In search of greener pastures

Emtec expects to grow by adding IT services to its reseller offerings

Headquarters: Marlton, N.J.

2007 Revenue: $224 million

Employees: 300

LEADERSHIP: Dinesh Desai, chief executive officer
Brian McAdams, director and vice chairman
Stephen Donnelly, chief financial officer
Keith Grabel, director and president of
sales and marketing
John Howlett, vice chairman of corporate development
Ronald Seitz, president of Emtec operations
Frank Blaul, executive vice president of sales and
Sam Bhatt, vice president of finance and secretary
David Singer, vice president of marketing and public
David Micales, senior vice president of operations

LINES OF BUSINESS: Government reseller of
information technology hardware and software and
provider of IT services and solutions.

MAJOR GOVERNMENT CUSTOMERS: Defense, Justice, Homeland Security, Health and
Human Services, Agriculture and Commerce
departments; General Services Administration; and
National Institutes of Health.

For more than 40 years, Emtec Inc. has been a
successful, if low-profile, vendor to the government
of information technology products and
services, including hardware and software from
manufacturers such as Cisco Systems Inc., Dell
Corp., Hewlett-Packard Co., Microsoft Corp. and
Sun Microsystems Inc.

Much of the company's reseller work has
involved configuring hardware, integrating hard
drives, adding components and preparing shipments
for delivery. "It's what some people called
'services around the box,'" said David Singer, vice
president of marketing and public sector at

The company, based in Marlton, N.J., is the
tenth-largest vendor on the General Services
Administration's Schedule 70 contract with nearly
$95 million in sales.

But having made several
acquisitions in the past few
years, Emtec is aggressively seeking to complement
its hardware and software sales in the federal
market, including the Defense and
Homeland Security departments, by offering a
range of IT services through its offices in
Chantilly, Va.

Emtec acquired Westwood Computer Corp., a
reseller of HP printers and solutions, through a
reverse merger in 2004 that allowed it to become
a publicly traded company. Westwood had been a
Top-20 GSA vendor for the previous eight years.
The merger created Emtec Federal, which
expanded the company's servers and storage
services, Singer said. In 2005, Emtec acquired
DARR Westwood Technology Corp., the parent
company of Westwood Computer.

In March, Emtec acquired Luceo, a staff augmentation
company in Chicago with about 100
employees. As a result,
Singer said, Emtec has
almost 300 employees and
$224 million in annual revenue.

Now, as an Over the Counter Bulletion Board company, "we really focus
on core industry verticals ? commercial, education,
federal, and state and local government,"
said Frank Blaul, executive vice president of sales
and marketing at Emtec.


The Luceo acquisition expanded Emtec Federal's business re-engineering services, Blaul said.

Emtec's goal is to expand its federal consulting
and integration services as it increases product
sales, he said. "We now are moving more into the
consulting and integration services world and
also into the software consulting services world."

To strengthen its federal marketing strategy,
Emtec Federal is partnering with three main IT
providers ? SAP Inc., Sun Microsystems and
Microsoft. And its strategic alliances with firms
such as HP, IBM Corp., Dell and VMware Inc.
will help Emtec Federal expand its services in the
government market, Blaul added. "They're
increasing our momentum to expand our footprint
into this sector."

The company is also integrating
Luceo into the corporate culture, Blaul
said. "We believe within the next 45
days you're going to see marked
improvement with respect to their
offerings and capabilities. They are
going to round out our end-to-end-solutions
portfolio inside government."

But problems securing H-1B work visas for
some Luceo employees has slowed integration
and delayed staffing current government
contracts and pursuing new ones, Blaul said.

For the moment, "we have to pick nimbly with
respect to where we do business inside the
federal government."


With federal dollars going largely to the military
to support the wars in Iraq and Afghanistan,
many federal IT modernization efforts have been
delayed during the past several years, Blaul said.
But, he added, the federal IT services climate is
improving. "We're starting to see some of that
[funding] come back in a lot of the highly visible
civilian agencies," including DHS and the State

Despite a sluggish federal market, Emtec remains committed ? albeit cautiously so ? to
future acquisitions, primarily in the area of professional
services to complement its organic
growth plans, Blaul said. "We're looking for companies
today in the services world that have good
past performance, good qualifications around
application development and software engineering
services, or even high-end white-collar consulting

At the same time, the company is approaching
GSA's ceiling of 500 employees to qualify as a
small business. "We realize that our landscape is
going to change as we move more into the services
space because we're already at 300," Blaul said.
"And once we reach that 500 threshold on
employee headcount, our position in the market
changes," he added, in which case Emtec Federal
would have to pursue many contracts either as a
prime or subcontractor.

Nevertheless, Blaul said he believes Emtec is
in an advantageous position as a publicly traded
company with revenue hovering at the quarter-billion-
dollar mark. "When you take a look at
companies that fall within that $250 million to
$500 million range, you find that there are less
than 20 of us," he said. "We see ourselves as being
unique because we're not a large firm. However,
we're not a small firm."

"Whether they're integrators, value-added
resellers or a combination of both, such as a
GTSI, they're all trying to sell more solutions,"
said Bruce Klein, vice president of the publicsector
organization at Cisco.

Klein said resellers are developing services
capabilities and offering a variety of systems solutions.
"I do see that happening, and I do see them
looking at the public sector because it's a natural
extension of someone who is focused on federal
and is looking to expand the business."

"If you're selling Cisco [products], theoretically
you know the customer. Why wouldn't you also
provide services?" asked Mark Zelinger, president
of Zelinger Associates Inc., a federal business
consulting company. "So a reseller going
into the services business intuitively makes

However, he added, selling services requires
employees who understand what services are
available, are continually being trained on new
techniques and might even be able to design specific
solutions. "Resellers don't have that psychology,"
he added, because they are used to doing

"When you start to sell services, and you do it
well, product sales suffer," Zelinger said. "I think
you mostly can do one or the other, but there are
rare exceptions."

Emtec Federal is looking at the intelligence
agencies, Veterans Affairs Department and especially
Energy Department as the civilian sectors
most likely to contract for its services.

With that in mind, Blaul said, Emtec business
development professionals are familiarizing
themselves with contracts for which DOE has
budgeted and issued requirements so "we may be
able to position ourselves either as a prime contractor
or subcontractor."

David Hubler ( is associate
editor at Washington Technology.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

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