Tech To Watch: Profiles

Digital River

Minneapolis-based Digital River bills itself as a multichannel e-commerce solution provider, whose clients include big-time tech companies such as Computer Associates, Microsoft, Novell, SanDisk and Symantec. The company builds, manages and hosts businesses for more than 40,000 software publishers, manufacturers, distributors and online retailers.

Whatever service a company needs to sell its products online, Digital River can provide, according to Ed Merritt, vice president, investor relations. The company develops, hosts and processes shipments--both physical and online--and implements fraud protection and other services. The company doesn't actually own any inventory, but works with distributors like Ingram Micro.

"We operate on a revenue-sharing model," Merritt said. "When our clients sell products, we make money, and technology is at the heart of everything we do."

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The company has recently focused on providing more marketing services to its clients, such as site optimization, "to provide as many click-throughs as possible," Merritt said.

Digital River can go behind the scenes of a client's online site, Merritt said, and covertly steer traffic away to another location. For instance, a user can access a Web site, and get one look, while another user can access the same Web site, which might have differences, such as various graphics. The sites are all under the same URL, but are tested against each other to find which has better traffic conversion.

The company's strategy is to stay global, which sets it apart from its competitors, according to Merritt, with six international offices.

Another growth driver this year will be an expansion into new vertical markets, Merritt said, such as the gaming space, and also investing in new technology around the new verticals.

"The bottom line is: We want to sell your product," Merritt said.

For Incentra Solutions Inc. (FG2008 No. 13), expansion is the name of the game. The Boulder, Colo.-based management and professional services provider has been on an acquisition tear in the past few years.

"We're looking for well-run companies that support our vision and provide synergies," said president and CEO Shawn O'Grady.

In 2006, Incentra acquired Portland, Ore.-based Tactix Inc. for approximately $3.6 million. The company was the No.1 reseller of Sun Microsystems products in Oregon. In 2007, Incentra also purchased Sales Strategies Inc., (doing business as SSI hubCity), for roughly $6 million. The Metuchen, N.J-.based company was a provider of data lifecycle management, information security, software infrastructure development and managed services solutions to mid-tier enterprises.

Incentra's largest acquisition to date was the August 2007 purchase of Santa Clara, Calif.-based Helio Solutions Inc. for approximately $10.3 million. Helio, The IT and secure data center solution provider to midtier enterprises and Fortune 1000 companies had sales of approximately $75 million for the 12 months ended June 2007.

O'Grady said that Incentra offers a good value proposition as a one-stop shop instead of acting as a niche player.

"As we buy VARs, we're increasing our portfolio of services," O'Grady said. "We can offer complete solutions, which our customers prefer."

With additional resources from its acquisitions, O'Grady said that Incentra provides ongoing cost reductions, which is always crucial, but especially in the current economic climate.

ZSL Inc.

Founded in 1995, ZSL, based in Edison, N.J., is a midmarket IT outsourcing, applications, replacement technology, mobile computing, enterprise 2.0 computing, DW/BI solutions, managed services, virtualization, MS Dynamics and QA and testing service.

Shiv Kumar, executive vice president, said that business is increasing 30 to 40 percent year over year for a variety of reasons.

Fortuitously, the company shifted into different verticals instead of keeping its focus in the banking and finance industry; big-league clients include CapitalOne, Citigroup, Wachovia and the troubled Lehman Brothers. With expansion into other verticals such as health care, pharma and telecom, Kumar said ZSL has not experienced a big impact because of the current decline in the finance sector.

Collaborative growth is another key growth driver. ZSL's "Get IT Together" partnership model is aimed at providing supplemental and added-value services for systems integrators, VARs and solution providers. Kumar said that roughly one-third of ZSL revenue is derived from this collaborative model, which has been in place for the past six to seven years, and has 60 participating partners globally.

In addition to working with the usual suspects, such as HP, IBM, Microsoft and Sun, ZSL also has been actively looking for and adding new vendors during the past several years. Kumar said that the company has signed four or five new and emerging vendors in the last year.

"The midmarket is always looking for superior tech products, so we constantly look to add new emerging partners in our portfolio with a cost-effective licensing implementation model," he said.

ZSL also has found that significant growth has been achieved by investments in a tech engineering workforce, such as hiring new employees and sponsoring certifications.

For the remaining part of the year, ZSL plans to further its business globally in unified communications, virtualization, green IT and mobile and wireless emerging technologies, Kumar said, using its partnership program, adding new vendors and putting in more time and investment in its research and development initiatives.