Pile On Networking Profits

Hold on a minute," Scott Smith says on the other end of the phone. "You just need to sign here and here," a female voice can be heard saying in the background. After a pause, Smith returns to the line, "OK, I'm back. Sorry about that. I'm at the bank. Now where were we?"

These are the types of interruptions one must endure when interviewing Smith, who is president and CEO of the company bearing his own initials - SAS Network Solutions, Inc. (Santa Clarita, CA). Always on the move, Smith is usually either conceiving some design feature of a customer's wired or wireless network or pitching a new client the benefits of a technology such as IP (Internet protocol) telephony. Today he is on his way to give a proposal to a client about a wireless LAN (WLAN) - a technology he expects will grow 20% in sales revenue this year for SAS.

Target Warehousing/Hospitality Markets For WLANs
"It's rare for us to sell only a wireless solution," Smith comments as he leaves the bank and gets into his car. "Wireless technology either leads us to other wired networking business or is part of a large networking project. We'll probably reach $200,000 in WLAN sales this year."

Of course, industry analysts expect big growth in the WLAN market over the next few years. In fact, research firm Allied Business Intelligence (Oyster Bay, NY) predicts the WLAN industry will generate $1.67 billion in total revenue through the end of this year. The 54 Mbps (megabits per second) speed of 802.11a and 802.11g WLANs is cited by ABI as a key reason for this growth (see chart on this page), especially in markets such as healthcare and education. Smith says that SAS has sold 802.11a WLANs but has yet to sell any 802.11g products.

Like many VARs and integrators, SAS has seen most of its WLAN sales success come from manufacturing and distribution warehouses. For example, when Bertelsmann Media Services (Valencia, CA) built its 110,000-square-foot printing and distribution facility, SAS was contracted to install a WLAN so the client could use wireless handheld computers/scanners for real-time inventory tracking.

"Sixty percent of our WLAN projects are for new users of wireless technology," elaborates Smith. "These customers want to augment their existing LAN infrastructure with wireless technology because it is more cost effective to deploy WLANs in large facilities. They are commonly using WLANs to add connectivity to conference rooms, training facilities, or remote offices. In fact, that's why we installed a WLAN at BMG Music (Duncan, SC). They have four buildings with almost 1 million square feet of space."

In addition to warehouses, SAS has recently experienced an increase in WLAN interest from the hospitality market. Organizations like AAA are now requiring four-star hotels to have high-speed (up to 7.1 Mbps download speed) Internet access in at least 20% of their rooms. Smith says many hotels are choosing WLAN technology as a more affordable way of providing this online access.

The Cost Of Wireless Expertise
SAS handles all aspects of WLAN implementations, including site surveys, network design, deployment, and testing. To do so, the company earned certifications in planning, selling, deploying, and maintaining Cisco WLAN/WWAN (wireless wide area network) architectures and became a WLAN/WWAN Cisco specialized partner in 2001. To achieve this partner status, SAS also had to construct a lab for testing and configuring wireless, networking, and IP telephony products. SAS' final price tag for the lab and certifications came to $15,000. Smith says he also spends approximately $300 each year to be a member of the IEEE (Institute of Electrical and Electronics Engineers, Inc.), a standards organization, to keep abreast of wireless technology developments.

Where The Leads Come From
You can have all the wireless and networking certifications in the world, but if you don't have leads, you don't have squat. After graduating in 1996 from Texas Tech University with a degree in electrical engineering technology, Smith went to work for NASA's Jet Propulsion Laboratory (Pasadena, CA) and then for Cisco Systems (San Jose, CA). His stint at Cisco has definitely had an impact on SAS' success; the majority of the integrator's leads come from the networking giant. Although, Smith is quick to note that the satisfaction of his customers - not his previous job - is what has made SAS a key Cisco partner in Southern California. For instance, before SAS was incorporated, the company received a lead from Cisco for providing Cisco certification training to Bertelsmann's staff. (SAS focused on this type of training before 2001 and still earns approximately $120,000 a year in training/certification course revenue.) The customer just happened to be in the midst of a large networking project during this time. "They were unhappy with the integrator on the job and asked if we could take over the project," Smith explains. "Cisco was initially concerned that we weren't big enough or experienced enough to handle a project of this magnitude. But the customer's satisfaction with our WLAN work at its distribution center ultimately earned us the job."

One of SAS' largest customers is a company Smith worked with during his time at Cisco. The Bakersfield Californian (Bakersfield, CA) newspaper was seeking a turnkey solution for new LAN, WAN, and WLAN infrastructures (i.e. cabling, racks, patch panels, routers, switches, and access points). SAS won the job and also installed network security products. The integrator is currently deploying an IP telephony (see sidebar on page 80) system at the newspaper. Next year, Smith expects to install an IP call center for the newspaper's classified department. All in all, this was about a $1 million project spanning two years.

Before Smith exits his car, the 30-year-old gathers the information he'll use for his client presentation. "I wear a lot of hats with this company," he says as he walks across the parking lot. "I'm the acting senior design engineer, the primary pre-sales engineer, and the account manager. So far, this strategy has worked well for us. We've landed about 50 customers, 20 of which are actively purchasing products. And, of those active customers, we have four key accounts that will probably generate more than $1 million in gross revenue this year. Hopefully, after this sales call, that number will go up. I'm here, sorry, I have to go." Click.