How ePlus Got On The Road To $1 Billion In Revenue

If all goes according to plan, ePlus will exit its fiscal 2013 in an exclusive channel club most solution providers never set foot in: $1 billion in revenue.

It's the latest milestone in what's been a steady climb to the ranks of the channel elite and made ePlus not only one of the most formidable channel players in the country but also one that's kept its reputation -- at least among customers, fellow channel partners and the industry's major vendors -- largely unvarnished.

Those attributes will prove important during the ongoing transformation of the IT channel, as the country's major solution providers, particularly those with traditional IT reseller backgrounds, attempt to become service- and solution-oriented technology practices that can play all of the roles -- reseller, integrator, service provider, consultant, architecture specialist, diplomat -- required of the channel in the cloud computing era, and sell stacks and architectures, not point products and maintenance.

EPlus, based in Herndon, Va., ranked No. 38 on this year's Solution Provider 500, CRN's annual ranking of North America channel partners formerly known as the VAR500. For its fiscal year ended March 31, 2012, it reported revenue of $825.6 million, up $107.1 million from 2011's $718.5 million. CRN conducted a series of interviews with ePlus executives both before and during the ePlus National Sales Conference in Scottsdale, Ariz., in May, as well as at Cisco's Partner Summit in San Diego in April, along with executives from solution provider rivals and from major vendors on the ePlus line card.

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What emerged from those interviews was a portrait of a legitimately sturdy channel powerhouse with a technology partnership breadth covering more than 100 vendors, but one that in personality is an almost workmanlike company that isn't ostentatious when celebrating its growth and doesn't chase technology fads.

It's all in, however, with multimillion-dollar investments in architecture and platform plays behind a stack of solutions that includes data center, collaboration, security, infrastructure, professional and managed services, and software for procurement and asset management, as well as financing options.

Mark Marron, president of ePlus Technology, said it's no great mystery why the solution provider hasn't wavered from that approach.

"What differentiates us compared to others is that what we are building is a set of comprehensive solutions which goes wider than one or two silos. Customers are facing the same challenges as many partners: how to approach architecture, because when you're recommending and designing solutions at that level, making the right choice is important. So you have to bet on the right technology but also be able to offer the services and the integration capabilities to tie it all together.

"We're not just coming in and giving customers a product-oriented solution and then moving on," Marron explained. "To satisfy today's needs, you have to have the capabilities to provide up-front assessments, manage the transition from physical to virtual to a cloud environment, analyze the data structure, virtual security and physical security, make sure you're up-to-date with numerous regulatory, policy, and IT compliance issues, install the solution, and provide the ongoing managed services to make sure it stays working. We think you have to come at it that way to be truly relevant in today's market."

NEXT: ePlus Takes A Practical Approach

EPlus executives agree that the practical investments philosophy comes from the top down: Philip Norton, ePlus' no-nonsense chairman, president and CEO. Norton, who declined to be interviewed on-record for this story, has kept ePlus focused by pushing financial objectives, margin opportunities and big-picture technology trends while eschewing trendy marketing and tactical maneuvers, and shrewdly building practices with vendors while staying neutral under their saber-rattling, according to ePlus employees.

It's Norton's particular belief, employees said, that ePlus field reps have to think big-picture. Kley Parkhurst, senior vice president for ePlus Technology, manages an intercompany newsletter, for example, that goes out to all of ePlus' sales, marketing and business development reps and includes news articles, analysis features, technology research and financial data that ePlus' executive team thinks bears watching.

"Phil thinks that a lot of salespeople are so tied to the products they sell and the account relationships they have that they're somewhat ignorant of big-picture trends that could drive thought leadership for us," said an ePlus executive who requested anonymity because he wasn't authorized to speak to the press. "He doesn't want ePlus reps to be able to talk up data center products but not understand network virtualization and the trend around programmable networking."

Marron and Parkhurst explained that ePlus' goal is to focus on organic growth, but also address acquisition opportunities where it sees them, particularly with the post-recession fallout and shift toward architecture-based sales, creating a need for partners with more specialties.

Following a few years of staying largely quiet on the M&A front, ePlus has made a handful of acquisitions going back two years, including three during its fiscal 2012: NCC Networks, a Chicago-based security VAR, in June 2011; VantiCore, a Bedford, N.H.-based UC, contact center and managed services provider, in January; and Pacific Blue Micro, an Irvine, Calif.-based Cisco specialist, in February.

"We have a set of corporate objectives we're trying to meet," Parkhurst said. "We're building a national footprint, and we're looking at companies that can give us presence in a particular territory, give us a way to extend value or expertise we already have, or give us expertise we don't have and that can go across our entire base. We are very selective, disciplined and strategic in both our approach and execution."

Cisco remains ePlus' biggest vendor line by revenue, but its published line card includes more than 100 vendors, from tier-one behemoths like Cisco, HP, Microsoft and EMC to specialty players like Infoblox, Blue Cat Networks and Violin Memory, plus growing practices behind major vendors like Apple that are increasing their enterprise channel footholds.

Several observers told CRN that part of the reason ePlus can support so many lines while minimizing conflict is that it is particularly adept at vendor diplomacy.

"To their credit, they've largely avoided the Cisco-HP dogfight," said the chief executive of a nationally prominent solution provider and ePlus competitor, who asked that his name not be used. "All of us who carry competing lines like that have to be diplomats, but rather than glad-hand one and glad-hand the other, I've actually seen [ePlus'] top executives at council meetings say to these guys' faces they will continue to support the other guy more than ever and, 'We'll keep things steady where we see the best opportunities' and stuff like that. None of the top sales guys at HP or Cisco ever want to hear that, but ePlus is big enough to them that they can say that, and if they don't like it, tough."

NEXT: ePlus Cuts Across Multivendor Stacks

Peter Howard, senior director of data center alliances at NetApp, Sunnyvale, Calif., said ePlus' investment in architectures -- its ability to cut across multivendor stacks of products and services -- is what sets the company apart.

"We've got a lot of VARs out there who sell point products and their business model is still very heavily dominated by product sales," Howard told CRN. "They've indicated they want to become trusted advisers to customers about not only private cloud but also talk about at what point we begin to move application workloads to the public cloud. There's a lot to be said for integration work, but I would also expect these guys to invest significantly in professional services on that kind of implementation."

In June, ePlus became a FlexPod Premium Partner, a designation that stations ePlus among elite providers of the prevalidated, NetApp-centric FlexPod architecture for combining storage with Cisco networking and servers, and VMware virtualization. Howard said ePlus' NetApp business, which launched seven years ago, is "well on its way to $100 million-plus" but agreed that ePlus' relative neutrality with major vendors positions it to support both a best-of-breed stack go-to-market model and capture opportunities related to converging infrastructure.

"I think they see a real opportunity to be a platform integrator," Howard said. "That puts them in a small class of [solution providers] that can say that."

PUBLISHED ON AUG. 28, 2012