Over the nearly 15 years since its founding, Net@Work has evolved from a simple network support company to a full-service IT consultancy and one of the country's largest Sage resellers.
Now, the New York-based company stands poised to expand nationally pending a soon-to-be completed acquisition, and will focus on growing its publishing portfolio of original applications.
With approximately $23 million in revenue and a staff of roughly 140, Net@Work ranked No. 9 on Accounting Today's 2010 Top 100 VAR rankings.
Co-presidents and brothers Alex and Edward Solomon never envisioned their company's current scope while they attended business school and were running both a catering business and a paper distribution company before founding Net@Work in 1996.
Over the years, the company's growth has come primarily via M&A, the Solomons revealed. It has also added many of its own proprietary offerings to provide a full range of IT services and solutions, including accounting and CRM software, custom application development, document management and information security services.
"When we got into this business, we were in school. We didn't have a business plan and we didn't have a tech background, but our leg up was the fact that we were business people and surrounded ourselves with the right [tech] people," explained Alex. "We thought that not only would we be a great service company, but we would be a developer with our own applications. We had some big years and never got into developing our own apps. We did add-ons, but never became a publisher until now."
The next step in the firm's evolution lies in developing mobile applications and services. Toward that end, the firm officially assembled its "On The Go" team in August to support its mobile strategy. The team currently consists of marketing director Marc Mandelbaum, CRM practice director Danny Estrada, and developers Ronan Sheridan and Sergey Morozov.
One of their key developments has been the release of an On The Go mobile application for iPhones and Android phones that allows users to access Sage SalesLogix 7.52 CRM databases and the SalesLogix Cloud Edition from smart phones, and, shortly, Blackberries. Net@Work's On The Go app currently has a user base of 500 and growing.
GOING MOBILE
"Once I explain the app idea [to potential users], rather than just trying to sell it, everyone [we showed it to] got on board," said Sheridan. "The eye-opener for us was when we saw the amount of app downloads in areas like Asia and Australia. We're on 60 blogs now. People are surprised it's free; you have companies charging $30 to $40 for their business apps. We wanted it to be a compact offering and we built it so we could get feedback and expand on it."
But the app itself, and any similar ones to be developed in the future, are just the surface of what the firm envisions.
Alex explained that the biggest part of the effort is that the firm is currently receiving requests to build mobile apps for other companies and resellers, either for a particular vertical they are in or for an existing application. "From a product perspective, it currently allows [resellers] to sell more SalesLogix. Now we are getting validation and we need to finish other versions, but overall this represents a major new focus for us," he said. "We will look for gaps in the market and fill those gaps with our own applications."
RECESSION PRESSURES
Despite its overall success, Net@Work did not escape the stresses of the economic crisis, particularly over the past 18 months. The owners admit that it was one of the few times they had to be introspective.
After years of double-digit year-over-year growth, Net@Work saw the pace begin to ebb and decided, first and foremost, that it did not want to downsize its staff or trim service. Specifically, Alex claimed that the firm had been on a growth path of between 15 and 30 percent every year for nearly a decade, and when that pace slowed, they realized that growing a business "was not about just size."
"Things like being a debt-free organization were also very important, and we learned what to invest in and we are now able to capitalize by owning smaller businesses," said Edward. "Years ago, we were so busy doing deals and doing business we didn't have the time or need the time to take a look at how we can be better. Last year, we looked at what we can do better. ... We are now that much stronger."
During the economic downturn, Net@Work also took the time to look into other areas that had significant growth potential - one of which was document management.
Paul Chapman, the firm's document management practice manager, revealed that Net@Work currently receives approximately three to four document management inquiries per week. "Our customers are savvy and know what it's going to take to survive in a down market; they want to route documents effectively to cut down on FedEx and UPS bills," he said. "They want to see information online, electronic approvals, full accountability, auditing, and controls in place so they know where the money goes. Document management is the plumbing of that house. Every software package we sell has the ability to store documents, and many midmarket businesses we serve have reached a point where the future of their business is predicated on their ability to save costs, be nimble and do more with less. Document management and workflow is all about that, and we are seeing rapid growth in this area."
