by John M. Covaleski

Sacramento, Calif. - Little more than a year after its first merger, Microsoft Business Solutions reseller Altara is on a rapid-fire expansion pace that could soon make it a technology services force throughout the country.

Since the start of the year, the organization, based here, has added four offices, including three this summer, that boosted its annual revenue run rate to about $20 million, compared to $12 million in revenue in 2002. The expansion has been a combination of mergers and opening new offices manned by local talent - and it may be just beginning.

Company officials said that they want to open offices in major markets and in secondary areas in all regions of the country. They also said that they have several “major” deals brewing.

Those additional deals could increase Altara’s total manpower to about 120 from its current 90, but the revenue those as-yet-uncompleted deals would add has not been determined.

“I would like to see us reach about $100 million in revenue, because that would give us financial strength and make us durable,” said Altara president Helene Cole. “But I don’t want to grow just for the sake of size; I want to make sure that the firms we merge with share our values and that we can we provide the type of service that creates long-term relationships with clients.”

“I would be happier with $80 million in revenue and a company that’s got an average employee tenure of five to 10 years and plenty of happy customers than I would be with a company double that size that has high turnover in staff and clients,” she added.

The major merger ingredient: Any additions must handle Microsoft technologies - either the accounting, enterprise and customer relationship management business applications from Microsoft Business Solutions, or Microsoft’s infrastructure products.

Roughly 75 percent of Altara’s staff, including developers and engineers, work with accounting and CRM business applications, while the remainder handle infrastructure products, such as Exchange and other server and desktop applications, including the Microsoft Office suite.

Altara’s expansion highlights over the past year includes:

● October 2002 - Acquired the former Automated Business Systems, a Sacramento, Calif.-based Solomon expert.

● February, 2003 - Opened a Chicago office headed by Joe Gulino and Kelly Pallay, former partners with Microsoft reseller Affinity Technology Group.

● June 2003 - Opened a St. Louis office, headed by local MBS specialist Curtis Anderson.

● June 2003 - Opened a South Central region office in Dallas, headed by local MBS specialist Duane Connor.

● July 2003 - Acquired Infinity Technology Partners, an MBS reseller in Wayne, Pa.

● September 2003 - Acquired ByteWorks Computer Consulting, an MBS reseller in Kansas City, Mo.

The first chapter in Altara’s growth opened in July 2002, when Cole merged her Cedar Knolls, N.J., firm, which had just been renamed Altara from DMS Technology Solutions, with the former Enterprise Resource Group, of Sacramento. The combined firms, which also had an office in Minneapolis, were handling MBS’s Great Plains and Solomon software lines, and Best Enterprise Suite, a product now called MAS 500, from Microsoft rival Best Software.

The new Altara soon dropped the Best product to devote its operations and expansion strategy to Microsoft. A single-vendor focus, according to Cole, is the best way to ensure that all the offices of the planned national organization would have adequate expertise in the products they handle.

“We wanted to be sure that we really had the skills at all our offices and, unlike some other consolidators, don’t just use far-away locations as sales offices,” Cole said.

Moreover, she said that creating a national Microsoft reseller organization with strong local representation is the best way to penetrate those local markets. As an example, she said that the new South Central office added 36 customers in its first two months.

The Microsoft focus also helps Altara handle that vendor’s penchant for marketing its accounting and CRM business applications with its infrastructure products. “When selling CRM, its not just CRM,” Cole said. “It’s also Exchange, CRM’s integration with ERP, and possible integration with the user’s Web site. And we are able to handle that.”

That Microsoft approach could also make Altara attractive to the vendor’s entire channel. “A lot of what Microsoft promotes is selling the applications [CRM and accounting] to secure the stack [sale of other products]. Some Microsoft people have great skill sets, but they don’t have the applications to lead the way - we are able to provide that,” Cole said.

The focus also gives Altara some leverage within MBS. “I cannot tell you that bigger is not better,” Cole said. “It’s important that we bring a lot of revenue in. Microsoft likes that.”

Microsoft praised Altara’s expansion strategy right from the start. At the time of the original merger with ERG, Microsoft Business Solutions Global Partner sales manager Brent Pieterick said, “Altara can now scale to reach broader markets with more solutions.”

In addition to qualifying for bigger margins because of larger volume, Altara also has a seat on Microsoft’s partner advisory board, which allows it to provide input on future product development. For example, as a beta partner in Microsoft’s CRM product development, Altara got a head start in handling that product.

Cole noted that in the first three months of handling the new CRM product, Altara had more deals with it than it did during the three years that it handled a Siebel Systems CRM package that was integrated with Microsoft’s Great Plains accounting line. She also said that Altara’s size and scope also make it better able to network with Microsoft’s volume licensing of CRM sales, an approach some other resellers dislike.

Size helped Altara right from the start. Its original merger made the reseller large enough to qualify for Microsoft’s Global Partner Sales Programs, whose members get additional marketing resources. Altara eventually blossomed into one of MBS’s top-producing Gold Certified Partners, providing more perks and prestige.

Those additional Microsoft designations provided leverage in courting the merger candidates and partners, and making the deals that were to follow.

The Altara business model is strategically aligned with Microsoft’s Business Solutions initiatives,” said Michael Wetter, president of Altara’s most recent acquisition, ByteWorks, of Kansas City. “Our decision to become part of Altara was driven by our desire to provide our customers with a broader offering of products and services.”

Cole is especially hopeful about the prospects for clients with multiple locations. One of its marquee clients is a multi-billion-dollar telecommunications company that is being served by Altara offices in metropolitan New York, Chicago and Texas.

Cole further said that a recent sales seminar by Altara’s relatively new Dallas office resulted in a sale to a client whose human resource management requirements are being handled by the Dallas office, while the metro New York office is handling the client’s accounting and project management requirements in New York City.

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