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Secure-24 Continues Growth In Application Hosting

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The Secure-24 IOC. Secure-24 photo.

The Secure-24 IOC. Secure-24 photo.

SOUTHFIELD — Secure-24 is on the grow even more sharply after a capital infusion by a new owner last fall.

After all, as the hosting company’s co-founder and COO Volker Straub said Friday, he and Secure-24 co-founder Matthias Horch “didn’t do the deal to sell the company, we did the deal to grow the company.”

Now, with new partner Pamlico Capital of Charlotte, N.C. comfortably aboard and Pamlico’s designated co-CEO, Michael Jennings, settled in, the company is continuing to move up in the rankings of companies that host the most important applications of some of the world’s biggest businesses.

The company’s now at 358 employees. It had 68 new hires in the fourth quarter of 2012 alone.

Why did last September’s deal occur? Straub said 80 percent of Secure-24’s clients choose to host their apps on hardware owned by Secure-24. That meant Secure-24 needed more cash for hardware. It had retained investment bankers Oppenheiemer & Co. to find someone to make the investment.

Jennings, meanwhile, had spent 18 months at Pamlico looking for an investment in the hosted applications market.

“We identified 50 potential targets in the U.S. and met with the top eight,” Jennings recalled. “We clearly came back with the message that Secure-24 was the best company in the industry, and that’s where we wanted to make our investment.”

Recalled Straub: “Mike called in December 2011 and left Matthias a voice mail, saying here’s my background. So we decided to meet him based on his background, and we became very comfortable with him within one day… We partnered with them because it was more than the financials, it was the people, and after the honeymoon we still feel that way.”

Jennings’ app hosting experience dated back to the 1990s with Appshop, an app hosting business, which later became part of US Internetworking, which became AT&T’s hosting arm. After Appshop, he joined El Dorado Ventures in Silicon Valley and spent seven years there as in-house CIO and CTO to their portfolio of companies. He joined Pamlico in mid-2011.

Jennings said what impressed Pamlico about Secure-24 was “the breadth of Secure-24’s offerings” in areas like SAP, Oracle, Hyperion and more, and “by its 100 percent U.S.-based work force. All of the other businesses we looked at were doing a very heavy amount of labor arbitrage overseas. To find a 100 percent U.S. company that was profitable was very intriguing to us.”

And Michigan offers unique advantages that allows Secure-24 to do just that, Straub and Jennings said.

For one thing, Jennings said, “Michigan is famous for its higher education system, with seven Division I schools. That gives Secure-24 tremendous opportunity to recruit talent and build their own talent pool.”

Secure-24 uses what the two men called an academy model to build IT experts, taking raw college graduates and giving them the opportunity to learn from the ground up in many areas — Microsoft technologies, Linux technologies, storage, backup, security, virtualization and more.

“We have engineering teams in all these disciplines around the company,” Straub said. “New hires get to pick their career path. We can show a new hire making maybe $35,000 a year a path from junior to staff to senior to team lead to manager to an expert making $150,000 a year.”

Said Jennings: “I never thought I’d find an IT services company like this in Michigan, to tell you the truth.”

One condition of the deal, Straub said, was that Jennings had to live in Michigan full-time. He’s now living in Birmingham. Hardly a sacrifice, but it’s not exactly his old hometown either — Santa Cruz, Calif.

So what’s the upshot?

Secure-24 is on a path to grow from $54 million in revenue in 2012 to $68 million in 2013. It has a $15 million capital spending plan this year, which is going to do great things for the state’s sales tax collections. And it’s forging new expertise in call center management and data architecture.

In call center management, Jack Connelley, manager of Secure-24’s Integrated Operations Center, said the company concentrates on solving problems with the first call. That’s because research shows people are just as satisfied if you answer a phone on the first ring or after six minutes — provided you solve the problem on the first call. Other companies, he said, concentrate on picking up the phone quickly. Secure-24 makes sure it can solve the problem on one call, achieving a success rate of 85 percent, vs. an industry average of 55 percent.

Meanwhile, Secure-24’s fifth employee, Sean Donaldson, is now chief architect in charge of building a major new data center for the company in Las Vegas, in order to get geographic, Internet and power-system redundancy.

He’s also an expert in Secure-24’s efforts in the Bring Your Own Device market, where more and more companies are allowing employees’ personal smartphones and tablets access to company IT resources so they can work from anywhere.

As it grows, Secure-24 continues to win bigger and bigger applications from bigger and bigger business names. Straub said the company’s focus is now on clients with annual revenue of $500 million to $10 billion a year — “a market we think is underserved,” he said.

More at www.secure-24.com.

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