will remain and will play a key role in integration, maintaining stable ongoing operations, and helping develop strategy for the combined entities.

Will Integral Axon employees be integrated into Datacraft offices?

Integral Axon will continue to operate from its current offices. Hot desking facilities will be open to Integral Axon employees in all Datacraft offices as and when required, and vice versa.

How will both companies deal with competitive clients, partnerships etc?

Initially, both companies will continue with their existing client and partner engagement strategies. Both companies will respect our mutual clients’ needs and determine the engagement approach which is most appropriate for them. Where it makes sense to our clients, we will offer the opportunity to engage in an integrated client management solution. However, this will occur only where it makes sense to the client. With partners, we will jointly evaluate each agreement and contact partners individually to ensure we maximise our existing relationships. Overtime, we plan to consolidate our partner agreements.

Will Integral Axon change its name to Datacraft?

In the short term, Integral Axon will operate under its own brand as a Datacraft subsidiary.

What growth do you expect to see in New Zealand as a result of the acquisition?

The New Zealand market is maturing. The combined capabilities of Datacraft and Integral Axon will position us as a major player in the New Zealand market, with the ability to accelerate our ability to win lucrative new deals across the regional, and increase revenues.

Does Datacraft and Integral Axon share clients?

There is very little overlap in clients.

Will there be redundancies?

This acquisition is an investment for Datacraft with a view of gaining market share and skills, and not an efficiency play. Integral Axon has 360 employees and we value the IP, skills and customer relationships these people will bring into the newly formed company. We respect the culture that Integral Axon brings to this relationship, and we are confident all employees involved will see career benefits personally.

What are the legal implications for Integral Axon’s licensing clients as a result of the acquisition by Datacraft?

Existing client agreements with Integral Axon will remain and continue.

Why is Ray Noonan, who led the acquisition of Integral Axon by Datacraft not staying with the business?

Ray Noonan has chosen to step aside. Robin Hartendorp will lead the integration of Integral Axon into the Datacraft family.

How will Datacraft’s business partners (the channel) benefit from this transaction?

Both companies have very strong partner relationships in place and there will be more opportunities for our partners, and the wider channel players, from the jump to being a major ICT player.

What is the role of NTT – how do they fit in?

NTT is one of the world’s largest ICT companies with over $100 billion in annual revenues and nearly 200,000 employees. When the NTT acquisition of Dimension Data is completed (mid- to end October), this will further enhance our capabilities in the longer term.

Will the new entity be able to tap into Datacraft’s and Dimension Data’s best practices?

As part of the integration process, and where appropriate, the Integral Axon team will be introduced to Datacraft and given access to broader Dimension Data collaboration environments and systems.

What effect will this have on the New Zealand revenue numbers in the short and medium term?

There is great potential to enhance the size of both businesses by effectively leveraging the combined set of capabilities. In the short term however, the immediate focus will be to ensure the integration process proceeds smoothly with minimal disruption to our employees, clients and the Datacraft and Integral Axon businesses. It will be business as usual.

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