When a company’s continuous, uninterrupted history spans more than a century, as with Spectrum Technologies of El Paso, Texas, one can often look at the philosophy behind the firm’s business continuity to gain insight into its success. And while Spectrum President Kyle Elliott may not consider himself a genius, he certainly deserves bonus points for being self-aware when it comes to his company, the market in which it operates, its customer base and how to drive value with a well-rounded portfolio.
True genius, however, is surrounding one’s self with intelligent subject matter experts. It’s having patience with a tricky offering such as managed IT—Elliott freely admits the company’s platform sputtered during its initial 10-year foray—to reach a point where it now realizes 68% annual growth. It’s assembling a hybrid business model that combines hardware and software sales, project integration services and monthly recurring contracts that encapsulate network services, cybersecurity, web services and business process optimization consulting.
Given the brilliance of Elliott’s approach, it’s not surprising to learn that Spectrum Technologies has flourished during the pandemic era instead of merely surviving. Calling the dealer a big fish in a little pond—and at $30 million in annual revenues, it certainly qualifies as that—is a disservice and wholly ignores the tactical brilliance Spectrum Technologies employs.
Winning Formula
“I guess one could say we were one of those pandemic winners,” Elliott said. “Our business experienced a great confluence in both operating units that resulted in the highest revenue and profit years in our history. On the office equipment side, we have a large portfolio of flat-rate lease contracts that produced steady revenue combined with a 25% reduction in service costs. We began moving to this model in the mid 2000s and my business partner, Mitch Plesant, has been a big champion of flat-rate with his sales team for several years.”
Spectrum Technologies did its part to help cash-strapped clients the past two years. Elliott estimates the company rewrote 25-30 leases to provide forgiveness and more palatable terms to the most impacted customers, though in hindsight, he expected more requests. While the supply chain issues touched all dealers, Spectrum Technologies saw most clients opt for lease renewals. In situations that called for new placements—especially for account takeovers—the dealer was able to lean on its fortified stash of refurbished gear until the new hardware arrived (usually within 90-120 days).
The managed IT business’ ability to address remote work and the availability of government funding further enabled Spectrum Technologies to flex its value proposition during the challenging period. “Our IT business saw a boom from the national work-from-home mobilization,” Elliott added. “We also had several large customer projects fueled by CARES Act funding. Those things, combined with decisions made to reduce our operating expenses, proved highly successful. I never could have predicted things would have worked out the way they did, but I’m certainly not complaining!”
Shifting Tides
Spectrum Technologies claims a heritage that dates back to 1903, when the firm originated as an office supplies store in downtown El Paso. By the end of World War II, the company began selling mimeograph machines and spent roughly the next 50 years as primarily an A.B.Dick distributor.
The firm started down the dealer path in earnest during the early 1990s, forging partnerships with Minolta and RISO. It then obtained a legacy Canon dealership, and Canon became the company’s flagship brand for more than 20 years. Spectrum Technologies now also counts Sharp, HP and Lexmark among its top hardware providers to a wide range of clients, from schools and universities to down-the-street businesses in West Texas and southern New Mexico.
Spectrum Technologies boasts a rich array of products and services beyond the box, including managed print, document capture and management; a solid managed IT lineup that encompasses cloud, VoIP/unified communications, software, strategy and consulting; and a branded cybersecurity platform, StrykerCyber, offering assessments, backup/disaster recovery, a 24/7 security operations center and managed detection/response backed by security consulting and vulnerability management.
Business process optimization (BPO) is also a key offering to bolster client’s operational processes. Other tools in Spectrum’s belt include digital marketing (website design/development, web promotion and SEO) and print marketing (booklets and manuals, scanning and archiving, wide-format printing, promotional products and graphic design).
In terms of BPO, with many companies seeking ways to accomplish more with fewer resources, Elliott believes the SMB space is finally seeing technology for what it was intended: a competitive advantage as opposed to a cash burn. “By introducing workflows and automating manual tasks, organizations can not only improve operational efficiencies, but also provide a better service to their end-customers,” he said. “Information has to be available in real time to make more informed and accurate decisions. Gone are the days of waiting for monthly reports and retroactively attempting a course correction. Get business intelligence or get left behind those that do.”
