NZ tech consolidation is producing some real diamonds

 |   Matt Bostwick

New Zealand’s tech industry is booming. Over the past few years we’ve seen it become our second largest sector, contributing more than $6.6 billion to the economy. While Covid has slowed some sectors down, tech is still growing. Numbers from the Minister for Digital Economy and Communications, David Clark, suggest it’s growing at twice the pace of the rest of the economy. That’s exciting for all of us fortunate to work in the sector, especially as that growth also brings change – and the patterns of change highlight what’s most important to Kiwi customers.

As tech businesses grow they can take one of two routes: either build their teams and capability up internally while they develop new products, like Fusion 5’s Jemini payroll system, or they can go out and invest in a competitor, naturally acquiring new talent and IP. The latter has become an increasing trend, as local IT businesses consider where the biggest opportunities are in the market. As the tech sector grows, we’re seeing a lot of consolidation, with acquisitions aimed at bringing more breadth and depth of services to customers.

Recent acquisitions include the likes of Xero buying Planday, or Cin7 adding two international businesses to its expanding inventory management empire. Each business has identified consistent challenges that customers are facing and has acquired new businesses to support them.

Vodafone + Defend = innovation with confidence

The latest example is Vodafone, which has just signed a deal to acquire a 60% share in one of New Zealand’s leading cyber security providers, Defend. It’s a smart move from Vodafone, one that will not only open new revenue streams, but help Vodafone better serve its customers.

The purchase is aimed at helping Defend grow in scale and it couldn’t have come at a better time. In a digital world, physical border settings don’t matter. The task of keeping out cyber threats, including identity thieves and data poachers, is rising every day. In 2021 alone, Microsoft globally intercepted 35.7 billion phishing emails and blocked more than 25.6 billion brute force authentication attacks. In just the last quarter of 2021, New Zealand cybersecurity agency CERT reported five times more malware instances than in the previous quarter.

As part of its partnership with Vodafone, Defend will bring on more specialist people, enabling it to grow its capabilities further. With access to Vodafone’s customer base and skillsets, there’ll also be more opportunities for innovation like Vodafone’s recent Teams-based Meeting Spaces as a Service offering. The potential for new tools and services with ironclad security is super exciting.

Vodafone New Zealand hasn’t been just a telco for some time. Its mission to become a full-service tech company is well underway, as demonstrated by its recent Microsoft Partner Awards win in the Modern Work category. The decision to invest in fellow award-winner Defend highlights that Vodafone gets how critical security is to New Zealand’s tech landscape.

“Security continues to be the fastest growth category in ICT,” says Vodafone New Zealand Chief Enterprise Officer, Lindsay Zwart (pictured). “Vodafone sees the acquisition of Defend as bolstering our security competence in the market. Customers’ focus on risk is increasing; in particular cyber security risk, where they are looking to introduce the concept of a zero trust architecture to enhance their Information security posture. We are now poised to help!’’

The local tech boom is also being boosted by a local datacenter boom. With Microsoft’s New Zealand datacenter region on the horizon, the demand for secure cloud-based services will only increase. Defend is a master of using Microsoft security software and tools for multi-cloud, so it is well placed to help Vodafone reassure customers that any solution they adopt will come with industry-leading security capability.

With the likes of Vodafone and Defend working together, it’s set to ramp up innovation in products and services that help Kiwi organisations use digital technologies with confidence. That’s the kind of partnership that will pay dividends for our entire tech ecosystem, and every organisation in New Zealand.

Evolving for growth

One of the key conversations I have with IT and SaaS partners is: What’s the next phase of your evolution? With digital technology always evolving, tech businesses need to keep morphing too. Vodafone’s move has put it in a stronger position now and for the foreseeable future.

There’s no doubt we’ll see more consolidation, and new partnerships over the next few years that enable different skills to be passed on to colleagues, interns and the broader tech ecosystem. While many in the industry will no doubt be excited about borders opening so more people with diverse skills can be recruited, sometimes the most value is created when we learn from each other.


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