DNX Solutions sees slower leads, longer sales cycles amid ‘tough’ conditions

Sydney-based cloud services provider DNX Solutions is seeing slower leads and longer sales cycles amid “tough” conditions, a trend that has continued since the last financial quarter.

In an interview with ARN at AWS’ Public Sector Summit conference in Canberra, Helder Klemp, CEO and co-founder of DNX, said “leads are not that responsive [and] sales cycles are longer”.

“We are doing more go-to-market events and more prospecting. We are always on alert, talking about these challenges every day. It’s tough,” he said. “We have this joke internally [that] we are always on alert. We are self-funded and growing using our own capital.”

According to Klemp, DNX needs to stay vigilant and make strategic decisions carefully, going step by step instead of “doing everything at once”.

“Our senior management team discusses the problems and challenges, then we decide where to invest,” he said. “We are alert to market conditions. Last financial year was tough for everybody.

“All the best partners I talk to complain about the slowness, fewer leads and longer sales cycles and we still see the same.”

He noted that customers are now making decisions on whether they really need something.

“Before, it was like, ‘Hey, we’ve got money, we’ll do the project.’ Now it’s, ‘Do we really need it?’ Today, we needed senior execs to assure a customer about the value we’ll provide,” he said.

The customers Klemp refers to are cost-sensitive, legacy software companies.

“They struggle to scale because if they do, their AWS bill doubles,” he said. “We propose a modernisation journey: assessment, identify gaps and propose a roadmap.

The challenge is convincing them of our value when offshore partners offer 50 per cent less and we assure them of our responsiveness and expertise.”

According to Salman Rahman, head of sales and customer success for Australia and New Zealand (A/NZ) at DNX, the company’s small pilot projects is becoming the norm.

“A lot of our [projects] now are phased. In the middle markets, not the large enterprises, we start with small projects, build trust and then scale,” he said.

Klemp sees this as being “cyclical and influenced by macroeconomics”.

“Everyone’s concerned about interest rates and raising funds,” he said. “Startups struggle to get funding, impacting their ability to invest in projects.”

Despite challenging market conditions, DNX Solutions is “growing healthily at 30 per cent to 40 per cent year-over-year, which has been sustainable over the past five years, he said.

“Our growth plan for this financial year is 40 per cent,” said Klemp. “I’m happy with that. We are also diversifying our practice areas, including data modernisation, data security, and cloud operations.

“We are likely incubating FinOps [financial operations] now. FinOps is super important in our journey towards enterprise customers, expanding into a larger customer base,” he said.

According to Klemp, DNX started out targeting startups and small- to medium-sized businesses (SMB) when it began in 2019, but is now positioned to grow the segment towards larger SMBs and mid-enterprise.

“From a sales standpoint, achieving 40 per cent growth involves changes in our organisation,” said Rahman. “We have built an inside sales team for outbound prospecting into new accounts and an account management team for existing business growth.

 We also have customer success managers focused on strategic accounts, ensuring we provide good service and meet their growth needs. This structure allows us to focus on new and existing accounts, driving 40 per cent growth.”

However, Klemp said that while acquiring customers is important, the company also aims to “retain them”.

“Customer success is crucial for us, focusing on customer satisfaction and not just sales,” he said. “We are investing more in customer success to ensure we meet their needs and provide excellent service.”

DNX Solutions reached AWS’ premier tier as a service partner after a year of focused effort back in June 2023.

A year on reaching this level has meant the company has been able to differentiate itself in the Australian marketplace.

“After achieving this, we started investing more in scaling the business,” said Klemp. “We are scaling the business with the premier tier status and a strong alignment with AWS, understanding deeply how AWS works and staying very aligned with them.”

Lilia Guan travelled to the AWS Public Sector Summit as a guest of AWS.