Emphasizing solutions, not PCs, keeps GTSI among the top 10 GSA schedule holders
Just a little more than four years ago, GTSI Corp. was struggling, beset
by financial difficulties and a stream of top talent heading for the exit.
But in the ensuing years, the company turned its fortunes around and established
itself as the most consistent reseller in the federal marketplace.
Now its trying to remake itself again. Commodity sales of PCs, workstations
and printers its stock-in-trade since it opened its doors in 1983 are
still a big part of the companys business, but razor-thin profit margins
dont hold much promise of growth. So the company has decided its future
is in solutions.
"We see a definite split in the market occurring," said Joel Lipkin,
GTSIs senior vice president of sales and customer support. "Theres the
commodity-driven side, and we think we still play pretty well in that. The
other side and its the one we see as the faster-growing is the product-solution
space. Rather than just take delivery of a product and integrate it themselves,
customers are increasingly asking us to turn a working solution over to
them," he said.
GTSI isnt doing too badly now. Total government sales were more than
$668 million for the
companys 1999 fiscal year, which ended Dec. 31,
1999 a 10 percent gain on the $606 million it posted for the previous
year. And it has been a consistent top 10 player on the General Services
Administration schedule list, ringing up the eighth-largest sales on the
schedule with more than $186 million for the 12 months between July 1, 1999,
and June 30, 2000.
GTSI has performed consistently at a time when many other resellers
have not. When computer sales slumped $12 million in the second quarter
of the fiscal year because so many agencies had rushed to buy Year 2000-compliant
computers in the first quarter, GTSI was still able to boost profits. Some
resellers not only lost money but abandoned the federal market completely.
Unfortunately, GTSI is still viewed mainly as a reseller. The company
suffers in comparison to the likes of Dell Computer Corp. (No. 1 on the
GSA schedule list), Gateway Inc. (No. 5) and Micron Government Computer
Systems (No. 6) because it doesnt have the same direct marketing muscle,
according to Mark Amtower, president of Amtower and Co.
"Its always dependent on the development dollars of other companies,"
he said. "[GTSI] cant spend as much on advertising and marketing as Dell
and the others can."
Thats all the more reason for GTSIs relative strength to be seen as
something of a triumph, especially given its perilous state in the mid-1990s.
Observers give much of the credit for the companys turnaround to Dendy
Young, chairman and chief executive officer.
GTSI hired Young at the end of 1995 and charged him with refocusing
the companys efforts. The founder of Apple Computer Inc. reseller Falcon
Microsystems Inc., which he sold to GTSI, Young has overseen a makeover
of the company from a reactive organization to one that aggressively looks
Quite frankly, Amtower said, GTSI was a company "full of weenies" 10
years ago, but it has since made a complete about-face. Thats partly because
of the fact that it has had to adapt to changes in government procurement
during that time, but Amtower thinks Young would have forced those kinds
of changes anyway.
What has happened to the GSA schedule parallels the kind of change that
has occurred at GTSI, said Lipkin, particularly with the GSAs focus on
blanket-purchase agreements. BPAs have allowed GTSI to work more closely
with its customers, which is similar to the close relationships systems
integrators have with their customers on indefinite-delivery, indefinite-quantity
To accommodate this future, GTSI made major investments in its infrastructure.
It built a 220,000-square-foot manufacturing and distribution center that
allows closer control over the configuration of the systems it provides
to its customers. The center also enables the company to offer value-added
services such as customized disk image loading and specialized military
The company also made a crucial step, Lipkin believes, when it became
certified under the International Standards Organization 9000 specifications,
a set of quality management and assurance standards that are an important
All told, Lipkin said, "We think we are light-years ahead of other resellers.
We also think we have a major advantage compared to the typical systems
integrator because we have a much larger scale of operations that can support
The problem is that not enough people may know that. One of the biggest
challenges for GTSI in the near future will be overcoming the old image
of the company as simply a reseller, Lipkin said, "and explaining to the
world that GTSI is now a solutions provider."
Robinson is a freelance journalist based in Portland, Ore.
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