Bitco Eyes VAR Business With One-Stop Solution

By Lisa Terry, Contributing WriterAshburn, Va.-based Bitco Enterprises, formed last summer when Bitco International Inc. joined with technology solutions distributor Decision Support Systems Inc., intends to capitalize on that merger by offering one-stop solutions to government integrators. With the August 1999 merger of Bitco International and DSS now complete, the new entity plans to provide a range of software, services, systems and component solutions to integrators and value-added resellers serving government and private-sector markets. Company officials said the move will boost the portion of its revenue derived from government from 35 percent to 60 percent of its overall business by the end of this year. The combined company had 1999 sales of $400 million.By combining Bitco International's software and service track record with DSS' distribution and system-building capabilities and its strong presence in the government market, the new company plans to help VARs flesh out their service offerings and broaden their ability to fulfill government bid opportunities with one-stop solutions. Offerings by Bitco will include IT distribution, custom software development, procurement services, contract management and project coordination, offshore implementation and international onsite services."Until this juncture, we were not able to bring in computers, RAID [redundant array of independent disks] servers and so on and be highly competitive," said Wayne Jones, marketing support manager and data IP manager for GTE Communications Corp.'s mid-Atlantic division in Chantilly, Va., which had been a DSS customer. Along with competitive pricing, "now Bitco allows me to incorporate additional folks or additional responses to bids that were showstoppers prior to this," Jones said, because GTE Communications can now round out its core competencies with subcontracted services from Bitco. The relationship will help his division increase government sales by 20 percent this year, he estimated.The combination of application development and integration services with hardware distribution is of particular benefit to VARs, whose "perception, which may or may not be accurate, is that they have been somewhat shunned by large OEMs (original equipment manufacturers) and partners, particularly in the area of product availability and back-end rebates," said Joseph Rigoli, research analyst for PC channels at IDC, a market research firm in Framingham, Mass. Demand for Bitco's core competencies in implementation and application development for enterprise resource planning is huge, Rigoli said, particularly since it is difficult to hire and retain qualified U.S. employees ? a problem that Bitco is addressing by basing a significant portion of its application development in Asia.Bitco Enterprises has instigated a campaign to sign government and commercial VARs for five different reseller programs, jointly market to government agencies and private-sector customers, retool support staff into customer relationship management teams and brief industry analysts on their capabilities. A VAR certification program is in development.Government systems integrators can lean on Bitco for such costly processes as bid proposals, software development, system integration and configuration and "spend more of their time and resources getting new business," said Jim Bitonti, president of Bitco Enterprises."The VAR is the guy who is close to the customer and knows his requirements. If he is fully certified on all our resources and capabilities now being offered, he'll understand where he can bring value to the customer," Bitonti said. External resources for software development are particularly valuable for VARs, he added.Last summer's merger brought together Bitco International, a McLean, Va., IT services company offering IT component acquisition and logistics, Y2K solutions and consulting in business re-engineering, multimedia, system migration, data warehousing and Web server applications, with Decision Support Systems, an Ashburn, Va., national technology solutions distributor. Both continue as subsidiaries of the parent company. DSS' product line is being expanded beyond storage solutions to encompass 100,000 stock-keeping units, including printing and imaging equipment and complete systems, and the company will debut an e-commerce offering in the third quarter. Product line expansion is also under way for V-Squared, DSS' former system building subsidiary, to include new branded and OEM platforms and storage area network and network-attached storage solutions. Former subsidiaries of the two companies, which also include Gateway Capital Corp., Bitco ITSS, Mirrors International, Apella.com, NEU Bitco, Primetech and New Sphere, have become subsidiaries of Bitco Enterprises.Bitco Enterprises has five owners and more than 900 employees, and is seeking private-placement, minority-interest funding at the subsidiary level. The firm expects "close to triple-digit" revenue increases this year, Bitonti said, most from overseas operations.Bitco Enterprises' new business model "makes sense," said IDC's Rigoli. "Profitability on the application development and system integration side can more than cover profit shortcomings on the distribution side," especially products with low prices, low margins and quick turnover.The key challenge, Rigoli said, will be for Bitco to build awareness among integrators and end users.