Managed services News
Trace3 CEO On Hiring, M&A And Double-Digit Growth
‘We use the term convergence, data, security, cloud, AI...I think that’s going to be where we see the industry evolve and 2024 and 2025. That’s going to take some smart people tying these strategies together, building new strategy and modernizing certain IT environments to go enable that. I think Trace3 is well positioned to take advantage of that’ says Trace3 CEO Rich Fennessy.
This past year Trace3 hired about 150 employees and plans to hire 100 more in 2024. That’s because the Irvine, Calif.-based solution provider is investing in key areas such as data and data analytics, and the company needs a top-notch team to execute.
“We knew we wanted to increase our exposure of the data topic,” Rich Fennessy, Trace3 CEO, told CRN in an exclusive interview. “To do that, most of those we hired are all front-end, the sales process engineers who are out there doing pre-sales and delivery. As our service business has grown, which has grown nicely, you need more people to go do that work.”
Through these investments Trace3, which is on CRN’s 2023 Solutions Provider Elite 150 list, plans to almost double the company’s revenue in three years.
Today, the technology consultancy generates $2.5 billion in revenue and plans to grow that to $4 billion by 2026. In the last year alone the company has grown by more than 30 percent and added about 300 new clients.
Fennessy said the company will see double-digit growth this year as well.
“We’ve been doing double-digit growth for a long time,” he said.
The company has a five-year roadmap, which it kicked off in 2021, that includes growing in four key areas: client engagement, services maturity, talent and expertise and geographic reach through M&A.
It also plans to develop a more efficient backend to support integrated technology and enhance service-based solutions and partnership relationships as well as its emerging tech value proposition.
“At a high level, we see this next phase focused on significantly expanding our services and consulting capabilities to help our clients modernize their IT environment,” he said.
Fennessy recently sat down with CRN to discuss the company’s growth trajectory, scaling up with talent, how it’s doubling down on data and more. Check it out below.
At Trace3’s Evolve conference you talked about a five-year roadmap. You’re in year two right now. What do the next three years look like?
So the five-year strategic plan was really designed to figure out how do we double Trace3 in size. At that point time, we’re just approaching $1.5 to $1.7 billion. So how do we become like a $3.5 to $4 billion company? What’s that look like? We think the whole solution provider space is evolving pretty quickly. About three years from now I think it’s a company that’s bigger in size and scale and it’s a company that’s driving together. We talked about convergence, data, cloud security, but that’s all about making IT work better inside of our large companies as well as our medium-sized companies. Thinking about the world in various silos isn’t working anymore, it’s all about going horizontal. That’s why I think Trace3 as a company is helping large companies and medium-sized companies connect the dots and drive optimization, modernize and be more efficient.
Trace3 hired 150 people last year when a lot of companies had layoffs. How did the company sustain economic headwinds and be able to grow?
Going back to the strategic plan, we knew we wanted to go invest in certain topics. We knew we wanted to double down on security. We knew we wanted to increase our exposure of the data topic. To do that, most of those we hired are all front-end, the sales process engineers who are out there doing pre-sales and delivery. As our service business has grown, which has grown nicely, you need more people to go do that work. I run a process every week where we’re looking at new hire people every week, so it’s a continual thing.
How many people do you want to bring on in 2024?
I would say on any given year,100-plus is our target. At one point, it was back office because we didn’t have good processes. Now we have really good processes. When I say 100 people, it’s more salespeople, more engineers, more delivery people who go out there and do work with customers.
How does Trace3 look at using AI for the future?
I think we got our finger on the pulse. I think it’s a hot topic. It’s an interesting topic and it’s a topic that is going to change how a lot of companies think about how they run some of the core processes and how they leverage technology. AI will be a center topic for Trace3 for 2024 and 2025. It’s the headline, but it’s embedded in security, it’s embedded in the data and it’s embedded in how to run an optimum IT infrastructure whether it’s in the cloud or in a hybrid mode.
What do you think will be the big market trend in 2024?
It’s all going to be about data and data analytics. You’re going to see us make some pretty significant investments and we have some acquisitions lined up. If we can own the data strategy for customers, I think that cascades down to everything else. From owning the data to where they put the data, whether it’s on-prem or in the cloud, and how they secure the data...our strategy is we want to be very much involved in engaging that data conversation.
What is your M&A strategy for 2024?
There’s two topics we think about. We’re still not completely at the size and scale across the US where we’d like to be. So we have a geographic expansion strategy. We’d like to be bigger on the East Coast and we’d like to be bigger in the Pacific Northwest, so we’ll do some of that. The bigger thing is the capabilities that we either don’t have or we have but want to be bigger. Data is a great one, so the next acquisition will probably double our data analytics capability. We already know what the model needs, we know what kind of capabilities we need...we just need more of them. There are cool companies out there we can bring into Trace3 to help us accelerate that.
Talk to me about DEIB initiatives Trace3 is taking.
It’s kind of migrated to ESG (environment, social, governance), so we actually have a lot of focus on this. We have a whole committee that gets together once a month and we’re partnering with key companies like Cisco, HP and Dell who have some of those initiatives. It’s a requirement. About 60 percent of our business today is in the enterprise and those enterprise customers want to know what we are doing from an ESG perspective. It’s everything from what we’re doing internally to what we’re doing with our partners. There’s so many topics within that ESG framework, it’s everything from how we recycle assets to how we handle diversity in the workforce. I think we’re in the forefront what’s going on with ESG.
What differentiates Trace3 from the competition?
In terms of the solution provider space, we are very deep, technical company. Over half of our people are engineers, consultants and architects, that is our value add. The reality is, we are in the people business and our people are great, but we also have some incredible technical talent and that’s where we make our investments.
What’s to come for Trace3 in 2024?
I think you’re going to continue to see our industry transform a lot. You’re going to see a lot of the things that we’ve all been talking about really start to come together, but not as individual topics. We use the term convergence, data, security, cloud, AI...I think that’s going to be where we see the industry evolve in 2024 and 2025. That’s going to take some smart people tying these strategies together, building new strategy and modernizing certain IT environments toenable that. I think Trace3 is well positioned to take advantage of that.