Chips Computer Consulting tackles its two biggest challenges with the acquisition of another VAR.
Finding new clients in an increasingly competitive market had become tougher than ever for CHIPS Computer Consulting, and throwing more marketing dollars at the problem didn’t bring the results management wanted.
It was time to go shopping.
“We bought another VAR, including [its] four engineers and 70 customers,” said CHIPS President Evan Leonard, who co-founded the company in 1993 with David Tan. “It’s cheaper to buy another company than go out and find 70 new customers.”
Five months after the September 2007 acquisition, the new engineers are part of the CHIPS family of 22 employees, and the new customers are learning about the products and services the company offers. The $16.5 million solution provider offers soup-to-nuts managed services, network infrastructure, information security, storage and data protection services, and business intelligence.
With the acquisition, Leonard said the company tackled its two biggest challenges—acquiring new customers to grow the business and finding qualified engineers.
Like other channel companies, CHIPS has spent plenty of money on marketing to hire outside companies to run customer campaigns, seminars and advertising. But the efforts didn’t produce the results CHIPS was looking for, Leonard said.
With a new strategy in place that includes plans for a second acquisition in 2008, the company’s goal this year is to grow its customer base; expand its 3-and-a-half-year-old managed services practice, which currently pays 80 percent of the business’ monthly expenses; and take the next step in its professional business model—providing more BI services to clients.
“With many of our existing customers sitting on five to 10 years of data, we want to help take that data and use it to more intelligently run their businesses,” Leonard said.
CHIPS looks to outside resources for guidance and services to help run and grow its business. In fact, the company’s acquisition strategy grew out of its involvement in True Profit Groups, a Phoenix-based professional organization composed of 13 companies in noncompeting markets that discuss business strategies and practices.
Rather than reinvent the wheel, CHIPS turned to True Profit to learn to quickly adapt to change. “We heard about other companies that had success through acquisitions, and we thought we’d try to duplicate that success,” Leonard said.
Through this professional peer-to-peer networking, Leonard also learned about Service Leadership, in Plano, Texas, a management consulting company for solution providers, which CHIPS turned to for help finding a business to acquire.
“Evan Leonard came to us with a clear vision of the type of company he was looking for [and] his objectives, and he stayed focused through the entire process,” said Karen Marino, president of Service Leadership.
According to Marino, acquisition is a fast-track strategy for gaining customers and growing a business. It’s not, however, without risk, particularly when it comes to successfully integrating the two organizations and bringing the customer base on board.
Leonard said some of his new customers are experiencing culture shock and have to be coaxed into doing business the CHIPS way.
As the solution provider brings its new customers into the fold, it has another business initiative in the works. In August 2006, CHIPS co-founders built a co-location facility using virtualization technology. While the company offers Web site hosting services, CHIPS’ bigger goal is to host its clients’ IT infrastructures. CHIPS’ average client has 75 employees, often with no IT staff or with IT personnel running a single business application.
Clearly, no moss grows under the feet of CHIPS co-founders. In fact, all the company’s business strategies, said Leonard, have a common objective: “To provide excellence to our customers through the technology services we provide.”
Lynn Haber is a freelance writer in Norwell, Mass. She can be reached at lthaber@comcast.net.
