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It's Not Easy Being Big

By Scott Campbell
May 19, 2008    12:00 AM ET

Page 3 of 3

Ingenix also finds that growth needs to come from a combination of acquisitions and internal additions, as well as latching onto a vertical market where spending is increasing.

"The [customer] base is just so large and so lightly penetrated. [Health care] is one of the lower automated vertical markets]. If the financial and manufacturing [verticals] are leaders, medical tends to have adopted computer-type automation at a lower scale and later than other industries. So it's a tremendous opportunity," Weiler said.

Expanding globally is instrumental as well, large solution providers say.

Insight has doubled its revenue to roughly $3.3 billion since 2004 when Fennessy joined the company. Its payroll has increased to about 5,000 employees, from approximately 3,700, so production, measured by sales per employee, has increased significantly. Insight has also expanded from three countries to 22. Insight's sales outside North America accounted for 30 percent of the total last year, up from 19 percent in 2004.

"The reality is how we get to that revenue growth on that [lower] employee growth is a good combination of acquisitions, such as Software Spectrum and Calence, which closed April 1," Fennessy said.

Insight has more solutions to offer customers than it did four years ago, Fennessy said. "Leveraging some markets that are clearly growing faster than the U.S. makes sense from a capabilities perspective. As we get into Germany, France, Asia, we only sell software now. We see significant opportunities there to sell hardware, services to those software clients. That's a key growth opportunity."

Within the last year, Dimension Data started a Canada business from scratch and acquired a company in Brazil.

As more customers require global solutions, companies that can service those needs will be at a tremendous advantage.

"A couple of years ago, only big enterprises had global requirements. Now, the medium- and even small-enterprise clients have the same multinational requirements that the big guys had a few years ago," Brown said. "We have been able to take market share because of our skills in certain market areas and having a focused plan around that. Market conditions around consolidation also allow us to gain market share."

Having a global presence is especially helpful as international markets tend to grow faster than the U.S., he said.

"In the U.S., you're competing for short gains, but in Latin America countries, the infrastructure is still being built out," Brown said. "One way to move into a new market is to take a mature product, one where you already have scalability and efficiency, and take that as an entrée into a new market."

"That's how we opened up in the West [United States] a few years ago. Four years ago, we did not have an office west of Atlanta. What started out smaller in the U.S. grew as clients requested us to expand to Canada, Mexico [and] Brazil. That's fueled growth globally. We go to where customers need us."



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