Always On

ORBIT Systems Bills Itself as a Virtual IT Department for Smaller Companies

By Gene Rebeck
Twin Cities Business Monthly
April 2005

Here's how Steve McFarland describes the development of a small business's information - technology "system": Little Company starts with a single computer on the owner's desk. As it grows in sales and staff, it adds more PCs, even a server. That's when things get ugly. The PCs have different software and capabilities. Employees can't exchange documents. The e-mail system functions erratically. Little Company's system is absorbing a lot of time and money, but it still doesn't work very well.

McFarland says, "I've heard a lot of prospective customers refer to that whole thing as a black hole. 'I put a lot of money into it, and get nothing out of it. In fact, the more money I dump into it, the more complaining my people tend to do about it.'"

Truck fleet operators, interior design firms, and other small businesses shouldn't be distracted by software upgrades and hardware failures. McFarland and partner Phil Palmquist founded Eagan-based ORBIT Systems to manage all the IT functions of small companies.

There are plenty of IT support firms around, of course. What makes ORBIT distinctive, McFarland says, is that it provides assessment, design, implementation, and 24/7 management of networks, Internet access, servers, applications, hardware, and software. Clients don't need to work with separate vendors for these services.

McFarland and Palmquist themselves come from big-company backgrounds. They met in the mid-'80s as employees of Xcel Energy predecessor Northern States Power. They left NSP in 1996-Palmquist to work as a technology executive at Shoreview-based Deluxe Check Corporation, McFarland in sales and marketing for the Twin Cities office of Chicago-based tech services firm Comdisco. A year later, Palmquist also joined Comdisco, where he and McFarland worked together building data systems for large enterprises.

The money was good, but something was missing. McFarland recalls working with Palmquist on a massive, 18- month network project for a Fortune 500 company. When the project was completed, "the basic way that the company did business was not impacted at all," McFarland says.

At the end of the day, he adds, "there wasn't a lot of gratification" working for Comdisco's large-client base. Just as this realization was hitting home, Palmquist said to McFarland, "If we could take what we're doing and apply it to a small or midsized company, we would change the way that it did business.'" In 1999, the duo left Comdisco and founded ORBIT Systems with the goal of building Fortune 500-quality IT networks for smaller enterprises.

"Most companies that can do Fortune 500-type systems are working for Fortune 500 companies," McFarland says. "The companies serving the small and mid-sized businesses are more of the 'bodyshop' types -techs that like to go out and fix things, but maybe haven't been exposed to Fortune 500 systems that kind of run themselves."

But how do you make large-company IT affordable for small firms? McFarland says that one way that ORBIT does it is by buying equipment, circuitry, and software in volume. ORBIT also keeps prices down by making all of its system designs largely identical. An ORBIT techie working with one client will know 80 percent of the environment of any other. For that other 20 percent, techs can access a knowledge base of information during implementation that the company has built on over time.

One of the ORBIT's hallmarks is its OfficeReady service. If one of its client's PCs goes down, ORBIT will load one of its stored machines with the same applications and deliver the facsimile workstation with a minimum of disruption.

ORBIT's 2004 revenues were around $5 million, up from $3.9 million in 2003. McFarland expects ORBIT to hit $6 million to $7 million this year. Its client list includes several Denny Hecker businesses, Culligan Water, and Pearson Candy. The company added voice over IP telephony last year. It is now exploring hosting applications and perhaps opening up offices in other cities. But the basic concept remains the same- providing manageable IT systems for a set monthly cost. According to McFarland, clients say that their IT systems "aren't a black hole anymore. Now [customers] can say, 'Hey, what other things can I automate?' "