Giving Companies a Boost

Dick Youngblood
Star Tribune

(Published Mar 31, 2002) - Steve McFarland describes his Eagan company, ORBIT Systems Inc., as "a computer utility" designed to serve as the IT department for small and midsize companies.

Translation: McFarland and partners Phil Palmquist and Jennifer Amys have invested upwards of $600,000 in equipment and networking infrastructure that allows them to host a client's business applications and monitor and service its computer system from a remote location.

ORBIT Partners In three years in business, they've built a roster of 120 clients and a revenue stream that last year reached $1.7 million. And based on the volume early in 2002, they expect revenue this year to top $5 million.

Not bad for a business that's actually applying an old idea -- what we geezers used to call "time sharing" -- to a contemporary need.

"Our target market is the small businesses owned by technically challenged people who don't understand computers and often don't trust them," said McFarland, ORBIT's president and CEO. As a result, the IT systems on which those firms rely often are ill-designed and inefficient, he said.

He's talking about people like Lowell Rieks, the city kid-turned-farmer whose improbable yarn about transforming expensive failure into entrepreneurial success filled this space last week.

Rieks, the proprietor of Autumn Transport Inc. in Woodbury, not only acknowledged when he met McFarland that he had no computer in his office, he bet a dinner at the Lake Elmo Inn that he never would.

Given that view of technology, it's no wonder the computer system Rieks reluctantly acquired to help run his trucking firm involved a haphazard collection of about 10 applications that couldn't communicate with each other. The system was so inefficient, in fact, that he had two full-time people rekeying data from all those applications into usable form for managers.

Simplicity the goal

Enter ORBIT Systems, which in the past two years has replaced those incompatible applications with two integrated software packages that, among other things, automated the truck-dispatching system for the first time. Meanwhile, Rieks is busy accessing business data on his new office PC -- after having bought McFarland that dinner.

Rieks, in short, is the poster boy for ORBIT's business strategy: "Our specialty is making [the computer system] easy to understand and easy to use," said Palmquist, the partnership's chief technology officer.

"In fact, we try to make it so the clients don't have to understand it at all," Palmquist said. "All they have to do is double-click to get the information they need. That way, they can focus on the business, rather than the technology."

Not every ORBIT client is so willing to go on the record about its technological deficiencies. Consider, for example, the prominent St. Paul manufacturer with 170 employees and $40 million in sales that was operating in the computing Dark Ages.

"They not only had no e-mail and no Web site, they didn't even have an internal network, which meant that data had to be passed from computer to computer via floppy disk," McFarland said. The company turned over its IT department to ORBIT and wound up leasing ORBIT computers and applications software as well.

The bottom line: The upgrade will cost the client about $85,000 a year, 12 percent less than it would have cost to upgrade and manage the computer system internally.

"This is not necessarily about saving a lot of money on a computer system, but about designing a system that maximizes the business benefits of technology," McFarland said. "All we promise is that the cost will be at or below the cost of an internal IT department."

IT "Taj Mahal"

But significant savings can be involved at times. For example, because of a lack of computer expertise, a small Minnetonka insurer called Security Life Insurance Co. managed over the years to assemble what McFarland called "the Taj Mahal" of computer systems.

"The company had 70 employees and an IT system capable of supporting 3,000 users," he recalled.

With ORBIT in charge of a substantially reduced computer system, the small life, dental and vision insurance firm figures to save nearly $170,000 a year, said Greg Rasmus, the Security Life manager to whom ORBIT reports.

"They've made our job a whole lot easier," Rasmus said. "And their focus on small companies makes us feel as though we're as important as any of their other partners."

McFarland and Palmquist came up with the ORBIT strategy as managers at Comdisco, a large Chicago-based technology services company. They recruited Amys, who had been a Comdisco client when she was chief information officer at C.H. Robinson Worldwide in Eden Prairie.

"Comdisco's focus was on the big accounts," McFarland said. "We thought there was a greater need among the smaller companies that the large technology services companies tended to ignore." There also was the little matter of satisfaction, he acknowledged: "We were tired of the red tape and inertia of the large corporation. We wanted to work where you could see the impact -- the difference you made."

Their timing was ideal. The Gartner Group, a technology market research firm, recently projected that in the next four years more than 70 percent of small to midsize business will be outsourcing their IT management.

Dick Youngblood can be reached at 612-673-4439 or at yblood@startribune.com.