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Sikh-Owned Tech Firm Secures $100M Investment
Dallas Business Journal - Friday, May 5, 2008 - Optimal Solutions Integration Inc., an Irving technology services and staffing firm, has arranged for up to $100 million in financing to fund the planned quadrupling of the company's revenue.
The cash comes via a New York private equity firm, Tailwind Capital Partners, which will both invest in Optimal and arrange financing for it. Tailwind has already injected an undisclosed sum into Optimal, and has now taken a majority ownership stake in the business.
"We're not happy with 20% to 25% growth" in revenue, says Gurvendra Singh Suri, Optimal's CEO. "We're looking to be (fourfold larger) in three years."
That would entail growing the company's 400-person worldwide staff to closer to 1,200 to 1,600 people through 2010, assuming that everything proceeds as planned, according to Suri.
Frank Sica, managing partner at Tailwind, says the $100 million figure is necessary to hit the aggressive growth plans. "That's the magnitude of what we think we will need to build the business."
Optimal, which has been in business since 1995, does consulting for software made by Europe's SAP. It has grown to $56.4 million in revenue (for 2007) serving Fortune 500 companies like Dell Computer and Texas Instruments.
The growth opportunity Suri sees is in providing consulting services to mid-sized businesses for SAP technology in a type of software called "enterprise resource planning," or ERP for short. ERP software helps run and tie together most major departments of a business, such as accounts receivable and payable, purchasing, warehousing and manufacturing.
The ERP market in large companies is generally viewed as saturated, which has made mid-sized businesses the next major target of software makers like SAP and its chief rival Oracle.
SAP, which defines mid-market companies as having up to $1.5 billion in revenue, estimates there are about 1.2 million such businesses worldwide. That gives the middle market a value of about $36 billion, the company says.
The Tailwind investment allows Optimal to jump feet-first into the middle market. "We're starting a new line of business," Suri says, adding that the company's work with large firms will continue unabated.
The cash will go toward building out the company's infrastructure to enable it to be a much larger organization, along with growing its management team and acquisitions, among other things. Suri says Optimal is looking at two deals right now, although it's unclear when, or if, a transaction might transpire in either case.
In the last few months, Optimal has brought aboard what Suri describes as three key executives, and has added four people to its sales, marketing and business-development operation. The executive hires include Andre Champagne, senior vice president of operations; Elliott Garofalo, senior vice president of the company's small medium enterprise business unit; and Heather Davis, director of national accounts.
Suri wants to use what he says is Optimal's strong reputation for delivering work on time and on budget to sell to mid-sized businesses, which make technology decisions faster than do their larger brethren.
Ray Wang, principal analyst at Forrester Research, says the middle market is as big as that for large enterprises. And it helps software firms such as Optimal Solutions to be re-selling SAP, which has a good reputation, he says.
"The selling skills required for this market are different" than for big enterprises, he adds. "This is about volume, this is about lead generation, this is about channel partners. It's building a hybrid sales model that helps you support all this."
He adds that mid-market companies are more niche-oriented than bigger ones, which requires a different approach when selling to them. "There's a lot of word-of-mouth referrals going on in this space."
Suri says Optimal is up to the challenge.
"I don't think anybody can stop us," he says.
- By Jeff Bounds | Staff Writer
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