Business First - November 14, 2005 (Tracey Drury, Technology Reporter)

Who's Who: Daniel Dolan, president and CEO

Other key executives: Craig Scarupa, vice president for finance; Kristen Mucher, vice president for operations; Carol Roach, vice president for service; and Chris Cummings, vice president for consulting services

Company history: VITEC Solutions LLC. was created in April when IKON Office Solutions shed its technology services divisions, selling four offices in its New York division to Empire Investment Holdings LLC, a Weston, Fla., corporate divestiture firm.

The company's roots in the region date to the 1950s, when Larry Smith Office Equipment Inc. was founded. The company was purchased in 1997 by IKON along with OA Systems in Buffalo; Command Services in Syracuse; and LSI Networks in Rochester. When IKON decided to get out of the tech side of the business, Empire Investment saw an opportunity to grow the business, said Dolan, a CPA who was hired in June to help make sure the transition was a smooth one.

"They'd seen a business that had a lot of potential with some focus," he said. "It was kind of lost in the big IKON world and they felt with some focus and some very specific marketing -- especially looking at the potential to acquire other businesses and increase the footprint -- it was a great market with tons of opportunity."

About 95 of the staff remained with the company through the transition and another 30 have since been added. Total employment in the Buffalo market is 65.

What's going on? The company provides IT solutions in four divisions: application solutions, which includes hardware/software sales, switches and routers; managed solutions, including hardware maintenance or "break-fix" with up to 24/7 response time depending on the level of service selected; consulting solutions, where systems engineers design, troubleshoot, upgrade and protect client networks; and outsourcing solutions, which provides a team of tech professionals for a few hours or on a daily, monthly or full-time basis.

Biggest accomplishment this past year? Creating a name, logo, Web site, brochures, benefit plans as well as identifying and moving into five new facilities in five cities. VITEC achieved these tasks while concentrating on a seamless transition for the company's 600 clients. That hard work was acknowledged by HP with a service award based on performance for the second quarter; and attaining the Gold Partnership level with Microsoft.

"That's pretty remarkable, when you consider all of the strife that goes along with this kind of a change," Dolan said.

Dolan is also proud the company kept the majority of staff on board through the process. "It was almost like starting a new business, but we didn't have the luxury of ramping up with employees and clients. That was extremely difficult," he said. "I think the bulk of our employees are amazingly committed to this business. It would have been easy for people to run away, but most of them stayed and worked even harder to make sure this was a success."

Greatest challenge in last 12 months:
"Keeping the staff motivated and focused has been difficult through all the changes," Dolan said. "The company has worked hard to gives employees a new sense of ownership in the process," he said.

"I think people felt this was a new start with new ownership that would actually focus on the business and give them a chance to grow, both individually and as a corporation, into something they didn't necessarily feel before," he said.

The move to new digs away from the former IKON facility also helped them spread their wings, Dolan said. The company completed the move into five new facilities in five cities in August, including an 8,600-square-foot headquarters facility on Commerce Drive in Amherst for VITEC's 65 local employees.

"There was so much rebuilding of infrastructure that had to go on underneath the surface while keeping the client at the forefront," he said. "Everyone had new policies to learn, new expense reports, new expectations in regards to HR. In a sense their whole life was new, but outside of this building we needed the customers to not see the changes and still have the same level of service."

What was the most extravagant business expense this year that was more than worth the price? The company invested $60,000 in a new Voice over IP (VoIP) phone system through TR Communications to address its dispatch needs and lower its telecommunications costs to connect the five offices in Amherst, Rochester, Syracuse, Albany and New York.

"Least cost routing means if we're making a call from Buffalo to Syracuse, the phone system knows we're calling and will dial out from our Syracuse location to make that local call from Syracuse rather than calling long distance from Buffalo," he said. "It's been worth it, absolutely."

A second expense included spending about $20,000 on promotional products to help spread awareness about the new VITEC name and brand -- vital to the company's continued growth, Dolan said.

Current revenues: Historically, as a division of IKON, the company had annual revenues of about $15 million. Dolan expects to double that over the next 12 to 18 months through growth in the existing business as well as targeted acquisitions in the markets it currently serves and by expanding to new markets.

What is one "growing pain" experienced while building the business? Dolan says one of the most time-consuming aspects of the name and ownership change turned out to be following the paperwork through to be sure that existing authorizations, agreements and contracts were changed correctly to reflect the new name and ownership.

"We have numerous service authorizations, several state contracts and many other vendor relationships where these changes were imperative to keep the business running," he said.

What is your best financial advice you can give to a businesses? Invest time and money in hiring and retaining employees. Some of VITEC's employees have been with the company for 15 to 20 years and Dolan has every intention of keeping them on another 20 years.

"Spend the time to hire the right individuals for a particular job," he said. "They are hard to replace and turnover is costly."

Clients: In addition to government and higher education companies, VITEC clients include Erie 1 BOCES, Buffalo and Erie County Public Library, First Niagara Bank, Ashton Potter, Wegman's, Manzella Productions, Starline Industries, Catholic Diocese.

How have seminars, workshops and conferences aided the growth of your business? With technology constantly changing, VITEC's service technicians, engineers and sales force frequently attend courses to learn the latest in implementation strategies and new product availability. Additionally, staff engineers consistently receive training to maintain their technical certifications.

Do you plan any major capital expenditures in the next year? Plans call for implementing an enterprise resource planning (ERP) system in the first half of 2006.