IT Management That's Not About the Technology

By Andrew Bacskai
Small-Business Success Stories
December 2006

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For a company that peddles information technology products and services, ORBIT Systems, Inc., embraces a seemingly anti-IT mission statement: "To be the best customer-care organization in the world," says Steve McFarland, CEO and president of the Eagan-based firm, which he co-founded in 1999 with longtime colleague Phil Palmquist.

"I think what differentiates us from other technology providers is that we get that it isn't about the technology. It's about how we can make our clients more effective in their business," Mc- Farland explains. "Our whole message is, ‘Focus. Minimize your distractions, focus on your core business, lead your people, and transform your organization.'"

That message has been wellreceived by ORBIT's target market— small and midsize businesses for which enterprise-level IT infrastructure has traditionally been out of reach financially. Since McFarland and Palmquist launched ORBIT, they've attracted more than 100 Twin Cities businesses as clients and have a 100 percent client-retention rate. More than 60 of those companies employ ORBIT's Complete- Office solution, which covers everything from network connectivity to hardware, software, and support. ORBIT (the name stands for office-ready business information technology) has seen revenues go from $500,000 in 2000 to a projected $7.2 million in 2006.

McFarland and Palmquist first worked together at utility Northern States Power starting in the mid-'80s, then at the Minnetonka offices of Chicago- based Comdisco Network Services in the late '90s. "We would watch really large companies spend millions of dollars on information technology for what I would call incremental improvements in technology," McFarland says. One project was a roughly $50 million network upgrade for Pennzoil. It made the network a little more secure, more reliable, and faster, he says. "But it didn't change the way they did business in any way, shape, or form."

That started McFarland and Palmquist on an intriguing line of thought: "Wouldn't it be great if we could provide the services we provide now to small and midsize businesses? Because if we could do that," McFarland recalls thinking, "we would change the way they do business." With that kind of IT infrastructure, not only would smallcompany managers be able to focus on their core business, they'd be better able to take on big competitors.

But first, ORBIT's partners had to figure out how to deliver Fortune 500–style IT capabilities at a price smaller companies could afford. McFarland describes the business model as a "co-op, where we're leveraging our infrastructure, our buying power, our software, and our human resources across multiple [client] companies." ORBIT builds IT systems using out-of-the-box products from Microsoft and Cisco, he explains, reducing product costs and producing a customer "environment" that can be easily and cost-effectively managed by ORBIT's staff.

"By having all our clients standardized in our environment, I can take my most expensive resource, which is human capital, and I can move a person that typically works with customer ABC to work with customer XYZ. And having never seen customer XYZ before, that technician might know 80 to 85 percent of the environment, because it's standardized," McFarland says.

ORBIT manages customer sites in 26 states, but all of its clients are based in the Twin Cities. "We've talked about expanding geographically, but there's so much untapped market here," says Mc- Farland, who shares ownership of the firm with Chief Technology Officer Palmquist and an angel investor who provided start-up capital. He estimates that between 4,000 and 6,000 local businesses fit ORBIT's customer profile: organizations that have from 10 to 150 work stations per location.

"I think we've captured between 1 and 2 percent of the market we're going after," he says. "So the potential here is huge."