What's The Rush?

"The Internet," wrote Bill Gates in 1997, "is another case where people who are selling pans to the prospectors often will do better than the prospectors themselves. Analysts, the people who assemble trade shows, consultants, and others providing Internet-related services may have a more surefire way of benefiting than the poor prospectors out there wielding picks and axes...."

Gates, chairman and chief software architect of Redmond, WA-based Microsoft Corp., drew a prophetic connection between get-rich-quick dot-com schemes and the Seattle/Klondike gold rush of the 1890s. He wrote his essay just before dot-coms brightly skyrocketed - only to plummet several years later.

Provide Tools To The Prospectors - And The Established
While dot-coms were getting off the ground, they needed tools to help them prospect their "gold." These tools were actually the infrastructure that enabled online transactions. A Seattle-area integrator, Dimension Systems (Woodinville, WA), sold servers and storage to many dot-coms, but never forgot its strongest customers, commercial Fortune 1,000 companies. Two years ago, Kathy Cartwright, Dimension Systems' president, sensed that many dot-coms were soon to become dot-gones, so she pulled away. She now believes she's lucky, left with only $16,000 of uncollected receivables from the experience. Commercial companies with strong business plans were Dimension Systems' true gold, and this integrator plans to thrive as long as Seattle businesses like Nordstrom's and Bartell Drug Company do.

John Nordstrom and George Bartell both started their companies in the 1890s during the Seattle Klondike gold rush, providing clothing and supplies - and both remain thriving businesses today. From soda fountains to e-commerce, Bartell Drug Company has stayed in business since 1890 by adapting to changing market demands and new technologies and keeping its brick-and-mortar stores focused on serving Seattle neighborhoods. Cartwright believes that Dimension Systems' evolution parallels those of Nordstrom's and Bartell Drug Company.

Adapt To Technology Changes To Keep Good Customers
Like many storage integrators, Dimension Systems started as a provider of enterprise general computing systems, but over the past 10 years, it has evolved into a provider of enterprise computers, backup and recovery, disaster recovery, general storage solutions, and SAN (storage area networks) solutions. Like the Seattle business pioneers before them, Cartwright and her staff adapted to the changing demands of the market and the opportunities from emerging technologies.

As a foundation for their current storage expertise, Cartwright's engineers have experience on QLogic, Sun, VERITAS, Hitachi, Compaq, and Cisco hardware and software platforms - in addition to experience in operating system, database, security, firewall, and Internet technologies. This enables them to architect, sell, install, and manage a seamless technology solution built from multiple manufacturer technologies based on the client's true requirements. This often results in "solution stacks." These are solutions that arrive at the customer site prebuilt and preintegrated.

Concentrating On Commercial Customers Helps Integrator Weather The "Transitional Economy"
Aligning her company with commercial customers and away from the dot-coms helped Cartwright's company weather what she calls the "transitional economy" (otherwise known as the recession). "We like the transitional economy," said Cartwright. "As IT spending gets tighter, a company like Dimension Systems becomes a strong provider of emerging technologies - especially of SANs." Cartwright gave a laundry list of reasons she actually likes the present economy.

• Customers are predictable.
• Customers must account for every dollar they spend.
• "Solution stacks" are important, resulting in more consulting opportunities and higher margins.
• Integrators with stability weather economic ripples, remaining strong solution providers.

"Delivery yesterday and lowest price were the driving decision factors for dot-coms' hardware and software purchases," said Cherie Reese, VP of operations/services for Dimension Systems. "Commercial customers want minimum risk, scalable solutions with easy management, small hardware footprints, the ability to connect to legacy systems, and the ability to endure for three years."

While dot-coms needed to deliver service at lightning speed and bought servers and storage as quickly as possible, commercial companies with solid business plans approach purchases more methodically, and therefore, more predictably. To help their customers make solid business decisions, Cartwright and Reese use an undisclosed vendor's software to provide a 20-page ROI report as part of their sales proposals. The explicit intent of the report is to allow customers to compare tradeoffs of changes to the base case (current technology) in business value terms. All components of the model are quantified in values of cost savings, revenue potential, and/or productivity gains. Dimension Systems' customers usually demand a 100% ROI in 6 to 12 months.

For the Dimension Systems ROI analysis, three "business value contributors" are quantified and analyzed to assess a given technology approach. Each of the value contributors contains numerous sub-elements and data points solicited from actual customer situations. These factors are assessed to develop an accurate view of the base case compared to alternatives.

• Operational Costs - Cost savings are analyzed using factors such as staff efficiencies, storage and server utilization, and software costs.
• Availability - Incremental revenue or productivity dollars resulting from higher availability are detailed. This emphasizes application availability and costs associated with planned or unplanned downtime.
• Flexibility - Faster application deployment translates into incremental revenue or productivity dollars. This analyzes a company's time-to-market ability by using a new technology.

The "ROI Analysis and Results" report is designed for companies like Seattle's Recreational Equipment, Inc. (REI), one of Dimension Systems' commercial customers. REI is an established company with a successful Internet division, REI.com. It illustrates a dot-com that was actually successful, probably because it operated with the same business principles as its parent company.

Mountain climbers Lloyd and Mary Anderson, along with 23 fellow Northwest climbers, founded REI in 1938. The group formed a consumer cooperative to supply themselves with high-quality ice axes and other climbing gear. During the past six decades, REI has grown into an international supplier of specialty outdoor gear, currently serving more than 1.8 million active members through 60 retail stores in the United States and Japan. It also sells direct via telephone, mail, and the Internet.

According to REI, its Internet division, REI.com, is the Internet's largest outdoor store, offering gear as well as advice and information about products and outdoor recreation. In July 2001, REI.com celebrated its fifth year, and REI reported record-breaking midyear sales of $55 million for its direct sales division. This represents a 55% increase over the same period the previous year and significantly ahead of projections.

Dimension Systems' continued approach is to concentrate on predictable business partners with documented business plans. It chose to avoid get-rich-quick schemes and took on only a limited number of dot-coms. Cartwright and Reese don't miss the middle-of-the-night phone calls they used to take from dot-coms in a hurry. They will continue to provide the tools their customers need to do business, while staying true to the business philosophy that works for them.