Edaptive Systems' game plan for pays off — big time

Company's growth rate tops 100 percent

After founding Edaptive Systems LLC in 1999, its principals put the company on cruise control and settled in for the next six years with a certain amount of complacency.

“We’re a bunch of engineers who like to code and program,” said Frank Blair, managing partner of the custom software, Web application development, data management, and project and program management services firm based in Owings Mills, Md.. “We were still a small, 15 to 20 person-type company doing in the ballpark of $3 million a year. We were doing what we liked to do.”

But in 2007, this bunch of engineers decided that the time had come to ramp the business up to the next level. “We said, ‘We’ve got a good thing going — let’s grow this thing,’” Blair said. So they sat down, evaluated the company’s strengths and developed a game plan for growth.

“As a small company, we knew we couldn’t be all things to all people,” he said. “So we started extending ourselves within our customer base and marketing ourselves to big companies. We knew as a small company it’s going to be hard to get prime contracts. You have to leverage relationships with other folks. We spent a lot of time out on the street and selling ourselves. We started winning some business and establishing momentum. We were able to get on teams and bid large programs.”

All that effort paid off. The company landed at No. 19 on the 2011 Fast 50 with a five-year, compound annual growth rate of 105.2 percent. Last year its revenues hit more than $30 million, due largely to three multi-year contract awards from the Health and Human Services Department’s Center for Medicare and Medicaid Services totaling $108.5 million. Edaptive is the prime contractor on two of the CMS contracts — one for program management and business requirements services, the other for support of a Web-enabled network for the End Stage Renal Disease program.

“At that point, we really started gaining credibility as a company,” Blair said. “We had to compete with companies larger than us that were doing the same thing as us.” 

Blair also attributes Edaptive’s vitality and success to its staff, which has grown to 135 employees over the past four years. The company prides itself in creating a workplace environment that is diverse, comfortable, stimulating and challenging.

“We want to seek out the best and the brightest,” he said. “We’re not looking just to fill a seat because we can bill the government.”

Edaptive’s reputation as an attractive place to work is underscored by the large number of applicants for jobs at the company. In a recent three-month period, for example, Edaptive received 2,800 applications for a variety of positions, Blair said. Officials then boiled that number down to 800 and, by the end of the evaluation process, hired 24 of those applicants.

Looking ahead to the future, Edaptive officials are developing strategies for sustaining the company’s solid growth trajectory. As a certified 8(a) veteran-owned small business — it is scheduled to graduate from the Small Business Administration program in 2014 — the company is well-prepared to do business after 8(a), Blair said. 

“One of the difficulties most 8(a) companies have is that they fall off the cliff after graduating because they don’t know how to market themselves,” he said. “Their 8(a) contracts run out and their business runs out. The No. 1 challenge for us is to make sure that when we graduate we still have the momentum to go forward past that program we’re growing out of.”

One way to maintain momentum is to stay responsive to changes in the government market. “You have to make sure you’re keeping an eye on what the government is buying and where [government buyers] are spending their money because if you’re not flexible enough to change direction, you’re going to get mauled,” Blair said. 

He noted, for instance, that the government is starting to fund programs in business intelligence, education and training. “We’re preparing ourselves to start growing in those areas because that’s where we know the budget is going,” he said.

Edaptive also has created a managed services division that will focus on cultivating business in the private-sector market to offset budget cuts and uncertainty in the government sector.

“The government [budget] cycle is very long,” Blair said. “The commercial side is a lot shorter. We’re trying to adapt to the budget shortfalls in the government by standing up a commercial managed-services practice.” At present, only 1 percent of Edaptive’s revenues derive from commercial-sector business. 

“When we started in 1999, [our business] was probably 20 percent government and 80 percent commercial,” he added. “The thing we liked about the commercial side was that there wasn’t any red tape.”

Asked about future revenue expectations, Blair said: “We’re building our company based on our vision. We want to be a company admired for its exceptional people, performance and service. But if you’re asking me personally, I’d like to see this company pass the $100 million mark in annual revenue.”

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