Insight, based in Tempe, Ariz., completed the acquisition for a cash purchase price of US$287 million, plus a preliminary working capital adjustment of US$33.3 million, net of cash acquired to Level 3 Communications, which owned Software Spectrum.The deal resonated throughout the channel worldwide, but it may have had the most impact in Canada.
Software Spectrum was CDN’s No. 5 solution provider last year. The company also won multiple Channel Elite Awards. However, one space below it was Insight Canada. Together, the two companies became a $350 to $400 million reselling powerhouse in Canada and landed in the No. 3 position in this year’s rankings.
According to Carmela Orlando, the president of Insight Canada of Montreal, the Software Spectrum acquisition from a Canadian perspective “completes us”.
“We wanted to be a trusted advisor, and for me trust is a word that equates with expertise. We have a strong hardware position and we dominate in the mid-market, but we did not have a strong presence in the enterprise space. (Software Spectrum Canada) really fit the bill from a software expertise perspective and they straddled both the enterprise and mid-markets. They were a shoe-in,” Orlando said.
Orlando added that Insight’s acquisition of Software Spectrum was a big deal in Canada because it enabled the company to cover all of the angles in terms of offering a total IT solution with hardware, software and services. It also positioned Insight with Softchoice and NexInnovations as well as other smaller VARs.
Besides the Software Spectrum acquisition, Orlando and her team were able to grow the business by focusing on adding value, attaining net new business and finding fast growth areas in the market.
“We really are no different that other channel players. We need to be proactive in finding new business. We look to meet the needs of our customers today and to further their IT projects in the future,” she said.
That’s why Orlando wants to partner with more solution providers in Canada. She said that is a major part of her plan for the year.
“Canada is a big piece of land, and I manage the U.S. and Canada. And covering Canada and building expertise in the channel, we recognized we need to leverage what we do well. We can’t do it all well in Canada. Not in all areas. Nobody can. They say the world is flat and Canada is a good chuck of that,” she said.
For next year, Orlando would like to climb up another spot in the Top 100 rankings. She expects Insight Canada build more expertise in software during 2008.
“A lot of people questioned what Insight could do in Canada. We have proven that we are in it for the long haul. We are not just fulfillment. We have demonstrated that.
If you hire the right people, success will come
If you want to know the secret to the success of this year’s fastest rising company, founder and executive vice-president Ron Stewart says it’s simple: if you hire the right people and treat them with respect you’re always going to get the best out of them.Based in Richmond Hill, Ont., FlexITy Solutions rose 13 spots this year from its previous ranking and leapfrogged over many notable partners that have won CDN Channel Elite Awards, Top 100 Solution Provider awards and other industry and channel awards in the past. It did it with a simple strategy: aligning business with technology, extracting all the complexity of multi-vendor IT solutions and solving the business problems for its customers.
Sounds simple, but it’s not easy to do. Key to a successful implementation of that strategy for FlexITy, said Stewart, has been the people that were executing it. FlexITy hires talented and dedicated staff and leverages their expertise and knowledge.
“When we drew upon that expertise of the senior IT folks we hired, we were able to build-out solutions that offered best in class integration,” said Stewart. “We were rewarded by being respected for our efforts and customers selected us over some of the other more well known, larger solutions providers.”
The toughest thing for a newer entrant to do, said Stewart, is attracting and building relationships with the top clients that will end up being a company’s reference customers.
By hiring respected, experienced staff FlexITy had a leg-up in that arena and was able to garner key strategic wins in the marketplace and get the attention of prominent Canadian end users. Quickly, said Stewart, their success has begun to snowball.
“I think it becomes a domino effect,” said Stewart. “Success breeds success.”
Buoyed by its seemingly overnight success, FlexITy is continuing to grow as well, from a handful of employees just 24 months ago to more than 70 today, with positions open for another 10 to 15 people.
“I think a lot of the senior people that decided to come here versus the big brand name organizations had that entrepreneurial spirit and really realized that, working side by side, we could create something very special,” said Stewart.
Another key success factor is FlexITy’s approach, and how it works with its clients. Eschewing the term “reseller” Stewart said he prefers to think of FlexITy as a strategic integrator. Perhaps a subtle difference, but a key one.
“We’re a solution provider, not a box pusher, and that’s a difference in the industry right now,” said Stewart.
“A CEO said to me a few weeks ago, ‘The thing I like about FlexITy is you actually come here and listen, while your competition comes in and all they do is wait to talk and try to sell me something,’” Stewart added.
Prosys, Sona jump up the rankings together
Prosys-Tec Computers Inc. and Sona Computer Inc. both made significant leaps up the Top 100 rankings. The interesting part is how they got to share the No. 22 spot.Prosys of Montreal acquired both Sona and 49 per cent of its sub-company, Foxwise Technologies. Then by way of reverse take over with Pontiac Castle Investments Corp., Prosys became a public company with a listing on the Toronto Stock Exchange. After that Prosys announced a $1 million investment by FIER CPVC of Montreal, a venture capital fund.
Prosys has been in business since 1991, during which it has become a leading system builder in Canada, with a volume of over 35,000 units per year and a production capacity of 90,000 units annually. But the company wanted to expand into the Ottawa region.
The new entity will be under the Pontiac name, but will be run as subsidiaries.
The management of the units will remain in place: Georges Hebert stays as president of Prosys, Xuening Chen is still the CEO of Sona while Sam Damm runs Foxwise.
“It will be a team effort,” said Chen. “Prosys has an aggressive vision. They want to be a leading PC manufacturer and solutions company in a short period of time. I think our company positions well in this vision. We have good penetration in the Ottawa market and in Newfoundland. It fits their revenue model and products and services very well,” Chen said.
One of the keys to this acquisition was that Sona had national master standing offer status in every IT category within the federal government.
The next move for this combined company is to be a national player. Together they have presence in Vancouver, Toronto, Montreal, Quebec City, Ottawa and St. John’s.
For Chen, the sale came from a realization that a company has to be big or shrink. “I did not want to shrink. I wanted to give this company a chance to grow,” he said.
Chen realized that after 17 years of operating Sona that more capital was needed. This new partnership gives Sona’s customer and employees a fair chance to grow.
Chen added that he was not selling Sona because of poor performance. It reported two record years of revenue and profits, he said. “At the end of 17 years you find yourself to be pretty conservative and it is too much of a financial burden for one person,” he said.
Hebert said in a prepared statement that Prosys successfully completed its first acquisition in 2005, integrating the activities of SPM Micro. This made it possible for Prosys to increase its sales by approximately $15 million and allowed the transfer of the production to a 40,000 square foot state of the art plant in Montreal.
The combined firm is planning a get- together in Gatineau, Que. in June.