Acquisitions, strategic hires drive Emtec's growth

Emtec Federal's push to be a more serious federal contractor started in 2007 when its parent company changed the division's name from Westwood Computer Corp. to Emtec Federal.

A second step came earlier this year when it brought on Brian Mandel, a 13-year veteran of Unisys Corp.'s government business, to be executive vice president of the group and intensify Emtec Federal approach to the government market.

Part of that approach includes making the most of several acquisitions Emtec had completed. 

Before Mandel joined the company, Dinesh Desai, Emtec’s chairman, CEO and president, had orchestrated the acquisition of several quality assurance, business analysis and IT consulting services providers.

“Since I’ve joined, we’ve made two additional acquisitions specifically targeted toward serving government more effectively and, quite frankly, more completely,” Mandel said.

Emtec Federal bought Secure Data Inc., an O’Fallon, Ill., provider of application development and financial management services primarily for the Air Force. In June, the company purchased Xcellor, of Palatine, Ill., which specializes in business intelligence and data warehousing systems and consulting services.

Emtec added data warehousing, data integration, information management and business intelligence services to its portfolio, according to an Emtec statement that announced the Xcellor acquisition.

Xcellor founders Peter LePine and Saj Patel remained with the company to manage Emtec Federal’s newly formed Information Management practice based on Xcellor services.

Announcing the acquisition, Desai said Emtec investments “are showing some exciting results in our new wins, including our new two federal contracts [and] the city of Jacksonville, [Fla.], managed services contract.”

Desai was referring to a municipal contract that has a potential value of $8 million for desktop support services for more than 6,500 users of desktop and laptop PCs in 200 locations throughout the city.

Mandel said he intends to use the services gained in the Secure Data acquisition to get a greater foothold in the Defense Department.

“On an agency basis, today we’re serving the Air Force,” Mandel said. "We would look to leverage that narrow experience more broadly across the Pentagon agencies," he added, citing the other service branches and the Joint Staff.

To support Emtec’s growth within the federal government, the company moved to new offices in Herndon, Va., in October, more than doubling in size from its former 5,000 square feet to 11,000 square feet of space. In addition, it hired eight new sales executives and technical consultants. And Emtec is planning to hire an additional 10 employees at the Herndon office.

In addition, the company has opened a new office near Wright-Patterson Air Force Base in Dayton, Ohio.

“We’re looking to expand on what we’re doing today,” Mandel said. “We also do a tremendous amount of work with Justice [Department] agencies as well as with health care agencies, including the [Centers for Disease Control and Prevention] in Atlanta.”

Mandel’s self-assigned first-year goal is to bring Emtec Federal’s professional services to about 30 percent of the company’s total business.

“That will be a tremendous shift from where we were two years ago, where procurement services really carried the load for us,” he said. “We’re growing both sides of our business. We’re just growing our services side a little bit faster.”

Vendors that can provide government with technology innovation and refresh and also deliver operational savings have an advantage in this federal budget-tightening environment, said Rishi Sood, vice president of government research at Gartner Inc.

Government officials are increasingly looking beyond the large Tier 1 or 2 systems integrators, he said.

“They are thinking of smaller, more client-focused vendors that they can partner with for their IT modernization efforts,” Sood said. “That represents an important opportunity area for a growing vendor like Emtec.”

Despite the growth of government services providers, “there are certainly areas that vendors like Emtec can specialize in and develop core capabilities for that would differentiate themselves from a traditional services player,” Sood said, citing critical infrastructure services, managed services and information management.

Mandel said Emtec Federal will continue to make investments that will help propel growth, and acquisitions will be part of the business plan as long as they “either grow our breadth within a current offering or add another strategic offering.”

However, Mark Kagan, an independent consultant and former analyst, noted that companies that have been successful in the commercial sector almost always go through “a steep and painful learning curve when they enter the government marketplace.”

“They discover that much of what made them successful is irrelevant,” he said. “They painfully must learn a whole new set of skills, knowledge and ways of doing business that is specific to the government market. Many of them never do.”

Emtec Federal’s government business is doing well, meeting its numbers for 2010, which Mandel called a transition year for the company. “Most importantly, what that does is to position us for really extraordinary success in 2011,” he said, adding that is because all government agencies continually need business intelligence and information management services.

“If you think about the volume of data that the government has and the need for consolidation of that data into dashboards so that it is actionable, we really believe that we have a compelling argument there,” he said.

Mandel said it’s hard to identify Emtec Federal’s competition because “on any given day, any company can be a competitor or a partner. I’d hate to call out one as a competitor and tomorrow I’m signing a deal with them.”

Emtec Federal can cooperate with or compete against any of the midtier integrators, such as SRA International Inc., Science Applications International Corp., ManTech International Inc. and Pragmatics, “depending on the particular opportunity,” he added.

Everyone must do more with less right now, Mandel said, so when a contract opportunity arises, his capture management team will aggressively go after it.

The opportunity will be assessed closely, he said, “to see not only whether Emtec Federal can win it but also whether it will add something of value to the company’s portfolio.”

“It has to pass a pretty rigorous test,” Mandel added, “in order for us to go and bid on something even if we believe we’re going to win.”