The climb is not impossibleBy Frank Ohlhorst | Posted 2008-05-20 Email Print
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The paths to growth may vary, but growth is a must for solution providers with any hope of success.
This illustrates the difficulty of growing a smaller business into a behemoth. But climbing the pyramid is not impossible, as demonstrated by the experiences of some of the IT channel’s biggest companies—EDS (Electronic Data Systems), CSC (Computer Science Corporation) and SAIC (Science Applications International Corporation). Founded by individuals with very limited resources, all three now inhabit the pyramid’s top floor.
H. Ross Perot founded EDS in 1962 with a $1,000 investment. The company, which HP is planning to purchase, was sold to General Motors in 1984 for $2.4 billion. Today, EDS is the largest systems management and services provider in the United States, with more than $20 billion in annual revenue. Founded in 1959 by Roy Nutt and Fletcher Jones with $100, CSC reported $14.9 billion in revenue for fiscal year 2007. SAIC, founded by J. Robert Beyster, Ph.D., and a small group of scientists in 1969, posted $8.3 billion in revenue for fiscal 2007.
While EDS, CSC and SAIC have unique stories behind their paths to success, they share a common trait: Each traces its success back to individuals that were not "technologists" by trade. Perot was a top salesman for IBM, Jones was known as a marketing whiz, and Beyster was a research physicist.
They are the exceptions, since most solution providers are founded by technical people. The birth of the typical solution provider begins with an individual offering his or her technology-related expertise to a small group of businesses, friends, or associates and then slowly growing a customer base. Much like most small businesses, some 80 percent may fail within the first year. Others will grow slowly. A select few will expand quickly, but most eventually hit a growth barrier.
The path to success
Many solution providers may feel the challenges today are insurmountable, and so they forsake growth for survival. However, though they never may become an EDS or CSC, some are clearly on the growth track and accelerating. Their experiences may serve as inspiration for other small solution providers looking for sustainable growth.
Take, for example, Neudesic, a solution provider founded in 1991 by three partners—CEO Parsa Rohani, Vice President of Technology Tim Marshall and Anthony Ferry, the company’s vice president of sales and marketing. With reported growth exceeding 1000 percent in its most recent year, the company ranked 197 on the Inc. 5000 list of fastest
growing companies in 2007.
This kind of success owes to "careful planning and using a rock-star cast," according to Marshall. "It takes a small group of innovators to build the foundation and the ability
to articulate the business value of the offerings to prospective customers to
Another growth success story is Artech, founded in 1992 by Ranjini and Ajay Poddar, a wife and husband team. In fiscal year 2007, Artech generated more than $128 million in revenue with 2,100 employees at 19 service delivery locations throughout the United States, India and China. Ranjini Poddar, the company’s president, said sustainable growth is no accident.
"Although we didn’t feel there was a silver bullet to success, we had proved to ourselves that through aggressive sales, prudent financial management and day-by-day practical leadership, we would succeed," she said.
In the channel, HP, Inc. is a storied vendor that has relationships...