Getting taxpayers to foot the bill for your new IT system.
Case Study 01
How do you relocate your business and install a brand-new information-technology system at the same time? Get someone else to pay for it
Who: Total Scope Inc.
Where: Boothwyn, Pa.
What: High-tech medical-instrument repair
Revenues: $3 million
Problems: An antiquated computer system; insufficient office space
Solution: A government grant to fund new digs and new technology
Last year Maurice Glavin gave his company, Total Scope Inc., a top-to-bottom exam. His diagnosis: the eight-year-old company, which repairs high-tech medical instruments, was basically strong and healthy. But it urgently needed two things to thrive.
First, the growing company--bursting at the cornices of its third set of offices--desperately needed to find space that would accommodate future growth. Second, Total Scope was long overdue for a total technology transplant.
In the first years of his company's life, Glavin hadn't focused much on office space or computer systems. He and his two cofounders had other, more urgent priorities: hiring skilled technicians, bringing in new business, and building a reputation in an industry crowded with better-known players.
So early on, the founders made do with whatever they could find, working first from Glavin's home and later in a series of rented office suites in Wilmington, Del., shoehorning in new workers wherever they could find space. Meanwhile, for each leap in business and every new name on the payroll, Total Scope simply grafted additional hardware and software onto its existing computer systems.
By 2000 the company had grown to 30 employees, and they were all using aging equipment riddled with eccentricities. One vice-president used a desktop computer that--because of a broken power switch that nobody had time to fix--could be turned on and off only from a power strip on the floor. "In small business, everybody does workarounds," Glavin says. "But as you add more people, it magnifies the technology problems. It really exposes the weaknesses."
Nowhere were those frailties becoming more evident than in Total Scope Management System (TSMS), the proprietary software Total Scope had used since birth to keep track of repairs and maintain service records. With more employees entering more data on more jobs, Glavin and his executive team increasingly noticed the system's shortcomings. Among them: multiple records for a single piece of equipment and an overnight lag--once standard, now unacceptable--when it came to updating information.
With his profitable company approaching $3 million in revenues in 2000--up from just $215,000 in 1994--Glavin decided Total Scope couldn't continue to grow at such a pace while still working around balky technology. Since the lease on his company's office space was about to expire, Glavin decided it would be great to kill two birds with one stone: completely revamp the company's information systems and upgrade his office space at the same time. Which is exactly what he did. What's more, he got somebody else to pay for a big chunk of the cost.
In June 2000, Glavin moved Total Scope to its own well-wired office building in a different state. To do so, he and his executive team had aggressively negotiated an impressive economic-development package with their newly chosen state.
"As you add more people, it magnifies the technology problems. It really exposes the weaknesses," says Maurice Glavin, CEO of Total Scope Inc.
Glavin launched Total Scope in 1992 with his wife, Ann, now the company's treasurer and quality manager, and his cousin Timothy, the company's chief operating officer. Their timing was no accident: it was year one in the modern era of medical cost cutting, with newly elected president Clinton calling health-care reform one of his administration's top priorities. The three cofounders assumed that hospitals would rather repair than replace expensive high-tech medical devices such as endoscopes, the camera-equipped tubes used in gastrointestinal and orthopedic procedures.
They assumed correctly, but they weren't the only ones who had. Other entrepreneurs--notably some refugees from the big-name companies that manufactured the instruments--had also launched repair shops for scopes and similar devices. To distinguish themselves, Total Scope's founders emphasized a fast turnaround for repairs. They pledged to cut service time from three days--then the industry minimum--to 24 hours or less. Living up to that promise, of course, meant keeping efficient, error-free track of every scope making its way through the repair process.
Not surprisingly, the founders found no off-the-shelf software tailored to their needs. So they turned to Odyssey Technologies Inc., of Sarasota, Fla., whose CEO happens to be Christopher Glavin, another of Maurice's cousins, who agreed to work gratis for the first few months. Odyssey built a DOS-based project-management system written in the then common X:Base language. The software--TSMS--did a fine job of maintaining Total Scope's records for several years.
But by the late 1990s, as Total Scope hit a growth spurt (the company's five-year growth rate of 1,205% earned it a #220 ranking on the 1999 Inc 500 list), TSMS was staggering under the workload, with sluggish response times and an inability to update records in real time, which led to confusion and errors.
So Total Scope again turned to Odyssey Technologies. This time, though, low-cost labor and family ties weren't the driving factors. Glavin felt that Odyssey, because it had developed Total Scope's system in the first place, was simply best equipped to improve it. Working from Florida, Christopher Glavin began developing a new Windows-based version of the project-management system in Visual Basic, dubbed WinScope.
Meanwhile, having outgrown its latest 6,700-square-foot office space, Total Scope was itching to move again. This time, though, Glavin looked beyond his home state of Delaware. It's not that he had anything against the second-smallest state in the Union--in fact, he and his wife still live there. But Glavin says that Delaware, known as the headquarters for billion-dollar corporate giants like Dupont and MBNA America Bank, seems to place its emphasis on attracting and appeasing more of the same animal.
After the state successfully lured the global pharmaceutical company AstraZeneca over the border from nearby Pennsylvania, Glavin knew he'd find it even tougher to compete for local high-tech talent. Still, having done business in Delaware for nearly a decade, Glavin called the governor's office to ask about possible incentives for staying put. No one returned his call. So he and his executive team reasoned that they might do better talking to another state.
But not just any state. Afraid of losing his highly skilled team of specialists, Glavin never considered moving Total Scope beyond reasonable commuting distance from Wilmington. "Economic-development grants are nice, but you don't want to take a core platform of people and cut it in half in order to move," he says.
