Transaction Information Systems Eyes New Business

By Marianne Dunn, Staff WriterNew York -based Transaction Information Systems Inc., which opened an office in Reston, Va., three months ago to hunt government work, is on the verge of landing its first contract, company officials said.The company, which specializes in IT staffing, enterprise resource planning software implementation and electronic commerce, is waiting to hear about a contract from the Small Business Administration, company officials said. But company leaders' interest in the public sector dates back to its inception in 1992, said Dan Bello, TIS vice president and regional manager. He is a six-year veteran who opened the company's offices in Iselin, N.J., and Philadelphia before launching the federal division June 2. "The government is starting to function more like private business," he said. "The services we bring to the table dovetail nicely with the way the government is going, since it is not as traditional as it used to be."TIS has more than 700 employees in Boston, Chicago, Dallas, Iselin, Los Angeles, Philadelphia and San Francisco. There are eight employees in the Reston office, but Bello expects that number to jump to 40 by June 2000.Michael Vogel, senior account manager in the Reston office, said that he expects the solutions side, comprised of ERP implementations, e-commerce software and Web site content management programs, to generate most of the public-sector business."The federal government is interested in business-to-business, e-commerce and enterprise level applications support and solutions," he said. The company's data integration expertise in areas such as online stock trading systems, self-serve employee stock option plans, knowledge management systems, customer relationship management systems and affinity programs, have prepared it for the federal marketplace, he said. TIS had $83 million in revenue in 1998, up from $55 million in 1997. Company officials expect 1999 revenue to exceed $100 million. The company's commercial client list includes Chase Manhattan Corp., Prudential Investments and Merrill Lynch. To date, TIS has not generated any business in the public sector. But company officials said they expect the federal division to generate about 15 percent of overall revenue within one year."We have a tremendous name on the commercial side, especially with the financial and manufacturing communities," said Vogel. "But we have zero credibility, zero experience in the federal government."Jerry Grossman, a director with the investment banking firm Houlihan Lokey Howard & Zukin of McLean, Va., said he expects TIS to pose a threat to small and midsized resellers and systems integrators that focus on e-commerce and process engineering in the public sector."I'm not saying that TIS is going to come in and revolutionize the market, but they will be a strong competitor," said Grossman. "What you have here is a technologically savvy company, very attuned to new media, convergence and e-commerce. They are now stepping into the federal marketplace, where these are the emerging issues that the government wants to deal with." In addition to the SBA, TIS is talking with the Navy about a potential project and scanning the entire federal marketplace for other opportunities, Vogel said. According to Vogel, government agencies realize they need to do more than meet the requirement to provide information to the public. Agencies have put information on the Web, but in too many cases, Vogel said, the sites are too hard for citizens to navigate.Now, he said, agencies are looking for ways to provide more information in a more consumer-oriented format. "They are beginning to ask, 'How do we do we add more value and save money in a more innovative way,' the same way commercial organizations do," said Vogel.Since it will take TIS at least four months to get a General Services Administration schedule, Vogel said the company is relying on partners to introduce it to the public sector."We feel that we will never be a government prime. We are just not set up for that," said Vogel. "But we can be a very, very effective and strategic subcontractor on a wide variety of contracts. I would rather be a solid subcontractor on 10 contracts than be a prime on one."In July, TIS solidified its partnership with MemberWare Technologies Inc. of Reston. The company, which provides document management, business process re-engineering and data base management services for government agencies and associations, had 1998 revenue of $1.5 million.Alan Curtis, vice president of sales for MemberWare, said TIS shares his company's philosophy that Web sites should be entertaining, informative and easy to navigate. Under the partnership, MemberWare will work with customers to identify a work-flow process, then TIS will create the solution based on MemberWare's recommendations. Because TIS is just getting into the federal government, Curtis said the company "is more cooperative and easier to deal with than some other companies here. They know what they want to accomplish." Vogel said: "We are looking to [MemberWare] to be a value-added reseller of our products and also to provide value-added service to some of their clients." Curtis said the two companies are in talks with the Agriculture Department, the Army and the Environmental Protection Agency. He expects some contracts to evolve from those talks within the next three months. Grossman said TIS is a company that could "set some patterns and establish some ways of doing business" in the federal marketplace."It is a very successful company that has implemented these things in the commercial sphere," he said. "With their new investment of capital, they will be very competitive."Last October, the New York investment banking and securities firm Goldman Sachs invested $50 million in the company and now owns a minority share in TIS."Goldman Sachs took their time, they scrutinized us to see what we were doing," said Bello. "Now they are a minority shareholder. If at some point we decide to go public, they have taken themselves out of the running by being a part of it." Jeff Najarian, TIS chief executive officer, said the Goldman Sachs investment set the company on a path to pursue strategic acquisitions and mergers and "increased market penetration for our services and products." TIS officials would not comment on the company's immediate plans for acquisitions or an IPO. But a company official said: "We are always looking toward the future and looking for growth. We are starting to look at other companies and see what possibilities are out there for us."