2008 CRN Fast Growth 100: Speed Demons

In years of economic slowdowns -- such as 2007/2008 -- companies typically look to streamline operations, reduce costs and increase efficiencies. They also look to solution providers to help them achieve those goals. That's why, despite the stress of high-energy costs, continuing financial market turmoil and a still-declining housing sector, companies' most trusted IT partners are growing at extraordinary rates. Almost 70 percent of this year's respondents said that while the general economy may be in slowdown mode, there also was an opportunity to do work for customers that meets the challenges of the current environment, such as helping them cut operating costs.

The average 2007 revenue for CRN Fast Growth companies is $106.4 million—that's 64 percent higher than last year's group of elite companies. How much is the Fast Growth 100 worth? All told, $10.635 billion. That's the same as the GDP of Jamaica, or of Nicaragua and Haiti combined. On the flip side, it's the same as the budget deficit in California. Gov. Arnold Schwarzenegger would do well to court even more of these companies to locate in the Golden State; currently, 13 are located in California.

From Last Year To This Year, A Nice Showing
The Fast Growth list saw a bit of movement from 2007 to 2008, with last year's third-ranked company assuming the top spot: $160-million NWN Corp. took the honor from $64.9-million Groupware Technology, which fell to #35. A total of 57 companies are new to the list this year. However, companies returning from last year are stronger overall than the debuting solution providers: They are more profitable, faster-growing and showed larger gains. For example, the alumni averaged 19 percent profit, while newcomers averaged 5 percent. In addition, newcomers averaged $79 million in 2007 sales, which is 25 percent lower than the list average. Repeat VARs on the list averaged $142.6 million in 2007 sales, 34 percent higher than the FG100 average. And, newbies have less staff—on average, they have 31 percent fewer employees, while alumni have 40 percent more employees.

Overall, the two-year revenue increase for our 2008 elite 100 was $59.4 million, $22.1 million (or 59 percent) more than that of the Fast Growth 2007. Further, the lowest rate of growth—52 percent—reported by Atrilogy Solutions Group Inc., rank #100, was higher than the 2007 CRN Fast Growth company that ranked #100. That solution provider, Webistix Inc., reported 27 percent growth between 2004 and 2006, but is on this year's list at No. 82 with 66.76 percent growth.

Smaller companies such as $3.36 million Webistix do have a growth advantage, because it's clearly easier to double $1 million in revenue than to multiply $1 billion in sales. However, the base revenue of the top 50 Fast Growth 2008 companies was only slightly less—0.32 percent—than the base revenue of the overall 100. On average, the top 50 increased their revenue by $87 million from 2005 to 2007, while the average for all 100 companies was $59.4 million. In addition, one company, Cognizant Technology Solutions Corp. (FG 2008 #30), again this year was the solo billion-dollar club member with revenue of more than $2 billion, up 141.08 percent from 2005.

Just as their customers are working toward increasing efficiencies, so, too, are FG100 companies. In fact, the two most popular action items for these 100 solution providers are streamlining operations and adding to their customer base (see chart, "How Do Their Gardens Grow?" this page). In an effort to attract more clients, solution providers know they must broaden the spectrum of technologies they offer. To do that, a whopping 85 percent of these VARs partner with other VARs and consultants. Overall, most of them (48 percent) see the midsize market as their fastest-growing opportunity this year .

"There are no 'secrets' to growing a great business," said Mont Phelps, NWN's CEO, "but unfortunately, no shortcuts either. It takes great people, a commitment to excellence and hard work. I am very pleased with our accomplishments, but we are not satisfied and that leads to a positive culture of relentless pursuit of improvement in everything we do." (See "Grow Fast Or Flounder".)

For NWN and other top VARs, the key to success is in taking a long-term perspective in everything they do. Their focus is on developing and sustaining excellent relationships with customers, in part, by cultivating strong partnerships with the leading vendors built on mutual benefit and trust. Staffing is also a top priority. Said Phelps: "We offer a positive culture and a career path to the best people in the industry, not just jobs."

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