United Computer Group Sailing Smooth Through Rough Water

April 22, 2008 Dan Burger

“Protecting Data for the SMB” could be the title of a book written by Jim Kandrac, president of UnitedComputer Group. The Brecksville, Ohio, company is doing quite well. According to Kandrac, its revenue for the first quarter of 2008 was up 198 percent compared to the same quarter in 2007. That’s pretty explosive stuff. When most companies are happy with status quo or small gains, where do numbers like 198 percent growth come from?

The key to this, Kandrac says, was the launch of Vault400 in September of 2006. Vault400 is an online backup and disaster recovery managed service. It can take the place of tape backup, handles encryption, and provide off site storage for archiving and disaster recovery.

“We’re somewhat of a poor man’s disaster recovery,” Kandrac says. “Those who are doing tape backups and may want some degree of high availability . . . we fill that gap. Where can a small shop go for DR and spend between $200 and $2,000 a month and get data protected and stored and get a DR Quick Ship program?” Quick Ship is a service that ships–within 48 hours–a System i machine that customers can use to recover their data and applications.

The success of United Computer Group is not all about Vault400, but Kandrac admits it is the most important of three reasons for his company’s prosperity. “Vault400 opens doors to our existing customer base and takes us nationwide to gain new customers,” he says. But he also emphasizes the importance of a partnership with VAI, and the development of the IBM reseller business that his company has been involved in for 22 years.

UCG did not release actual financial results (it is a private company), but instead announced the rate of change of its revenues.

VAI has an installed base of approximately 750 companies running its ERP solution. That partnership has worked out well. Surprisingly, the reseller side of the business has been doing well, too.

As a business partner in the Great Lakes region, UCG is permitted to market its services to about 1,500 companies that use the System i. Out of that base, it claims about 550 clients. The region is hurting, Kandrac says. Not surprising, because it is heavily oriented toward manufacturing and the global economy has not been kind to manufacturing. (Google China and manufacturing for all the proof you need.)

So how does this relate to terrific revenue gains for UCG?

“Our growth is somewhat attributable to other IBM business partners being bought out, merged, sold, or gone out of business,” Kandrac says. “We are gaining market share in a stable or shrinking marketplace because we are in the System i, now Power Systems business.”

What’s that, some sort of reverse logic?

“We’re gaining market share due to our persistence and the loss of some of our competitors,” Kandrac says. “We are doing turn-key implementations of 515s and 525s, because some of the larger reseller firms are not interested in doing deals below a quarter of a million dollars. We are doing all that business and some bigger deals, too, but [the bigger deals are] probably about 10 percent of our business.”

The reason for that growth is not based on dynamic growth in the Great Lakes region. It’s national. UCG is now selling systems along with Vault400 nationwide. Selling Vault400 has brought UCG into selling situations it never faced before. The same for VAI customers. It’s broadened the playing field.

On the horizon, Kandrac says his company is partnering with a company in Atlanta to get a second data center. The existing center is in Columbus, Ohio. The Atlanta data center is being designed specifically to provide a solution for companies that want a 12- or 24-hour return to operation after a disaster. It will have 50,000 CPW capability along with 8 TP of disk. “We can provide a second system, just like a company’s primary system, and we will manage it from A to Z,” Kandrac says. It is expected to be available by the end of the third quarter 2008.