Forsythe Expands Reach With ECI Buy

Forsythe Solutions Group, a 30-year-old, $630 million solution provider, had national coverage, except for one big hole in Colorado. That hole, says Eva Losacco, CEO and president of Forsythe, was hobbling the company's ability to work with its largest customers.

Forsythe CEO Eva Losacco says the solution provider has always worked with multiple platforms, because no one manufacturer has all the answers.

At the same time, small but profitable Enterprise Computing Inc. (ECI), an Englewood, Colo.-based solution provider with a loyal, local customer base, could see tough times coming. Vendors increasingly were overlooking smaller partners to concentrate on large integrators or their own direct-sales forces, says Bryant Martin, owner of ECI.

Last month, both firms overcame their challenges in one fell swoop when privately held Forsythe acquired ECI in a deal whose financial terms were not disclosed.

Martin says he has known Rich Forsythe, chairman and founder of Forsythe, for 17 years, and the two companies have similar business goals. ECI approached Forsythe in December about a merger, and met with a couple of other potential suitors as well.

It was the perfect fit, says Losacco, who started working at Forsythe as an account manager 16 years ago. "We offer a comprehensive approach to our marketplace," she says. "But customers now want a nationwide approach from their partners."

Forsythe's vendor partners include IBM, EMC, HP, Compaq and Sun. It has enjoyed an average growth rate of 35 percent over the past five years and recently started integrating solutions in new areas such as IP telephony, wireless and even content delivery.

"ECI is successful and has a similar customer focus," Losacco says. "We'll benefit from an expansion into the new territory."

	LESSONS LEARNED • Solution providers at the high end are acquiring-and being acquired.  • Both organizations should have a complementary business.  • Know what kind of partner your vendors are looking for, and make sure you match their needs.

Prior to the deal with Forsythe, ECI's profitable business had been overshadowed by a lack of size in the eyes of vendors, Martin says. While ECI might win a service contract with its clients, it was losing out on the hardware side of the deal, he says.

"As a partner of Cisco, Sun, EMC and others, we were at the Silver level," Martin says. "This deal lets us become a Premier VAR with them. . . . We are a spider monkey. Forsythe is a 900-pound gorilla."

Losacco agrees that size matters when it comes to competing with vendors that can easily take a deal direct. "It's the smaller partners that get hurt when vendors go direct," she says. "They haven't the investment to work with such vendors."

ECI's business model covers the entire process involved in high-end solutions, from assessment and design to integration and management, says Martin.

However, he says, smaller solution providers are finding it more difficult to offer the complete package, forcing them to focus on one part of the process, or on niche markets.

"A lot of our competitors are one-trick ponies," Martin says. "IBM business partners, HP business partners, they are more like extensions to OEMs. We've always had multiple platforms, as we don't feel any one manufacturer has all the answers. The downside is we don't always get the best support from the OEMs. But we can give our customers the best solutions."

The acquisition will mean more resources for ECI in addition to Forsythe's vendor relationships and nationwide presence, says Martin. For instance, ECI plans to increase its sales and engineering staff. Martin will become president and CEO of Forsythe Solutions Western States.

The deal is the latest in a string of events in the last couple of months pointing to consolidation in the high-end solution provider business.

Just two weeks ago, Martin's observation that "one-trick ponies" may be in trouble rang true with the closure of DIS Research, a New York-based firm which in the past was the largest HP-exclusive solution provider.

Last month, HP signed a deal to acquire nearly all of the Availability Solutions business of integrator Comdisco for about $610 million in cash.

And in April, CNT, a Minneapolis-based storage vendor, acquired Articulent, a Hopkinton, Mass.-based solution provider, to serve as its services arm.