Intellisys Seeks Steady Growth Streak

By Richard McCaffery, Staff WriterIntellisys Technology Corp. has notched more than $250 million in new contracts this year after landing a $121 million award from the Internal Revenue Service last month.On the heels of a $300 million Army contract win in February, the Fairfax, Va., products and services company is on track to have as much success in 1999 as it did in 1998, company officials said. Last year, ITC's revenue grew from $7 million in 1997 to $122 million.Steve Baldwin, ITC's president and chief executive officer, forecasts sales of $200 million for 1999, and expects to make an acquisition by year's end to boost the company's services business. ITC's target is a company in the $10 million to $20 million range with software engineering skills."We have set very high goals for the company on what we want to achieve," Baldwin said. He would not disclose the privately held company's 1998 income, but said ITC turned a profit. How much of a profit is unclear, but margins in the reseller industry have been pummeled in the last two years as competition has increased and computer product prices have fallen.Still, Baldwin's goals look doable if ITC keeps winning contracts. As prime contractor of the IRS contract, called the Multiple Software Acquisition Project, ITC will provide the taxing agency with software and maintenance services. The company has partnered with two bright stars on the deal: Beyond.com and Microsoft Corp. ITC will deliver Microsoft Windows NT, Windows NT Workstation and other Microsoft products to the IRS over the course of the five-year deal. In February, ITC was one of two companies to win the Army's three-year, $300 million PC-3 contract. Under PC-3, Intellisys will provide the Army with computers, peripherals, software, configuration and other services. The contract also is available to other Defense Department and civilian agencies.Baldwin plans to increase the staff from 140 to more than 200 by year's end. In February 1998, ITC had just 20 employees. Within three years, Baldwin wants more than 1,000 engineers on the payroll, pushing services such as software engineering, network engineering, Web site design and enterprise management. ITC's customers include the departments of Defense, Justice and Treasury and the Food and Drug Administration. Almost all of its work is with the federal government. "We want to be able to be a single-source solution for our customers,' Baldwin said. "Yes, we sell a lot of product, but we have a significant network engineering practice."For example, ITC already offers software services through its Quick Step methodology, a process used to help customers engineer software packages. Baldwin believes that intellectual property such as Quick Step will help the company ramp up its services business in a hurry. "I'm not aware of too many resellers that have their own intellectual property," he said.Founded in 1983, ITC got a regal boost in February 1998, when BTG Inc. sold its reseller division to a competitor, Government Technology Services Inc. of Chantilly, Va., and five executives left the Fairfax-based integrator. Baldwin, one of the BTG executives to leave in the wake of that sale, became president and chief executive of ITC in February 1999. Along with ITC's three founders ? Reggie English, Bruce Johnson and Mike Calhoun ? Baldwin's team has used its relationships with former customers to bring in business like the Army PC-3 contract.This group has brought in about 60 new employees, including former BTG officials, said Paul Collins, ITC's executive vice president and one of five BTG executives who moved to ITC three years ago.And ITC has pushed ahead with its plan to increase its services revenue through organic growth and acquisitions. About 5 percent of ITC's $122 million in sales last year came from services business, said Baldwin, who expects services to account for 10 percent of business this year. "The legacy of our team is that we're all very good at growing services and businesses," said Baldwin.Meanwhile, the IRS deal fits nicely into the company's plan because it allows ITC to leverage its consulting relationships with the IRS. Collins said one of the reasons ITC won the award is because of the services it provides.Over the next five years, ITC will be in charge of keeping track of Microsoft software licenses issued to the IRS, upgrading the licenses and overseeing installation of product upgrades. "The underlying strength we have is knowledge of the customer," said Collins.Kendall Fargo, Beyond.com's vice president of enterprise and government sales, said he is relying on ITC's knowledge of IRS' computer network as well as its relationships to fulfill the contract. "They have a good relationship with the IRS," he said. "They have done a lot of consulting with them. It's a great, complimentary fit."XXXSPLITXXX-Founded: 1983Small Business 8(a) graduateSteven Baldwin, president and chief executive officerHeadquarters: Fairfax, Va. Local offices in Montgomery, Ala.; San Antonio; and Belleville, Ill.1997 Revenue: $7 million1998 Revenue: $122 millionWeb site: www.intelltech.com