Softchoice Aims For $1B Mark

It's been a busy year for Softchoice (VARBusiness 500 rank: 69). The Toronto, Ontario-based company is working toward " and succeeding in " continuing its pattern of 20 percent growth during the last five years. According to CEO David Mac Donald, the company has increased net income by 47 percent this year and has grown its hardware revenue from $1 million to $200 million in five years. Softchoice's overall revenue growth in that time has increased from $402 million to more than $700 million. The company is eyeing future growth, both organically and through acquisition: In October, for example, Softchoice agreed to buy the technology solutions portion of NexInnovations for $10 million. This week MacDonald talked with Channelweb.com about Softchoice's plans for 2008 and beyond.

With the NexInnovations deal, it looks like you are interested in expanding Softchoice's horizons.

NexInnovations was a company that had sophisticated hardware and software provisioning capabilities. It provided solutions to the largest Canadian companies: Rollouts, servers, desktops, laptops. They had a big Cisco, IBM, Lenovo, HP business, as well as a consulting and networking practice. We bought that, not their break fix business.

We have customers with 150 to 200 PCs, and also customers like the Royal Bank of Canada, with 70,000 PCs. We are Canada's number one provider of Microsoft licenses to SMBs and, yes, we have a growth strategy to further expand into enterprise We are looking to match our ability in software with hardware through the acquisition.

Has the financial sector's woes affected your business at all?

We have some of Canada's largest financial firms, but in Canada, the banks are not exposed as they were in the U.S. to the sub prime market. We've really been driving our SMB focus in the U.S., and haven't seen a lot of impact in the financial area.

You've said you're looking to become a billion-dollar solution provider. What's your strategy?

We are the number five reseller of Microsoft software in the U.S., and the number one in Canada. We work closely with our partners; for example, HP is our number one partner in hardware, and we get great support. Also, [our] customers buy more with deeper relationships, and we nurture them through our licensing agreements.

We do things counter intuitively. For example, when everyone else was out pursuing an online strategy, we strengthened our call centers. Our people answer the phone, rather than have callers stuck in phone trees.

But you have an online presence ...

Yes, and if you have strong vendor relationships, a strong customer base, if you have an effective infrastructure, strong Web capabilities, call centers, then you start seeing economies that you can apply elsewhere. We think enterprise is attractive, but SMB has a more resilient base.

SMBs are your bread and butter, then, and you can use that as a foundation for your expansion into the enterprise market?

Exactly.

Why are customers loyal to you?

We meet face to face with our customers, at a strategic level, to plan over a three-year time frame. We also assign them an inside account rep. It's a high-touch model. The face-to-face model is a strong one . Our goal is to become one of the top five solution providers in t he next three years. We will continue to grow by acquisition and organically. Our stock doubled in the past year as well.

What do you see as strong technologies in the next year to 18 months?

Unified communications is one of the biggest opportunities coming out in the next five years. Every company is going to reevaluate its communications structure. All that's out there will be merged into a unified system. MS and Cisco will be big players.

Virtualization without question will be strong. Environmental issues, heat generation, floor space issues will all dovetail with quad core and VM ware and MS development. With Vista, we are starting to see migration with SP1 becoming available. And of course, there's also storage. Needs are doubling every year.

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