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Press Release: Feature story on Intertech runs in Star Tribune "Clarity - and growth - by merging"

STAR TRIBUNE
June 24, 2007

Sometimes two companies aren't better than one.
Tom Salonek runs a successful software-developer training company. And a leading information technology consulting firm.

Nowadays, both services come from one company, Intertech, which Salonek founded in 1991, just a couple of years after finishing college.

Over the years, a persistent problem has been that clients who used one service often were unaware of the other.

In 1999, at the height of the dot-com boom, Salonek attempted to solve the dilemma by splitting the consulting side of the company with the name go-e-biz.com. Training services continued under the banner of Intertech Training.

"It seemed like a good way for us to manage the two businesses," Salonek said. "We saw it as an opportunity to provide training services even to other consulting companies because it was separate."

But separate companies were not the solution that Salonek had hoped for. So in 2005, the company reunited under a cross-marketing strategy that carried a new brand statement: "Instructors who consult, consultants who teach."

The company, after all, sends instructors into the field to get practical experience in working with new technology, to make sure course work is not too academic. It also now brings consultants into the classroom briefly to share real-world tips with students.

"For years we struggled with what is a succinct way to say who we are, beyond our name," Salonek said. "So we said, 'What are we doing and how is it different in a way that matters to our customer?' "

The company reunited both services under the Intertech brand. The company maintains a separate sales staff, annual goals and profit and loss levels for each service, Salonek said, and ties performance plans to overall results.

"From an overall brand management standpoint, having one is simpler," Salonek said. "It's really one team, one dream."

Along with the new marketing campaign came a goal for 2006: Raise at least $800,000 of new consulting revenue from training clients. The company met the revenue target, and all 35 employees took home Xboxes as a reward.

"Training positions us as experts," Salonek said. "If we're the ones that are teaching them it seems reasonable that we would be the ones to work with them on those first consulting engagements they're doing."

The new strategy helped raise Intertech's revenue to $6.2 million in 2006. With the same $800,000 goal in place for this year, Salonek said he expects revenue to reach $7.5 million.

Consulting, which can involve working with clients for months or years to design and develop software applications, accounts for about two-thirds of revenue, Salonek said. Having training clients -- who far outnumber consulting customers -- bring in a third of revenue shows that training is a significant part of Intertech's business, Salonek said, rather than the loss leader it is at some IT consulting companies.

Today, the company has a national reach in training, and Intertech's technical team members publish bestselling training manuals that even some competitors use. Intertech consultants work with companies and government agencies to develop systems. Clients include NASA, Wells Fargo & Co. and Lockheed Martin.

The focus now is to grow by building out the skills of consultants and instructors to cover the full software development life cycle, Salonek said. While both sides of Intertech specialize in application architecture and software development, the goal is to add courses and consulting expertise in such areas as project management and quality assurance.

Specializing in such higher-end services should help the company fend off the threat of losing business to offshore developers, Salonek said. Intertech now is hiring people with 15 to 20 years of experience in working with enterprise-level software, compared with recent college graduates the company typically brought in during the dot-com heyday.

Tom Pearson, who brought in Intertech for a development project at Agribank, part of Farm Credit Services, said he had been impressed with the company's consultants and instructors.

"They have very high-quality training classes," Pearson said. "The quality of the instructors, the materials, the way they run their classes, their facility there is nice -- it's a nice setup."

At least 15 consultants worked on the development project, Pearson said.

"We especially liked the high quality of people we've gotten from them," he said. "Both their expertise and their personalities. They were easy to work with, and that's not always true with consulting companies, shall we say."

The experts say: Ernest Owners, an assistant professor of management at the University of St. Thomas Opus College of Business, said a company merging two services as Intertech did needs to have sound strategic reasons for making such a change. Is such a move market-driven, something customers want? Or is it an internal decision? Does data suggest it will improve the bottom line?

"If training needs something special to make them grow, go after that piece to help them sell the product, whereas on the consulting side, it seems like they're doing well with two-thirds of the revenue. ... If one of the two groups has a better business model, how can we take that business model and extrapolate it to the other organization so they produce better?"

Avinash Malshe, an assistant professor of marketing at St. Thomas, says that bringing both services under one umbrella is a good idea, and that it could be a competitive advantage.

"If you present a comprehensive solution like this, you can use this as a differentiator," Malshe said. "The consultants are not just consultants and the academics are not just academics. That could be a wonderful differentiator."

Todd Nelson is a freelance writer in Woodbury. His e-mail address is todd_nelson@mac.com.

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