RALEIGH — When Karen and Harvey Braswell purchased Alphanumeric Systems for an undisclosed sum in 2009, the business was in good financial shape, but the outlook was worrisome.
The problem: Profit margins on the computer hardware sales that accounted for more than 80 percent of the company’s revenue were declining fast in the face of intense competition from larger companies.
So the husband-and-wife team of the 500-plus employee company – she’s chairwoman and CEO, he’s president – decided to reinvent Alphanumeric by transforming it first and foremost into an information technology services business.
Today, that transformation is complete. Alphanumeric’s revenue picture has flipped, according to the Braswells, with services currently accounting for more than 90 percent of revenue. That’s up from 18 percent when they acquired the business.
“If we hadn’t done that, we wouldn’t be in business today,” Harvey Braswell said during a recent interview at the company’s headquarters on Wake Forest Road in Raleigh.
But Alphanumeric hasn’t merely survived – it’s thriving. The company doesn’t disclose revenue details, but the Braswells say revenue has risen between 5 percent and 10 percent in recent years and is on track to grow 22 percent this year.
“We’re seeing the results of all the hard work of the last few years,” said Harvey Braswell.
Alphanumeric’s services include manning an IT service desk; hardware maintenance and support; technology consulting; learning solutions, which includes off-the-shelf courses taken on computers and mobile devices as well as customized content, such as how-to videos and podcasts; and staffing and outsourcing, which includes providing workers on either a short-term or a long-term basis.
“Today, the (hardware sales are) actually a byproduct of the services we provide,” said Steve Chase, vice president of sales and emerging markets. Alphanumeric sells products from companies such as Cisco, Dell, HP, Lenovo, Microsoft and VMware.
Since acquiring Alphanumeric five years ago, the Braswells have put more than $3 million in profits back into the business, which was founded in 1979 by entrepreneur Darleen M. Johns.
Under their direction, Alphanumeric’s staff has grown faster than its revenue, which they could afford because of the higher profit margins for the company’s services business. The company’s workforce has doubled since the beginning of 2012. The company now has now more 500 employees, including 200 in Raleigh.
Its customer base tends to be companies with between 250 and 2,500 employees, but it also includes organizations with 25 employees and those with tens of thousands of employees. GlaxoSmithKline, Rex Healthcare and the state of North Carolina are among the company’s customers – just as they were before the Braswells acquired Alphanumeric.
“We have customers we’ve had for 25 and 30 years,” said Harvey Braswell. “We’ve lost less than 1 percent of our customers … over the last five years.”
Four Oaks Bank, which is based in Johnston County and has more than a dozen branches, has been a customer for nearly two decades.
“They helped us put in our first network in 1996, and we have worked with them ever since,” said Leon Hiatt, executive vice president and chief administrative officer. “We’ve had the same rep the entire 18 years.”
Over the years the bank has tapped Alphanumeric for new services “many times over,” he said, including running a computer help desk for the bank and managing its servers.
“They’ve got good people,” Hiatt said. “They are quick to respond. They are very knowledgeable.”
Fast and nimble
Longtime client Rex Healthcare, which is owned by the UNC Health Care System, has found Alphanumeric to be “partner-oriented, very collaborative,” said Bernadette Spong, chief financial officer.
When Rex created what is now called the UNC Physicians Network, which today consists of dozens of medical practices statewide, it asked Alphanumeric if it could handle the monitoring, management, maintenance and support of the technology infrastructure.
“They were Johnny-on-the-spot,” Spong said. “They were very, very willing.”
Spong added that Rex asked Alphanumeric to do the work rather than handling it in-house because “they are a very nimble organization. … They can deploy resources faster than we can.”
The Braswells’ first impulse is to say yes when a client asks them to take on a new project or provide a new service – even if it strays outside the realm of information technology.
“If it’s not exactly what is in our toolkit, we get creative on how we can satisfy the needs of that customer,” Karen Braswell said.
“If we know it is beyond our capabilities, we will say no,” she added. “But we try to be as creative and flexible as we can.”
For example, last year the company was hired by two large physician practices that were building new offices to handle, among other things, their infrastructure needs – not just for IT equipment but also for telecommunications and medical technology. That included coordinating the installation of the medical equipment.
“Alphanumeric isn’t going to go and install a huge X-ray machine,” Chase said. “However, what we can do is work with (the installer) on behalf of the client. What connection do you need? What bandwidth do you need to get your information? What kind of physical space do you have to have?”
Alphanumeric’s transition to services also was fueled by a concerted effort to talk to customers about what their problems and needs were and studying the competitive landscape to uncover fertile new business opportunities.
The latter led to the company’s 2010 decision to acquire Micor, a Texas-based training company that had 50 or so employees.
“We got a really good buy on the company,” said Harvey Braswell. He declined to disclose the sale price but did say, “What we paid for it, the business paid it back in 11 months.”
“It’s not how much you spend, it’s how well you spend it,” Karen Braswell said.
Micor became the foundation for Alphanumeric’s learning services operation.
Alphanumeric also hasn’t been afraid to expand beyond its IT roots. In 2012, the company decided to compete for a contract against much larger companies to run a 100-plus-employee help desk for a large pharmaceutical company in support of clinical trials being conducted around the globe.
When a drug company executive questioned whether Alphanumeric was big enough to handle the work, Harvey Braswell replied: “I’ve worked for large companies in my career. If there’s an issue or a problem, you call somebody … and you might get an answer in a week, two weeks, three weeks.
“You’re talking to a guy who can make a decision right now,” he continued. “I’ll give you my cellphone number, and between Karen and I, we can make our decision.”
To the Braswells’ surprise, Alphanumeric won the business.
That triggered what Karen Braswell calls an “executive team-building exercise,” except it was for real.
Within four months, Alphanumeric had more than 100 workers ensconced in a Montreal office, trained in the protocols of the pharmaceutical company’s clinical trials and handling calls from around the globe in 15 languages.
“We took the whole management team (to Montreal) and split up the jobs we had to get done,” Harvey Braswell said.
That experience helped Alphanumeric win a second clinical trial services contract from another pharmaceutical company earlier this year. That led to establishing a 75-person help desk in Barcelona, Spain.
The transition to services wasn’t pain-free, however. With the ailing economy putting the hurt on hardware sales in 2009 and 2010, Alphanumeric ended up laying off about 20 workers. Attrition also cut into the ranks.
Some employees “didn’t like the new leadership,” Karen Braswell said. “They went elsewhere.”
On the other hand, she said, “we have had a lot of great employees who are with us now that chose … to embrace change.”
“You can’t change a business like this with one or two people,” Harvey Braswell said.