VARBusiness 500: What You Need To Know

There's good news and there's...good news to report this year, based on the 2005 VARBusiness 500, this magazine's exclusive research package that charts the results of North America's top solution providers during 2004. And that good news starts at the top of the list and winds its way down to the bottom.

First, the top companies--there are more of them than at anytime in the past three years. A total of 57 companies (five more than last year) nailed more than $1 billion in sales (Little Rock, Ark.-based Acxiom brings up the rear guard of this mighty billion-dollar club with $1.01 billion posted).

Not surprisingly, those that crested the milestone were pleased by the feat.

"The most important accomplishment for GTSI this year was that we blew through the billion-dollar mark," says Dendy Young, chairman and CEO of the Chantilly, Va.-based government solution provider. GTSI is No. 55 this year, up from No. 58 last year. "We grew by increasing the depth of our technology practices and by expanding our customers sales teams," he says.

Last year, the threshold for inclusion on the 2004 VARBusiness 500 dropped noticeably. That is, a company gained entry onto the list with $15.3 million in sales, down more than $3 million from 2003. Spin-meisters might argue that due to an active M&A climate, companies got larger at the top of the list while smaller companies getting bought disappeared from the bottom.

But, the good news trickles all the way down to the bottom this time. The bar has been raised considerably this year--up $3.2 million to $18.5 million. While consolidation activity continued apace this past year, new solution providers also flourished.

And VARs grew stronger at every level, according to our proprietary research. Examining the list at various midpoints, this year's No. 201--Sierra Systems Group--posted sales of $115.4 million, while last year's No. 201 posted sales of just $108.3 million. Similarly, No. 300 this year, Paradigm Solutions, recorded revenue of $61.8 million against last year's entry at the same slot, which came in at $59.6 million.

"2004 was a very good year, and it ended phenomenally," says Steve Tepedino, president of Avnet Technology Solutions, Americas. "In large part, that's because many suppliers have been opening up space for partners to play. They figured out the channel is doing a great job for them."

Solution providers that did well last year was smart, with a good sense of focus and a good value proposition, Tepedino adds. "They knew their customer, their geography and the market," he says. "They have good fundamentals and didn't try to grab the world."

CyberCore Technologies (No. 194) is one company from the top 500 that represents the Avnet paradigm.

"We achieved exceptional success in 2004," says Kevin Powderly, CyberCore president. The company more than doubled its sales, from $55.7 million in 2003 to $122.2 million in 2004.

"We knew there would be a huge opportunity in the homeland security space, so we geared our company for it," he explains, adding he expects his company's sales to grow to about $150 million in 2005. "We got all our clearances. There's a tremendous amount of work out there if you have major authorizations from the top manufacturers and you get on their schedules. We have 85 cleared engineers and are hiring about one employee per week."