Cotelligent Group Inc – the band of six regional integrators that went public in February – claims it can enter the top tier of the service market by offering something the national players can’t: a corporate culture grounded in the local communities. But why would national customers who need project management, outsourcing or technical staff augmentation choose a rag-tag team of locals over the likes of Electronic Data Systems, Anderson Consulting and Computer Sciences Corp? Cotelligent says it’s because local, entrepreneur-run companies are better managed and more focused on customers needs than local branches of national service providers. In the past few years, locally-based providers have beaten out branches of national service providers for local contracts. But despite those victories the six small firms all discovered the same thing: they didn’t have the cash or national resources to play in the national arena. It was grow, sell out, or die, according to Cotelligent founder Jim Lavelle. To grow, the regional firms decided to combine themselves into a nation-wide partnership of service providers. But instead of adopting one set of best-practice rules or trying to roll out a cookie cutter image of a single firm, Cotelligent’s strategy has been for each company to operate as it always has, and for each firm to retain its president, but with the financial backing and bidding capability to compete together, nationally against the EDS’s of the world.
Acquisitions
Well, not the world just yet. Cotelligent’s first strategy is to gain a foothold in every metropolitan area in the US by spending about $30m from its war chest to acquire other, regional service providers. It already has member firms in New Jersey, Massachusetts, California, Minnesota, and Texas. Along the way it hopes to acquire a few US providers which already have offices abroad to make its entry into Europe and other areas a bit easier, although that’s realistically a couple of years away. Cotelligent’s business consists of three main areas. It makes the most money from placing temporary, technical staff with customers, something the larger firms aren’t as focused on and an area where Cotelligent could shine. It’s fastest growing area is project management, which includes application development and maintenance. The third area is outsourcing. It’s main vertical markets are telecommunications – making it well positioned to cash in on the changes wrought by the telecomms act – followed by technology and banking.
Status
Cotelligent’s plans for greatness include adding 200 to 250 technical staff to it’s 1,000-strong work force, in addition to employees it’ll inherit through acquisitions. It’s formed a national sales force of its six member chiefs and two other employees, aggressively termed the swat team, to go after national accounts for the first time and to partner and subcontract with larger service providers until it is able to compete on their level. Part of Cotelligent’s strategy is to leverage existing contracts between its member firms and local offices of national companies. For example, a member firm might have a project management contract with a local bank branch, but now with the Cotelligent network of firms it could use that contract as a foot in the door to bid for a deal with the bank nation-wide. It’s also trying to increase its relationships with large vendors, such as Microsoft Corp, so that each member firm has the same reseller status to enable the group to bid nationally. But even those plans for Cotelligent, whose member firms’ contracts usually range from $200,000 to $2m and occasionally $3m, to break into the big league where the main players don’t even bother with contracts under $3m. The bottom line: the service industry has been an elite and cliquey club for a long time; Cotelligent is facing an uphill battle. Cotelligent’s members include BFR Co Inc, Liberty Corner, New Jersey; Data Arts & Sciences Inc, Boston, Massachusetts; Chamberlain Associates Inc, San Mateo, California; ESP Software Services Inc, Minneapolis, Minnesota; FDSI Consulting, Bellevue, Washington; and Innova Solutions Inc, Dallas, Texas.
