Consolidation Station

Incentra Solutions Inc., Boulder, Colo. (CRN Fast Growth No. 4), provides automated remote monitoring and management services to help clients trim expenses, enhance performance and mitigate risks. President Shawn O'Grady recently spoke to CRN about how his company is buttressing itself against the threat of an economic storm.

CRN: What will 2008 bring for companies such as Incentra?

Shawn O'Grady: We see an awful lot of strength in the services business. If people are going to be more cautious on how they spend, we're not seeing that yet.

We do hear vendors are worried about slowing growth—for example, Cisco [Systems Inc.] and IBM [Corp.] are both saying that. We are noticing customers are now more focused on optimizing what they already have. They are more open to outsourcing to save money.

CRN: How will a slowdown affect you?

O'Grady: In my personal opinion, if you are a huge company, the overall economy matters more. We are a $250 million company. In a down period, especially, there is always an opportunity to secure new customers and do more. If they are spending less on products, there is the opportunity to sell services.

We're not IBM or EDS [Electronic Data Systems Corp.]; we don't provide outsourced services for whole departments. We do specialized managed services around specializations, like networking and backup. The fact is, there are companies that have to get by with smaller budgets. This is not about being opportunistic, it's about giving options to the customer.

CRN: Are you seeing fewer product sales, then?

O'Grady: I'm not saying product sales are down. Right now, our outlook is strong. We're not seeing a slowdown, and it looks like services will be in greater demand. Solution providers need to do everything they can to let customers know what options they have.

CRN: Economic indicators, at best, are suggesting sluggish growth. You've addressed large and midsize VAR prospects; what about small VARs?

O'Grady: Consolidation will take place. We operate more in the data center space where there a lot of niche VARs operating. If you're a small VAR, it's a time to make sure you have a service capability to provide customers with alternatives in a tougher economy. Controlling costs is an obvious answer. Managed services can be a big winner for people.

CRN: Incentra has been a part of that consolidation trend, with its acquisition of SSI [Sales Strategy Inc., Metuchen, N.J.] and Helio [Solutions Inc., Los Angeles] in the not-too-distant past.

O'Grady: Those acquisitions have gone really well. You always worry that good people will leave. But we had our big kickoff meeting [recently] and it went great. People are happy to be part of a bigger company. A bigger company has more staying power. We are now able to offer our customers, and legacy SSI and Helio customers, a broader portfolio of product.

CRN: What types of customers are you seeing?

O'Grady: Our customers seem to fit into two big categories. The first is optimization services. [Those customers] are not going to get to buy new networks, so they ask us to help them explore the option to optimize.

The second customer is looking at outsourcing to us so they can get more done with less. A good outsourcer can always do the job cheaper.