NWN, one of the fastest growing solution providers in the country, rang in the New Year by beefing up its application development services capabilities with the acquisition of Microsoft Gold partner ComFrame.
The acquisition gives NWN, a Waltham, Mass. national systems integrator that was No. 87 on CRN's 2010 Fast Growth list, a stronger foothold in the South with offices in Birmingham, Alabama and Nashville, Tenn. and its first international office with a facility in Beijing, China's legendary Z-Park, the equivalent of California’s Silicon Valley. The acquisition officially closed at 11:59 p.m. EST on New Year's Eve. Terms of the deal were not disclosed.
ComFrame, a Microsoft Gold partner that has considerable Java programming expertise, is a 12-year-old application development services provider that has distinguished itself providing robust custom development solutions for more than 300 companies in the Southeastern and Central United States. ComFrame, and NWN itself, are two of only 37 nationally managed Microsoft system integrators.
ComFrame was honored by Microsoft with a marketing excellence award in 2010 and a Central Region Partner of the Year award in 2009.
"This makes us one of the more substantial applications development services companies in the business, and one of the few focused on both the commercial midmarket and public sectors," said NWN CEO Mont Phelps.
With the China-based off-shoring capabilities, the deal provides NWN with the muscle to provide the kind of application development and deployment services that power bigger global systems integrators like Avanade. It also marks the first time that NWN, which has 13 offices in addition to its Beijing facility, has all the pieces from strategic consulting to application development and deployment, and 24x7 support to offer its customers a complete solution to their business problems.
The differentiator, says Phelps, is NWN's lower cost structure, business agility and its strong local relationships with customers which provide the opportunity to "Team-Shore" -- a unique blend of local development and business resources combined with an off-shoring capability.
That application development "Team Shore" capability is likely to be a big factor in future growth. IDC, a Framingham, Mass market research firm, forecasts a 39 percent compound annual growth rate for application development and deployment in the worldwide SaaS market from 2009 to 2014.
NEXT: NWN's Application Development Services Gives It A New LookThe acquisition makes NWN one of the premier companies providing a full range of solutions, including application development services, to midmarket commercial and public sector customers. "We believe that our customer-centric approach is going to have tremendous appeal in those markets," said Phelps. "We have the capabilities and resources to compete with anybody in those markets. We can go in and sit down with CEOs and CIOs and talk about where they are going with their business strategy and then be able to design, implement and support the systems they need."
The acquisition is another step in NWN's steady path to break the billion the dollar sales mark. The company set the goal to reach the $1 billion sales mark at its annual sales conference last year.
NWN is also beginning 2011 for the first time with a vertical consulting group. Jane Linder, the managing director of the company, is going to oversee the new vertical solutions group chartered with sharpening the company's focus on health care, education, state and local government and midsized banks/credit unions.
"There are plenty of VARs out there that only think about technology," said Linder. "We know how to help customers use technology so it creates business value." That requires a deeper knowledge of the customer's business in addition to the technology, said Linder.
Phelps called the new vertical customer capabilities a "natural evolution" for NWN. "The business world is Darwinian," he said. "You have to evolve and change. Hardware is only part of the answer. We are going to be solving the applications needs of our customers and then dragging along the infrastructure."
The deal marks the tenth acquisition that NWN has made over the last five years as it evolves in a solution provider channel that is facing big changes as companies embrace cloud computing solutions. NWN ends the year with $250 million in annual sales, up from $200 million in 2009. The company also ends the year with 600 employees, 400 of whom are skilled, billable engineers and consultants.
Before the ComFrame deal, the national systems integrator's last acquisition was its purchase last January of Western Blue, a Sacramento, Calif.-based VAR specializing in public sector. That gave NWN a prominent West Coast presence and a much stronger presence in the public sector marketplace.
Phelps said he sees continued consolidation in the channel with the emergence of cloud services. "We're already seeing the impact of the cloud," he said. "By midyear you are going to see more adoption. It is going to get tougher to compete."
Phelps, honored several times by CRN as one of the most innovative executives in the IT industry, sees the biggest pressure affecting those solution providers that are midsized players that have not adapted to the new realities of the cloud services market.
As for NWN, Phelps has his eye on building the company into a $1 billion powerhouse that dominates the midmarket business solutions and services market. "We don't have any fear of change," he said. "We are trying to drive change. Status quo is counter to how we operate. What we do is relentless pursuit of improvement. We just listen to customers and they tell us where we need to go."