How partners have carried the immixGroup to nearly $1B in revenue

Executives at immixGroup Inc. say they are confident their business plan will enable them to weather any current and future federal contracting constraints.

As company co-founder and Executive Vice President Steve Charles put it, “Constraints are opportunities.”

“We firmly believe when you look at the many, many examples of how technology has made us more efficient that we can make our government more efficient through the correct use of technology,” said Art Richer, president of the technology products and services provider to the government market.

Richer said technology will continue to play a major role in reducing the cost of government and how agencies use their IT budgets even as they shrink.

“They’re going to turn more towards commercial products, which we think bodes well for us because that’s the way you’re going to reduce the cost of government,” he said. “It’s not going to come just from reducing your technology spend; It’s making your technology spend work smarter for you and help reduce the cost of the programs and the missions you’re trying to serve.”

Charles and immixGroup Chairman and CEO Jeff Copeland, founded the company 15 years ago, working mostly from home. They soon brought in Richer, who had worked with them at Sterling Software several years earlier.

By then Congress had passed the Federal Acquisition Streamlining Act of 1994 and the Clinger-Cohen Act of 1996, improving how the federal government acquires and uses IT through statutory preference for commercial items and removing the financial caps from contract vehicles for IT purchases.

It was a time when many commercial technology companies held their own government contracts, but didn’t always understand their nuances.

“We jumped right in and we started talking to commercial companies about their contractual presence on vehicles so they could get their stuff sold more directly, more quickly and easily, rather than being tied into those large [Requests for Proposals] that took three years. That’s what we focused on, that’s where the government was focused,” Richer said.

Since then, immixGroup has expanded its focus from consulting on direct government contracts to helping its clients work with today’s multi-partnering preferences and the large indefinite delivery, indefinite quantity governmentwide acquisition contracts.

To do that, immixGroup now has four lines of business.

Its original Contract Management sector remains an important component, but it now represents only five percent of company revenue, Richer said.

About 90 percent of immixGroup’s business is split evenly between the Technology Sales Division and the Channel Division, the reseller branch that includes sales and marketing assistance for more than 200 technology company clients.

In August the division added vendors Bit9, MarkLogic and RES Software, whose products and services immixGroup can now sell to the government.

“More and more we’re seeing the consolidation of technology companies and, given the era that we’re in, more and more technology companies are moving to the [reseller] channel. That’s the greatest push that we see today,” Richer said.

“So we have our Government Channel Division, which exists to provide the same proactive activities – sales, marketing, market intelligence functions. Instead of giving that to the technology companies’ sales teams, we’re giving that to the [channel] partners,” he said.

The remaining five percent of business comes from the fourth business line, IT Solutions.

Those clients include IBM, Hewlett-Packard, Oracle, Cisco and EMC Corp., and other technology providers that include McAfee Inc., a network security software provider.

“We established our GSA Schedule with immix and they are the official holder for us,” said Keith Weatherford, director of the public sector channels at McAfee, an immixGroup client since 2009.

“We look to them to be the one-stop shop for all of our partners to be able to team with immix for any opportunity around GSA [the General Services  Administration], ” he said. “In 2010 they captured 91 percent of our business.”

Weatherford recalled that when the Homeland Security Department sought bids on a large task order, McAfee relied on immixGroup to assist with its response.

“We were able to leverage immix as the prime and [were] able to plug-and-play partners to be able to bid on that project,” he said. “They had a great capture team that put together a phenomenal proposal that took a lot of time and cycles, which some of our partners that are smaller don’t have that capability to do.”

Richer said immixGroup examines how technology companies come into the government market and tries to streamline the process so they can get to market as quickly and simply as possible.

“They want to talk to their customers but they just don’t necessarily know how to do that,” he said. “We can help those technology companies plug in and talk to [government] about their technologies. But we also help [government] buy technology.”

Government agencies go to immixGroup when they have specific technology needs, which are then passed on to its commercial clients, he said.

The company’s market intelligence analysts and business development experts provide information to clients and government on buying trends and technology requirements through its Government Aggregation Program, or IGAP, which includes company-sponsored symposia, webinars and other in-person contacts.

“How do we create a more productive channel for those technology companies in the public sector?” Richer said.

“Our role in IGAP is to bridge that [information] gap,” Charles said.

For example, in early October, immixGroup will host a McAfee-Intel Partner briefing that will cover topics such as security, hardware and joint go-to-market strategies. Later in the month it will hold a partner networking event for channel partners and IT manufacturers.

ImmixGroup’s success is clear from the numbers.

The 200-employee private company saw its revenues increase from $750 million in fiscal 2010 to about $920 million in fiscal 2011, which ended this past May.

About one third of that came from direct sales to government, Richer said. That put the company at No. 66 on this year’s Washington Technology Top 100 largest government contractors.

“We’ve typically seen between 30 [percent] and 50 percent growth in any given year,” Richer said.

In most instances, immixGroup derives its revenue from a margin on transactions, “just like you would see in the traditional commercial channel model,” Allan Rubin, the company’s vice president of marketing, said in an email. “It’s a familiar business model: the wholesaler/distributor sells to a retailer/reseller, who in turn sells to the end-user/customer.”

Asked about growth plans, Richer paraphrased a well-known real estate adage. “It’s partners, partners, partners,” he said, especially now when the government is moving toward adopting technologies such as infrastructure as a service, software as a service and cloud computing.

“We have to be able to develop and drive those technology applications through our partners to get to those government customers,” he said. “That’s [all] partner driven.”