Movin' On Up
What does it take to land a spot on the VARBusiness 500?
For some solution providers new to the list, hard work, anticipating market changes and a commitment to the midmarket are keys to success.
HPM Networks Inc. (2008 VARBusiness 500 No. 386), a Fremont, Calif., solution provider new to this year's list with 2007 annual revenue of $55 million saw its business grow 41 percent last year. "Our growth is coming from our consultative model that we put in place about three years ago," said Romi Randhawa, HPM Networks' president and CEO. "We focused on three strategic areas: virtualization, server consolidation and storage consolidation." Randhawa said he hired solution architects and put his entire staff, including salespeople, through extensive training in strategic solutions. "That effort really started paying off a year and a half ago," he said. "And our biggest growth opportunities are in the midmarket and SMB. That's where we are coming in and throwing a bunch of our resources."
As a result, Randhawa said midmarket customers that previously bought from CDW Corp. or Dell Inc. are now moving to HPM Networks.
Like HPM Networks, newcomer Axispoint Inc. (VARBusiness 500 No. 481), a New York-based solution provider specializing in wireless and convergence solutions, secured its spot on the list through organic growth. Axispoint President and CEO Dan DiSano noted that the company had only $2 million in revenue in 2002, but finished 2007 with $37 million in sales and is on target to reach $55 million in annual revenue in 2008.
"If you look at a lot of people that are bigger, they tend to do it through acquisitions," he said. "We may do an acquisition, but I haven't done one yet. I am seeing across-the-board growth. All of our practices are going in the right direction."
But DiSano said Axispoint might well expand its geographic footprint this year. Right now, the company has offices in three New York metropolitan area locations as well as in New Jersey, Boston, Washington and London. "Next for us is probably the Southeast," he said. "And then we'll work our way West."
DiSano said that because of Axispoint's relatively small size compared with brand-name global integrators, his company can be much more receptive to clients' needs. "We are one of those rare firms that have C-level conversations with our prospects and clients and then the next day, we roll up our sleeves and do the work," he said. "We are incredibly good at solving complex problems. If you can meet your customers' complex needs, you'll be a partner for a long time."
For example, Axispoint was recently competing against two of the largest telecom companies in the country for an IP telephony contract in New Jersey. On a Friday night, in the midst of competition for the contract, the customer's network went down. The customer called all three bidders for help. Axispoint employees worked through the weekend to get the network back up. "Literally the next week we landed a $1 million purchase order. The difference between us and our competitors is that we're there in the trenches when something goes wrong," DiSano said.
For Stuart Raburn, president of TekLinks Inc. (VARBusiness 500 No. 487), a solution provider in Birmingham, Ala., building data centers and selling managed services to midmarket customers helped punch his ticket to the VARBusiness 500. "We are a big Cisco unified communications shop, and that continues to be the biggest piece of our business," Raburn said. "But our data center business just exploded last year."
Raburn said that for midmarket customers in the Gulf coast areas of Mississippi and Alabama, disaster recovery and business continuity in the wake of Hurricane Katrina are all too real.
He pointed out that Fortune 500 companies don't need data center services from TekLinks because they already have their own centers. "We have a great SMB practice that continues to thrive, and our SMB clients need 24x7 operations. We bring a server and a connection [to the data center] and we give our small clients some of our top-tier technologies. Our midrange commercial clients are the ones that have caused the explosion in our data center business."
Raburn noted that midmarket clients can't cost-justify spending upward of $300,000 for a facility when they can tap into his data center and have all the capabilities without the costs. "Three hundred thousand dollars is a lot of money for a 250-user network," he said.
What's more, with the additional data centers online, Raburn said that for the first time Teklinks will start going after clients outside of its geographic region. "We will be looking at Tennessee, Georgia, and north Mississippi and Louisiana this year," Raburn said.
So far, newcomers to the VARBusiness 500 list said they've managed to dodge any ill effects from the recession.
"We're seeing growth in maintenance and managed services on multivendor platforms in the telephony space, as well as the applications integration side of the house," said Richard Manhire, COO of Empire Technologies (VARBusiness 500 No. 474), a solution provider in Freehold, N.J., which focuses on health care, pharmaceutical, and state and local education vertical markets. "The recession is pocketed. It's a concern but I haven't felt it. I'm waiting for that one customer to say, 'Because of the recession, we're stalling on this project.' But I haven't heard it yet. 2008 is shaping up well, and we're right on target."