Expertly Crafted
The services aren’t simply bolt-ons with OEM support lurking behind the curtains. The SMEs Spectrum Technologies amassed enable the dealer to have not only specialization leadership, but guidance as well.
“Hiring smart people and telling them what to do is ridiculous,” he said. “We’ve hired smart people and let them tell us what to do. Many of the new service offerings we’re in today are because we allow our employees to bring an entrepreneurial mindset to their every day at Spectrum.
“Quality, speed and price—pick two. This is often how we decide who we’ll be and ultimately likely how we’ll be perceived when rolling out a new service offering. Knowing that speed and quality are the most likely to provide longevity, we typically won’t enter a space where we’re in a (price) race to the bottom.”
Elliott is confident in Spectrum’s ability to drive the overarching goal of reaching deeper and wider within existing accounts as opposed to merely seeking out net-new opportunities. Expanding conversations with clients not only ferrets out pain points, it opens the gates to possible product/service propositions down the road. Challenges, after all, are seldom unique or relegated to a modest core of businesses.
“Controlling the narrative to talk about only what immediately benefits you might cause you to miss the real opportunity to understand a problem,” he pointed out. “This problem just might be experienced by many of your other customers and may eventually become your next big winning service offering.”
Managed Approach
Spectrum Technologies’ managed IT growth the last 10 years is fueled by a customized approach for both the SMB- and enterprise-level clients. Elliott and Co. use the full weight of the dealer’s stack of services and solutions for the smaller client, which typically lacks staff and resources. Enterprise customers’ IT departments lean on Spectrum at a more granular level to help drive strategic organizational value. This can range from addressing simple choke points including imaging PCs and retainer services for a technical skill gap, to deeper strategic plays such as business continuity planning and developing business intelligence solutions.
Now that the managed IT department is realizing its potential, Elliott will seek to ride the wave of change dictated by client needs. “What we choose to focus on is building an organization that can easily adopt and adapt to the inevitable change,” he said. “While having stacks and standards is all well and good, marrying a platform can lead to you being left in the dust—FAST. We have a technology evaluation committee led by our CTO that’s constantly looking for what’s new, what need it meets and how we can bring to market.”
StrykerCyber is a statement element of the company’s foundation that enables it to differentiate among a sea of providers that embrace a “me, too” philosophy but lack in core substance. Elliott’s crew boasts more than 30 years of experience in the space and is built upon having strategic conversations centered on people, processes and technology. The theater of threats is rampant with bad actors who, to their credit, constantly evolve their attack points and methodologies. He’s well aware that employing a defensive strategy that speaks to the 2017 landscape won’t accomplish any provider’s objectives.
Any branding worth its salt is one that embraces ongoing education from an internal and external standpoint. “We gave the division its own brand, which helped us create some distance and perceived sole focus to all things security while also answering the classic question ‘Aren’t you already doing that for us?’” Elliott noted. “We’ve also been able to wrap layers of management around everything we deliver, from security awareness training to process and compliance documentation, to more obvious solutions such as business continuity, active EDR, SIEM, etc.”
Best of all, from a provider point of view, cybersecurity is a conversation starter at the very top of the end-user pecking order, and any substantial platform can find a willing listener within the C suite. And while it dovetails nicely with the dealer’s managed IT portfolio, StrykerCyber has found a home within SMB and enterprise accounts as a stand-alone proposition. The relationship-building acumen demonstrated by Spectrum Technologies and its wider/deeper philosophy has provided mutually beneficial opportunities.
Market Catering
There’s truth in the notion that Spectrum Technologies is a product of its environment. A diversified portfolio, clearly, is an essential success ingredient for any dealer that operates in what may be termed a secondary market such as west Texas and southern New Mexico. It is, however, an operating plan that carries merit regardless of geography, particularly in a business that’s witnessed a sharp downturn in print even prior to COVID-19.
Spectrum Technologies’ blocking and tackling entails a business development team that’s geared toward opening strategic, business-level conversations with clients. “When you don’t focus on speeds and feeds, you can consult on the things that are important to clients and how we can partner with them to help them achieve their goals,” he said. “This type of focus has led to nice growth in our cybersecurity and BPO services. Relevance to our client base is crucial, especially in IT, or we’ll get kicked to the curb pretty quickly.”