Net@Work also operates Docutrend - a sister company created in 2002 that targets a certain level of document management, focusing on copier sales, service, supplies and leasing for all makes and models of copiers, printers and faxes. The company has partnered with the likes of Canon USA, Ricoh, Sharp and others.
A BUILD-OR-BUY STRATEGY
Much of the firm's growth came, and likely will continue to come, through acquisition. It is still averaging approximately two to three purchases per year.
At press time, Net@Work was in the final stages of its acquisition of Sage and Deltek reseller Forepoint LLC, which will officially make it a national firm. Forepoint has between 350 and 400 customers and three owners, with offices in Seattle, Oregon and Wisconsin, and services clients in those areas as well as California, Hawaii, Alaska, Idaho, Montana, Colorado, Wyoming and Illinois.
Admittedly, growing a firm through acquisition has its challenges, particularly with different cultures and locations. Net@Work claims that it does not go in to a buy with a plan to change things, but it is focused on getting the firms they acquire to see "the bigger picture."
"The difference with going with us is if they want to provide a customer with an end-to-end strategy, we are the best place for them to go. It's build or buy, that's the state of the VAR market," said Alex. "If a reseller wants to cash out, they will maximize their earn-out with providing more than what they currently implement for their customers. Net@Work allows them to do that by the vast portfolio of solutions that we carry."
Edward explained there are always cultural challenges that need to be met as well, but Net@Work has been successful in delivering its philosophy. "I think the most important thing to note about us right now is that we are not [just] a VAR. We are a consulting firm and want to be an incredible trusted advisor for all technology needs to clients and be accountable for the entire solution," he said. "The beauty of our business is that we run the business, we can focus on the big picture. And from a client perspective, the total cost of ownership is much easier with one company. With one company that you deal with that can do it all, it's a lot more cost-effective."
NOT JUST LOCATION
Net@Work claims its acquisitions are also focused on talent, and not just a client base or location. For example, in its recent purchase of Boston-based Fitzgerald Group, the firm saw much greater potential in owner Mike Fitzgerald than just having him run his existing operation. Not long after the acquisition in April, Fitzgerald was appointed director of inside sales and client care.
"Management recognized that what worked in a company with one or two offices and under 1,000 clients doesn't necessarily work with offices across the country and over 3,000 active clients," said Fitzgerald. "Alex asked me to step in and take over the excellent team of account managers here who focus on making sure the needs of all our customers are being met and that the customers are maximizing their system investments. At Fitzgerald, we had a very strong focus on customer service, and Alex's hope is for me to bring this experience into an already strong customer service culture at Net@Work."
Fitzgerald also noted that his single biggest change is the ability for former Fitzgerald Group staff to have conversations with customers outside of the basic Sage MAS 90/200 comfort zone they used to be restricted to. He also said that while there have been some operational changes to his former firm, they have been minimal, as the two firms had "very similar cultures and strong talent."
A LOOK AHEAD
Looking forward to a five-year timeframe, Net@Work sees more international opportunities. While they may not be focusing on the international market as a strategy, they are admittedly being pulled into international opportunities as the upper end of the mid-market has such needs and, as Alex explained, "Very few companies have the capability and bandwidth to provide a solution. That is why Sage put together a global group that partners up some of the largest national partners for global opportunities."
In addition, its On The Go team is focused on the global market, and there is a possibility of offshoring some software development.
Acquisitions may not slow down either, and Net@Work doesn't see itself getting swallowed up anytime soon.
"We have a lot of customers in the SMB market. For who we serve, there is no one bigger than us now that is privately owned and not a consortium," said Alex. "The hard part of being this size is there are few companies to model ourselves after. There's a lot of trial and error and figuring it all out. It's hard to look at larger consulting firms [for inspiration] because they don't focus on SMBs as much. We find ourselves looking at accounting and law firms to see what we can model after them."
