Are you ready to blow up your business model?
- By David Hubler
- May 15, 2012
IntelliDyne LLC has been a profitable government consulting and professional services provider for more than a decade, having successfully resuscitated a major military health contract.
So why did company executives last year decide they weren’t content with the status quo and needed to change the external focus and internal alignment?
Chief Operating Officer Tony Crescenzo said management decided it wanted to stay ahead of the curve, and to do that IntelliDyne needed to adopt one of three business models: to become an economic leader such as Wal-Mart, an innovator like Apple or a customer adviser like Booz Allen Hamilton.
The idea was to meet the market needs as they arose rather than come late to market.
Crescenzo, who directs IntelliDyne’s strategic planning and marketing, called the team together to take a look at the next several fiscal cycles.
The team also looked at current hot trends in the commercial sector because “federal tends to follow commercial,” he said.
Among the questions they sought answers to were: Where is the market going? What’s driving the move? What are the key technologies and business needs that the market is looking for?
“Rather than say, 'What can we do today?’ We looked at what can we do nine to 12 months from now,” Crescenzo said, “because it takes time – even in a services business, which is agile – it takes time to develop the artifacts, the assets, the expertise and the capability and capacity to service that business.”
Crescenzo said they opted for the Booz Allen model of focusing on the company’s ability to advise clients on innovative technologies and apply them to business solutions. The idea, he said, was to anticipate market demand and meet that demand as the market was peaking.
With that in mind, the leadership looked at what technologies were likely to remain problems solvers nine to 18 months into the future; they included cybersecurity, cloud computing, application development, enterprise mobile adoption, business process management and big data.
“We also spent a lot of time focusing on [Federal CIO Steven] VanRoekel’s statements and strategies around the way the government wants to reinvent itself. In a down economy and down market, it’s all about doing more with less,” Crescenzo said.
To polish its crystal ball, IntelliDyne sought out analysis experts at Gartner, several industry advisory organizations, and IntelliDyne’s senior program and technology executives also met with federal CIOs and clients to determine their specific needs.
“Our goal was to identify real business problems that hadn’t yet been solved in a scalable or repeatable way and attempt to find solutions in those areas where we could add some real value, not just from an implementation standpoint but from a policy and process standpoint,” Crescenzo said.
IntelliDyne executives hope to emulate the successful work the company has done for the company’s biggest client and its longest running contract, DOD’s Health Affairs/TRICARE Management Activity contract, which it won in 2001.
Now, after earning two follow-on awards, “for the first time in the history of the contract, we’ve now been able to earn incentive fees because of the application of this model,” Crescenzo said. “And we earned 100 percent of our incentive fee for the first time in the history of the company.”
Before he retired recently, Keith Simmons was DOD director of network operations for the Health Affairs/TRICARE Management Activity contract.
He was responsible for operations and management of the HA/TMA network, which links approximately 3,000 contractors and government civilians throughout the United States.
Simmons was working on the contract when the incumbent lost it to IntelliDyne in 2001 and later went out of business.
“It was a difficult transition because it was like a bad divorce,” Simmons said, adding that the network never reached reliability because of the incumbent's poor oversight of the work. “They were more reactive than proactive,” he said.
“One of the things that IntelliDyne brought in was a proactive management philosophy, if you will,” Simmons said. “They [also] brought this whole new – new to us – skill set that really helped move operations and maintenance in the direction that we needed them to go in.”
Even with the new contractor, there were a lot of challenges, Simmons said. “We didn’t call them problems, we called them challenges,” most of which were security related, he said.
Nevertheless, IntelliDyne “bailed us out many times, in my opinion, with their ability and desire to go the distance,” he said.
IntelliDyne’s current Tricare contract, which is worth about $26 million, according to Simmons, will expires on Sept. 30.
IntelliDyne most likely will compete again, hoping that its new business model will only add to its incumbent advantage.
Among its changes, the company underwent an internal restructuring at the start of 2012, including the creation of an IT group composed of eight senior technology employees whose role is to act as a virtual CTO, Crescenzo said, because “given the landscape of technology and the length and breadth of the challenge, one person cannot adequately address those issues.”
The group meets weekly or more often as needed.
They analyze business problems that were identified in discussions with federal CIOs and they look for software-hardware technology solutions that are innovative and cost effective and apply them in a holistic fashion, Crescenzo said.
“That gives us the capability both to surge faster and be more agile in terms of the way we solve a particular business problem,” he added.
And when IntelliDyne does a post mortem on a completed government project “we work backwards from did we achieve the business impact? Not did we just comply with the contract?” Crescenzo said.
A private company, IntelliDyne doesn’t discuss its bottom line, but Crescenzo said five-year revenues are up, significantly so during the past couple of years.
“Our staff has grown significantly as we’ve implemented this model and it hasn’t affected our profit at all,” he added. “Like any mid-size company we long to be a large company.”
With current staffing at just over 300 employees, rather than hire more technicians and perhaps hurt the bottom line, IntelliDyne has established a strategic partner program with resources such as professional services organizations Morgan Franklin and BDO, as well as Microsoft and IBM.
Despite IntelliDyne’s evident success, Crescenzo said the company isn’t resting on its new model. “I’m sure we’ll have to tweak as we go,” he said, “but I think we’ve got a very solid foundation.”