In 1986, with only $2,000 cash and a $100,000 credit line, Art Allen came out of early retirement to found Allen Systems Group (ASG) in Naples, Florida. Since then, the president, founder, sole shareholder and CEO of ASG has grown the company to more than 7,000 customer sites served by more than 900 employees at nearly 50 offices worldwide.
Allen, a consummate tennis player who hits the court every day at 4 p.m., knows what it takes to stay in the match: a mixture of hard work and careful shot selection. Like a globetrotting tennis pro, Allen recently "brought ASG's game" to six of the seven continents (ASG does not have any customers in Antarctica) in an intense five-week campaign. "You travel five weeks around the world and you get a flavor for what the issues are and where the industry is going. I rely on what my customers say," comments Allen.
What are ASG customers looking for? The company's business, says Allen, is to partner with clients to improve productivity and significantly enhance performance through the intelligent use of technology. With their products, ASG helps mainframe and distributed IT departments mobilize resources to boost productivity and enhance performance. Clients' needs are met by the company's offerings in six main product categories: security management, applications management, operations management, information management, performance management and infrastructure management.
The challenge for ASG, according to Allen, is not one of reach, but of depth. Of the approximately 10,000 large IBM data centers in the world that run on MVS (i.e., z/OS) operating systems, ASG already counts 7,000 of those as customers. "Many of them only have three or four ASG products," explains Allen. "Our challenge is to sell more of our existing products back into the installed customer base."
"The vision in the beginning was to be a company that would be special in the marketplace, and we've certainly achieved that vision. Our customers are the Global 5,000, and we've been very successful there," remarks Allen.
With help from recent acquisitions, Allen says that ASG's vision has evolved into providing end-to-end technology management: "For example," he notes, "we're the only company on the planet that can manage from the desktop to the mainframe and every single device in between, from both an inventory and performance perspective."
Acquisitions have been a crucial ingredient in ASG's business proposition. "We manage the technology that lets you manage your business," explains Allen. He lists the February 2002 acquisition of Landmark Systems, which gave the company presence in the performance space, as the most significant addition for ASG, reporting, "That really launched us into the end-to-end performance market. We now have approximately 30 percent market share there, and that share is growing every day." Since founding ASG, Allen has been involved in 50 acquisitions. "I built the company on acquiring products and companies as well as enhancing those technologies significantly as we've grown them," says Allen.
Allen points out that ASG has many things that differentiate the company. "We're privately held. Therefore, we can put our customers first; we don't have to put industry analysts or investment bankers first. That makes us extremely flexible in negotiating contract pricing and terms and conditions. Because we can incorporate enhancements into products immediately, we have even more flexibility when working with our customers," says Allen.
Allen reports that ASG is the largest single-owner privately held software company. Based on ASG's software and service revenue of $156.7 million in 2002, the company was ranked by Software Magazine as the tenth largest privately held software company and 133rd overall among global software companies. Allen estimates the company brought in an estimated $170 million in revenue in 2003 and expects $200 million in 2004. He forecasts that ASG will hit $1 billion in 2009. "We have a wider breadth of technology than even Computer Associates; we cover more space in the enterprise. ASG is positioned for 2004 with our breadth of technology and our flexibility with pricing and licensing. Analysts think that we're going to be the star of 2004."
To make their broad range of products even more enticing, in February, ASG announced the availability of the ASG Enterprise Subscription License, an innovative licensing program providing access to more than 150 ASG-owned software solutions for a single price, including all annual license and maintenance fees. This license program encompasses a comprehensive portfolio of end-to-end IT solutions from several product families, which provide robust management of security, applications, operations, information, performance and infrastructure, in addition to solution suites for meta data repositories and business service management (BSM).
