Canberra-headquartered IT service provider and hardware reseller Dataflex has gone into voluntary administration. While no reasons have been given for the collapse of the company, it follows a three year downward trend in its total contract value (TCV) with Federal Government agencies, according to Intermedium analysis of AusTender contracts data.
Indian IT Services giant Tech Mahindra had been expected to purchase a majority share in the company, however, Frank Lo Pilato of Administrators RSM Bird Cameron Partners told Fairfax, “[Tech Mahindra] had done a significant amount of due diligence, and a decision was pending on that but as of last week, they pulled out. We’re not sure what the major reason was so that resulted in the director of the company appointing the administrators.”
According to Intermedium’s research, since 2010-11 Dataflex has been signing significantly less contracts year-on-year directly with Federal government agencies. In 2013-14 year-to-date (YTD) Dataflex’s TCV is sitting at $283,000, across 7 contracts.
In terms of contracts it signed with agencies (as opposed to contracts where it may have been a sub-contractor), 2010-11 was Dataflex’s peak year in the 10 years 2003-04 to 2013-14 YTD.
In 2010-11 Dataflex signed 172 contracts with a TCV of $18.7 million, but by 2012-13, its business (as measured by contracts published in AusTender), had declined to 53 contracts worth a total of $5.0 million.
Dataflex is currently on the following Federal agency panels, according to Intermedium’s AnalyseIT:
- Finance’s ICT Services Commercial Off the Shelf (COTS) Software and Hardware Panel, through which it has done $225,000 worth of business since June 2012;
- The Department of Human Services’ (DHS) ICT Contractor Services Panel through which it has signed $170,000 worth of contracts since August 2012; and
- DHS’ Enterprise Storage Panel through which it has signed one contract worth $29,000 since January 2011.
A significant contributor to the decline in Dataflex’s TCV since 2010 is the fact that it was not awarded a position on two crucial panels which both commenced in 2010.
The Department of Finance-managed, Whole-of-Government panel for the ‘Provision of Certain Desktop Hardware and Associated Services’, established in December 2010, does not include Dataflex. The panel, which has had a TCV of $160 million from inception to date, does however include Acer. Previously, Dataflex is understood to have been Acer’s exclusive reseller in the Canberra market. Acer has signed $64.5 million in TCV through the panel since its inception.
Dataflex is also not on the former Department of Education, Employment and Workplace Relations’ (DEEWR) IT Hardware and Related Services Panel, established in August 2010. From inception to date, the panel has had a TCV of over $10 million.
While in 2006, as Acer’s reseller, Dataflex signed a $10 million contract to supply 4,500 Acer PC’s and monitors to DEEWR, it has not had the same success since the inception of the panel. Intermedium analysis shows that DEEWR has contracted a TCV of $965,000, with Dataflex, largely for hardware in the period 2009-10 to 2012-13.
Dataflex’s 2006 success with DHS has similarly not been matched in more recent years. In that year, it rolled out 8,000 desktops as part of a $30million contract between the DHS and Acer. DHS’ most recent contract with Acer was an April 2012, $6.5 million deal for 5000 desktop computers, but it is not apparent from the contract description what, if any part, Dataflex played in the deployment of the computers.
The company’s chief executive and founder Brian Evans told CRN that Government accounted for 95 percent of its business. According to Intermedium’s analysis of AusTender data, since 2003, Dataflex has signed contracts with a TCV of $128million with the Federal Government. The value of its business with State and Territory governments is not known.
Dataflex’s last significant contract was a $440,000 contract with Defence signed in June 2013 for software support and maintenance. It is due to expire in 2016.
In 2012, Dataflex launched its Blucloud solution. A Discussion Document released in 2013 aimed the cloud service at the Government market and Dataflex was added to the Data-centre-as-a-service (DCaaS) Multi-use List (MuL) in December 2013. Despite this inclusion, no cloud contracts signed with Dataflex have yet been posted on AusTender.
Dataflex also did $170,000 worth of business within the Federal Labour Hire market, according to Intermedium’s AnalyseIT. It signed three contracts with DHS in 2013 for IT Specialised Services through DHS’ ICT Contractor Services Panel, but has not signed any other Labour Hire contract since then.
Intermedium is of the view that Dataflex may be the first of a number of companies with a predominantly reseller business model who will not survive in the current Canberra market given the impact of various cost cutting measures (whole of government panels, efficiency dividends and Capital Expenditure restrictions) coupled with the prolonged period of agency reluctance to spend due to firstly the pre-election and election periods and now the uncertainty attendant to the Commission of Audit.
For more information, please contact the Editor (02) 9955 9896.