Dubbo – a gateway to IT

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This article appeared in the 1 April, 2008 issue of CRN magazine.

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Dubbo – a gateway to IT
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Dubbo is known as the gateway to NSW’s west and the home of the Western Plains Zoo. But few would pick the country city of 34,000 as a home to a world-class IT company which won the international award of best small business partner for Microsoft in 2006.

Dubbo? How? Largely on the back of one man, who saw the writing on the wall for the standard break-fix model in 2000 and wrote his own approach, which is used by more than 300 resellers around the world.

A career that starts and ends in Dubbo is always going to be less than orthodox. But in retrospect, it seems obvious that Mathew Dickerson was destined to be a success in IT.

When his school received its first computers, two Apple IIs in 1980, Mathew was writing programs on them three days later – despite being in Year 7. By the end of the year he had compiled a database for the entire student body which he then managed on behalf of the school.

“I remember doing the data entry, too. The teachers thought that was great,” said Dickerson. The school allowed him to keep a copy which he used to organise the 10-year reunion.

Back then, computer science was only studied by those wanting a career in programming Unix, and the subject itself wasn’t counted towards the Higher School Certificate.

Dickerson finished school and left Dubbo for Sydney, where he worked for life insurance company Prudential maintaining the fleet of “computers” for its agents in the field.

The agents carried briefcases containing a calculator-sized Casio and docket printer, from which they would produce graphs to show how much a superannuated person would be worth by retirement. Dickerson’s department wrote and updated the software, which the Casios ran on little tapes.

It was a step up from data entry, although a small one. “One of the exciting jobs I had there was to duplicate changes to the program onto a couple of hundred tapes. I had this really important job of inserting tapes into one device while it copied over onto another tape.”

After three years the expense and intensity of big-city life became too much and Dickerson returned home to the most depressed part of the economy since the Great Depression. In 1989 interest rates were at 18 percent, and there was incredibly high unemployment.

“There were some government jobs that didn’t seem that exciting, and so I just thought, stupidly and arrogantly, to start a business.”

Dickerson set up office in a bedroom at his parents’ place and started selling door-to-door from brochures. Two-way radios, the first mobile phones, computers, fax machines, car phones – any business-minded electronics, which carried high margins at the time.

Dickerson remembers it as a hand-to-mouth existence, as few could afford the standard prices. A fax cost $3000, a mobile phone $5000. “It was a pretty exciting event when someone bought one computer. If I had a week – [of] which I can’t remember having too many – that I sold a computer and a mobile phone, that was all the cows come home.”

Soon he convinced the bank to give him his first business loan for $5000, which he blew the next day on a mobile phone. A year later he took on his first employee and then moved into the last vacant shop in the Centro shopping mall.

Not that he could afford to – instead, he knocked on the centre manager’s door and offered him $100 a month until another tenant showed up or he could afford proper rent.

Dickerson then took the biggest gamble of his working life. He stocked the shop with $10,000 worth of credit from his suppliers (mainly Tech Pacific) and hoped that he would sell enough by the end of the month to pay them back.

On the first day of the next month, Dickerson was still there, but only just. “It was really a struggle just to squeeze by, but once we’d done that one we knew we could keep going.”

By 1994 Dickerson could afford to pay rent as well as three salaries plus his own, and he signed a lease and did a major shop fitout. He also changed the company title from MAD Industries (an acronym of his name) to Axxis Technology.

With a bit of capital and acumen, Dickerson split off the cabling business of Axxis into another company called Comstall in 1996. In 1998 he did the same with the mobile phone business, opening another shop for that purpose alone in the same shopping centre.

Both companies did much better as separate entities. Mobile phone sales leapt from 30-40 a month to 150 phones a month. It’s still in operation 10 years later in the same location, and averages 200 phone sales a month.

The cabling business also did well, eventually winning more than 70 percent of its work outside of Axxis before Dickerson sold it off in 2004 for an undisclosed amount.

Axxis outgrew the shopping centre and moved to much larger premises in 2000. Despite Axxis making good profits that were increasing year on year, Dickerson realised that it would come to a very sudden halt in a matter of time – five years, according to his calculations.

A business model that relied on good margins was now outdated thanks to the commoditisation of the IT industry. The conclusions he drew, and the following steps he took to change his business model, he would eventually share at conferences all over the globe.

“When I’m talking to people around the world, they’ve all got the same story. All remember when we used to make good margins. You’d sell the hardware and make good money on it, and when [the client] rang up two weeks later [with] a problem, it seemed like good customer service to fix it.

“When they rang up three months later [with a problem], was it the fault of our installation or was it something that just happens in IT, or was it the fault of the client? Do you charge? How much do you charge? Is there a call-out fee?”

Dickerson looked for alternative models that gave a fair reward for the skills and talent of Axxis’ staff. He assigned one staff member the role of developing this new service-based business, but after a couple of weeks he had drawn a blank. “Two months later he said to me, ‘It’s a bit hard.’ And I said to him, “Maybe you’re too busy, here I’ll give it to Billy.”
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