Allen adds that customers are often surprised at ASG's nimble approach to pricing. "Recently I was sitting in the office of a bank in France that had just completed an acquisition," recounts Allen, "and they were talking about our pricing. Through an hour-and-a-half discussion, the CIO said, 'Well, this is how I think the pricing should be.' And I said, 'Great. We'll create a new pricing model. That's how it's going to be.' I visit with the customers and if they have issues or they need a new pricing model, or if they need a discount - whatever they need, I'm right there on the spot to make it happen for them. That's just one of the things that makes us a very special company."
Allen says, "I get the most enjoyment from just satisfying our customers' business requirements. When I visit our customers and they have pain, I'm like the doctor - I don't even think price/profit. I concentrate on how to cure their pain. That's what I get the most satisfaction from - working with the customers and solving their issues."
Outsourcing and offshore development is another area in which ASG has applied creative solutions. "We've chosen a different approach," says Allen. "We're opening a center of excellence for development in Northern Ireland. We've committed to staffing approximately 180 developers there over the next three years." Allen says that although the salary structure is higher than other offshore rates, they selected Belfast for their development center because of the absence of a language barrier and the impressive work ethic.
ASG evaluated a number of locations around the world, including China, India and Russia, and chose Northern Ireland because of the availability of high-quality graduates in disciplines such as software, electronic engineering and mathematics from two nearby universities - Queen's University and the University of Ulster - which have longstanding track records of working closely with companies in the development of new technologies.
Allen knows the power of hands-on training. He got his start in the tech business 35 years ago after receiving a scholarship to study at a junior college in Dayton, Ohio. "In Dayton at that time, we had NCR, GE, Honeywell and a couple of other computer manufacturers right in town," says Allen. This junior college had formed a partnership with all of these computer manufacturers to establish a curriculum around information technology. It was really revolutionary at the time. I actually coded on five different machines when I was just out of high school. That's where I got my start."
Since that time, Allen has traveled the world and conducted business on a truly global basis. "I'm not geographically challenged," he says. Allen adds that serving in the military in Vietnam for 13 months opened his eyes to his ability to operate globally. ASG practices globally as well. "Regardless of your global position," confirms Allen, "if you're a customer of ASG, you have access to all ASG employees."
More recently, Allen visited China and is optimistic about the potential for growth there. However, he also sees other companies squandering opportunities in the Chinese market. "The difference in China is we're going to service the customer well, and I think that's what differentiates us in the marketplace in addition to flexible pricing and all of the other things that we offer." Allen says that ASG also plans to complete an original equipment manufacturer (OEM) deal in India in 2004, capping their placement in the three largest outsourcing markets. "We're going to be doing things in all three of those areas and not really betting the farm on one area or the other," says Allen.
Year Founded: 1986
Allen is frank about the challenges ahead for ASG. "I have the customers, I have the technology, I have the pricing model and I have the back office to support whatever growth I can achieve in whatever time I can achieve it, but I don't have enough feet on the street to really service that customer base effectively because we've gained many of those customers through acquisitions. I have to be able to take where I am to $1 billion profitably, and that will require the addition of sales reps and technical people to service the customers," he explains.
ASG plans to jump geographic hurdles by increasing bandwidth and global networking. According to Allen, "This year, we're putting 42-inch high-definition televisions into every one of our offices, and they're all connected on the Global Crossing network. We have voice data and video so that we can do live presentations to any one of our customers with the best technical talent from any point on the planet. Regardless of whether we're in Australia, South Africa, Germany, the United States or wherever, it doesn't matter because we'll be sitting right in front of the customer through high-definition television." The system enables bidirectional interaction, enabling dialog and customer training, revolutionizing the delivery of information for global economies.
Allen is proud to say, "We've accomplished so much with so little, all without bringing in investment from the outside." And the game is far from over for Allen, who firmly maintains he is not retiring any time soon. "I'm going to continue to do what I'm doing until my health says that I can't do it anymore." Allen looks forward to continuing to find technological solutions to real-life business problems - something that he's been working on 24x7 for the past 35 years.
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