NexInnovations’ wounds were exposed

Although rumours have swirled for the past couple of months, NexInnovations surprised the Canadian IT industry last week when it filed for credit protection.

By all accounts, NexInnovations had been a major industry player, until it had filed for bankruptcy protection last year. Many thought it had emerged from that situation, however, with the support of Tech Data and IBM. For almost a year, the management team and employees have worked to rebuild the business, while paying down its accrued debt. When it filed for protection again things dramatically changed. The company’s wounds were exposed.

The question that still needs to be answered is what really happened?

Until, of course, the white knight appeared. Softchoice Corp. announced last Friday evening, October 5th, 2007, the acquisition of NexInnovations’ technology solutions division for $10 million. The agreement terms included acquiring customer account records and management resources, including both outbound sales and inside sales representatives; pre-sales technical support resources and certifications; and configuration and implementation services.

Suddenly, the focus shifted from “what really happened?” to “what will happen?”

Softchoice has won kudos from industry watchers for years. It has – and arguably continues to be – the darling of the industry, winning multiple awards and accolades. Its success has been based on strong customer relationships, as well as effective product strategies.

NexInnovations’ corporate customers definitely benefits by Softchoice’s purchase. So, do the employees who will join the Softchoice team. In one fell swoop, they have joined on of the most coveted organizations within this industry.

For years, speculation has had tongues wagging about “who was next” in the big consolation trend. Expectations were high. While this move wasn’t exactly a “consolidation move,” the executive team at Softchoice will face similar challenges combining two individual corporate cultures, practices, and standards. As it faces this challenge head on the organization will benefit from an expanded client base. Its business practice will benefit as well with a significant expansion in the hardware business.

The expanded client base will bring the most benefits to Softchoice, however. As they pick up enterprise clients with large IT solutions in place, Softchoice will be able to expand its business quicker because of the penetration rate it now has radiating throughout the client’s environments.

One of Softchoice’s successful strategies has been its focus on delivering strong customer service.

This will contribute to its future success. Understanding customer concerns, demands, pain points and responding to them has been a successful a recipe for the one time software-only reseller. Combined with a skilled sales and delivery team, Softchoice, who is already familiar with some of these customers will deliver stability in a time of immense change.

Something that NexInnovations, despite its size, was unable to deliver in the last year and a half.

Michelle Warren is a senior market analyst for Info-Tech Research Group of London, Ont.

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