That limited the team's search to southern New Jersey, eastern Maryland, and southeastern Pennsylvania. From the start, the team was most interested in Pennsylvania, particularly Delaware County, outside Philadelphia. For one thing, Glavin and others had grown up there and knew it well. And Pennsylvania was close: the border was just five miles from Wilmington. Finally, from the beginning, when Total Scope talked, Pennsylvania listened.
In approaching the Keystone State, Glavin fell back on the same model he'd used to apply for U.S. Small Business Administration loans: "Find out what they have to offer before you ask for it. And find out what they're looking for," he says. Glavin and his team talked repeatedly with Delaware County economic-development officials, local entrepreneurs, and state legislators, quickly figuring out exactly what Pennsylvania wanted: health-care, scientific, and high-tech businesses. Having just lost AstraZeneca to Delaware, the state was particularly hot to attract healthy new medical companies of any size. "Medical is sexy," Glavin says. "It's around 14% of the gross domestic product."
So Total Scope made its pitch to Delaware County's economic-development officials. "We went to their offices and spent a fair amount of time selling them on the idea," Glavin says. He stressed that his company wasn't just another Blockbuster video outlet with a retail-wage staff, but a vital enterprise with a highly skilled workforce. Based on past growth, Glavin argued, the company expected to create even more jobs in the next few years, not to mention the burgeoning tax revenues that it would add to the state's coffers.
Ultimately, Pennsylvania provided quite a housewarming package for Total Scope, starting with a $200,000 job-creation tax credit for creating 100 new jobs. Total Scope found land in Boothwyn, Pa., a suitable site for the 26,000-square-foot building that Glavin planned to build, and the state provided a low-interest, 15-year loan covering 40% of construction costs. The folks from Pennsylvania also threw in a $100,000 grant to help the company defray the cost of its technology upgrade.
Though the company would have overhauled its technology even without the grant, says Glavin, receiving the money let Total Scope build a system that not only met its current needs but also could accommodate plenty of future growth. "The challenge most companies run into is the tendency to think short-term instead of in terms of where they expect to be in a certain number of years," he says. "We got to build an infrastructure that will allow us to deliver on those expectations."
That infrastructure includes the new WinScope project-management system and a new technology platform that features a Windows 2000 operating system, Dell servers and workstations, and a T1 line for Internet access. (Before the upgrade, Glavin didn't even use E-mail.) The system helps Total Scope move equipment through the repair pipeline faster and track it better. For instance, electronic data entry lets Total Scope eliminate several paper-intensive steps, including one form that had required technicians to fill out multiple copies. Now, Glavin says, "we're down to one sheet of paper," specifically a hard-copy receipt that customers sign when they get their repaired equipment back.
The new technology also lets Total Scope do real-time reporting. Glavin can now determine the company's precise profit for a particular repair job, say, or the average scope-repair costs for a particular day. Also, information is more widely available. For instance, anyone in the company can run a report on how many new customers the company has signed on in a particular month, a capability that Glavin hopes will encourage everyone to track growth and help find new accounts.
Total Scope would have moved even without the governmental aid, but it probably would have landed in yet another leased space. Even with a mortgage, Glavin says, "we came out ahead, because the building is also a new asset."
"We now have systems in place that will let us grow to five times our current size," says Maurice Glavin.
Total Scope's transformation and relocation were not without their mishaps. In May 2000--preoccupied with explosive business growth and the company's move--Glavin and his management team made a critical and, in retrospect, flawed decision. They switched Total Scope's operating system from Windows 98 to Windows 2000 without consulting Christopher Glavin. Maurice Glavin says that the oversight happened because the company managed its day-to-day systems separately from Odyssey's proprietary project-management software. "That was stupid," the CEO says of the oversight. "But Chris lives in Florida, we got a head of steam going, and we just forgot to include him."
When somebody finally, offhandedly, gave Christopher Glavin the news of the operating-system switch, he countered with some news of his own: the company's existing system wouldn't run on Windows 2000, and WinScope, the new system then under development, would need to be rewritten to run on Windows 2000. "We had to do a little backpedaling," Maurice Glavin admits. The company switched a few machines back to Windows 98 for several weeks while Christopher rewrote the code for WinScope to run on Windows 2000.
Although Total Scope moved only seven miles from its former Wilmington headquarters to its new Boothwyn offices, its relocation didn't exactly go smoothly. The company moved the same week that it held an intensive two-day audit for ISO 9002 certification. Meanwhile, business could not have been better. "There was only one time in my life I was hoping we wouldn't have a lot of scopes come in, and that was the day we moved," Glavin says. But on that day the company set an all-time record instead, receiving 26 items for repair. Employees repaired some in the old facility and some in the new.
These days Total Scope seems well poised for the future. "We now have systems in place that will let us grow to five times our current size," Glavin says. As Total Scope expands, adding locations in other U.S. cities, its Pennsylvania headquarters will have sufficient infrastructure to serve as the company's nationwide hub. Far-flung employees will be able to access repair records, customer histories, and forms in real time.
Meanwhile, the Boothwyn facility continues to knock the socks off potential customers. Glavin, who designed the building's layout himself, created a large open space. Visitors can see Total Scope's technicians at work in their glassed-in repair lab from almost anywhere in the building, including the reception area, the conference rooms, and the few private offices. "Just about everybody who comes to our facility does business with us," Glavin says. "We've actually had people walk through the door and say, 'Wow, you guys really are a business.' "
Glavin says that, together, the new technology and the still-pristine building impress potential customers into thinking: "You've made an investment in yourselves, and we're willing to make an investment in you, because you look like you're going to be around for a while."
Anne Stuart is a senior writer at Inc.
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