As the pandemic recedes, Elliott notes the importance of continuing to realize organic growth in the company’s legacy office equipment business despite declining demand. Still, the legacy gear provides a solid foundation for investments and growth in Spectrum’s newer lines of business.
“This gives us the ability to penetrate our client base with strategic and highly valued solutions that tend to be a bit stickier than our traditional services,” Elliott added.
While Spectrum has relied on some acquisition-based growth in the past, Elliott doesn’t foresee the company expanding into the closest major markets such as Albuquerque or Santa Fe. There are smaller independents within Spectrum’s back yard, but he points out that the market landscape is significantly different than it was even five years ago. So while he doesn’t anticipate M&A activity, Elliott is willing to listen to overtures.
Waging a War Over Wages: The Battle for Employees
The flight of the employee was a well-documented phenomenon in 2021. But one might think that a company such as Spectrum Technologies, out in the west Texas town of El Paso, wouldn’t face the same trials and tribulations as a dealer in a major Lone Star State market such as Houston or Dallas.
But don’t be fooled by an old Marty Robbins song and visions of tumbleweeds dancing across the open plains. El Paso had a population of nearly 680,000 in 2019, and corporate distribution centers have been popping up faster than dollar stores.
“We definitely have had to make some strategic choices, particularly in certain segments of our workforce, to try to be competitive,” noted President Kyle Elliott. “We have a huge Amazon distribution center here, along with a call center for Verizon. Those companies can entice a segment of our workers with $15 to $18 an hour entry wages.
“We’ve had to be cognizant of that, particularly in our area which, as a border town, tends to be a little more on the depressed labor costs side.”
In the end, even with the Great Resignation and competitors trying to lure away resources with promises of high entry wages, Elliott hasn’t experienced employee erosion. His turnover/attrition rate remains essentially normal—a claim not made by many firms these days.
Action Items
Elliott has a number of initiatives on tap for the next 12 months, and one of the key elements is creating more clearly defined goals around harvesting within existing accounts. A new account management group will focus on gathering key customer insights and leading period business reviews with the goal of positioning new lines of business.
On a more granular level, Elliott looks to augment the firm’s VoIP offering in conjunction with its unified communications-as-a-service platform, which Spectrum embarked upon due to strong customer demand. Being able to proliferate the Microsoft 365 portfolio will also open the door to greater possibilities within existing accounts.
“We have a lot on our plates that we can get better at, but we’re always looking for new opportunities, for sure,” he said. “If you want to be of any significant size in our world, you can’t be a straight legacy office equipment dealership or pure play managed IT provider. We just don’t have that luxury.”
Contact Hitter
Elliott confesses to the occasional “swing and miss” along the way, but in an industry where growth and opportunity are inextricably linked to embracing change and creating operational efficiencies, he’s enjoyed more than his share of success. He’s fiercely proud of a Spectrum staff that boasts an average employee tenure of over 11 years (see sidebar)—a group burgeoning with smart, energetic and innovative performers who challenge him. And he wouldn’t have it any other way.
“With an increasingly diverse product and services set, we believe it’s more important than ever to work closely as a team and rely on our subject matter experts to educate and inform our employees and clients,” Elliott remarked. “We believe in a non-siloed approach to business with a laser focus on everybody working towards creating a regional fan base of customers. We want everybody on the same team and rowing in the same direction and for them to know that, under any circumstances, their teammates have their backs.”
Friend to the Community
Chris Kohn was hired many years ago as a sales associate for Spectrum Technologies and thrived in that role. But he also wanted to make an impact within the community. Thus, Kohn spearheaded the Borderland Kids outreach program, a faith-based initiative focused on child nutrition providing backpacks of food for local elementary school kids who may otherwise have gone hungry on weekends. In addition to underwriting the annual cost of the program, Spectrum Technologies employees helped fill and distribute backpacks and served at school outreaches and holiday parties. Kohn currently resides in Ndola, Zambia, with his wife and four sons, but his efforts to address food insecurity and the underprivileged continues in his new home. He heads Orchard, an organization that provides education and other support in south-central Africa.
