Plainview, NY--March 17, 2010 -- This IT services company has expanded its core business and upgraded its online presence to pump up revenues, according to Bruce Malyon and his team.
About 15 years ago, Alan Cook called a meeting at his home to talk to some colleagues about starting a new managed IT services company called Computer Network Solutions, or CNS, for the New York area. Instead of the two or three friends he expected, 70 interested people showed up. Bruce Malyon, current chief operations officer of CNS and long-time friend of Cook, attributed the turnout to Cook's vision.
"Cook had a very specific plan for CNS, but he also has never limited what it could become, which established a strong foundation for us from the beginning," said Malyon.
CNS primarily provides IT management services, which Malyon said include everything from networking to general technical maintenance, for New Jersey, New York, Connecticut, and Pennsylvania. In the beginning, CNS developed strong relationships with key partners, like SUN Microsystems, for which the company maintained and repaired server mainframes and hardware. CNS still does between $2 million and $3 million of business with SUN annually, and Malyon said the company would not be where it is today without that relationship.
And for the last five years, CNS has been one of the few firms of its size to be a Cisco Gold Partner, maintaining at least 12 staff members trained on various Cisco applications and four CCIEs.
For the past three years, the company had started to move toward a more product-focused business model to take advantage of high demand in a growing economy. But when the market fell, CNS found itself losing product sales and its recurring revenue.
"From the beginning, CNS's business model was based on the much more reliable recurring revenue model through the sale of our services for longterm contracts," Malyon explained. "If we hadn't reacted quickly to the market decline and adjusted our focus back to our core managed services, we would have been in a very vulnerable position."
Strengthening the base, building a brand
So since early 2008, CNS has been emphasizing the sale of complete IT solutions that include maintenance, professional services, and product solution sales. This refocusing demanded that the company expand instead of retract in this recession, but Malyon said there has been no better time to strengthen the company and gain marketshare.
CNS added more than 20 new positions in the last year. Most of them were field engineers but three were marketing professionals, the first the company had ever hired. That small staff orchestrated the launch of a new Web site, the development of new brochures and sales pitches, and an e-newsletter campaign. Malyon said just putting those pieces in place have helped the company gain access to bigger opportunities: In 2009, its average deal size jumped from around $40,000 to between $78,000 and $90,000 and it closed on three major accounts all worth $900,000 or more.
The flexibility of so many offerings has been crucial recently, with businesses of all types cutting back their IT budgets. Malyon added that the beauty of this model is that CNS can save the client money, no matter what the economy is doing. "Either we replace a client's existing IT support system with our experienced, professional, 24-hour support staff, or we free up that system to work on more strategic projects while our team takes care of malfunctioning equipment or networks," he explained.
Records management: the natural next step
But all of that work was just the beginning. In the meantime, CNS was also building up its development staff, picking up talented people who had lost their jobs in the recession and putting them to work on a new service offering for the company: a document management software platform called MaxxVault. After 15 months of work, the system launched last November, and Malyon said sales in December hit $450,000.
MaxxVault is designed for scanning in paper documents, managing traveling electronic documents through a workflow, and maintaining electronic records. It can integrate with the Microsoft document management platform Sharepoint, and it can also be used as an e-mail archiving system. Malyon, who has experience working in software development, said this venture meshes seamlessly with CNS business strategy.
"We already manage our clients' networks and equipment, now we can help them manage their data," he explained. "This fits into our recurring revenue model as clients pay for upgrades and maintenance over the life of the product, but has the added benefit of an upfront sales margin."
MaxxVault will be key to Cook's long-term vision for CNS: moving to the national stage. Already, the company has secured 10 resellers across the country for the platform, and Malyon expects to reach 50 by the end of 2010. And that is in addition to the three resellers of CNS network monitoring service also in place; he said he aims to reach 25 over the next 12 months.
He explained that the company's strategic vision has three parts. In the first part, CNS will receive as much as 90% of its revenue from recurring sources through a combination of resellers and sister companies nationwide. In the second part, which Malyon said will fall between 2012 and 2015, the company will grow from MaxxVault to producing other software solutions available nationwide. He said unlike most entrepreneurial ventures approaching 15 years in business that are looking an impending exit strategy, CNS benefits from a forward-thinking founder and an eager management staff ready to execute a third phase of development for the company.
"Beyond five years out, I hope that we'll have built a highly profitable business with a strong recurring revenue base and a national reputation for excellent service offerings," he concluded.
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