Aris Corp, the US IT services firm, has launched what it calls Performance Improvement Consulting, (PIC) a new business model that includes consultancy methods in its IT training offering. By using consultants to analyze business processes and staff skills, the training arm of Aris will tailor what it calls knowledge transfer programs to the needs of the client. Doing this, Aris expect to achieve effective cross-selling between consulting and training divisions. Also, client loyalty is expected to increase as companies stick with a training company which already has detailed knowledge of their skill needs.
Aris claims PIC, rather than being just marketing gloss, is a unique system. To differentiate its offering from services companies which use similar strategies, Aris has attached various bells and whistles to PIC. A data capture system involving a proprietary web-based tool called eVal is used to assess staff competency. Success criteria are decided on between Aris and the client, so a measurable return on investment can be achieved. Aris claims to have big-name companies lined up to try PIC, but none is prepared to go public yet.
The offering is the latest in Aris’s move to bring US-style services into Europe. As with a multitude of US firms, Aris has employed a strategy of rapid expansion into Europe, using the UK as a handy springboard. The company was founded in 1990 by Paul Song, a Korean-American who had previously worked in consultancy and management roles for Oracle Corporation. Its first contract was an Oracle implementation, won from under the noses of the likes of Anderson Consulting.
In late 1993, Aris launched its first software product, DFRAG, a defragmentation tool for Oracle databases. The software business is a minor part of the operation, niche products for IT professionals, accounting for only about 10% of Aris’s revenues. Aris Software Inc, a wholly-owned subsidiary, was formed in 1996 to develop DFRAG, and this company expanded with the acquisition of Noetix Corp later that year. Aris now develops Noetix’s products as its own, but with the Noetix brand. Noetix was subsumed into Aris Software a year later.
Software is strictly a sideline (revenues are split 55% consulting, 35% training) and Aris has concentrated its growth in the consulting and training markets, branching through acquisition across the US and into the UK. Each acquisition made a new geographical area or area of expertise available to the company. Now, the company specializes in Microsoft, Oracle, Sun and Lotus services, and is partnered with those companies. Its acquisitions over the last four years have reflected this.
Between 1995 and 1998, Aris bought ten companies. SQLSoft, Absolute Inc, Enterprise Computing Inc and Agiliti Inc were all US companies specializing in Microsoft consulting and training. In early 1997, the company took its first step into Europe, buying Oxford Computing Group in the UK, another Microsoft services firm. InTime Systems International, MMT Computing (Reading) Ltd, Barefoot Computer Training Limited were bought to broaden the training/consulting portfolio to include PeopleSoft, Lotus and Oracle consulting as well as strengthening the UK training business.
As well as expanding organically across the US, Aris has also found it useful to buy itself into new locations. Clarity Inc, SofTeach Corporation, and Cray Solutions took the rapidly expanding group into the states of Washington, Colorado and Texas respectively. Now Aris has offices in nine US cities, and three UK locations.
Its main area of implementation work is enterprise resource planning. Customers include Boeing, NIKE, Microsoft, Tektronix and Hewlett-Packard, and US government agencies like the Internal Revenue Service and the Environment Protection Agency. The majority of its training work is with Microsoft, which uses Aris for training its support staff.
Aris floated on on the NASDAQ in 1997 raising over $30m with a share price of $15.00. It reported 1998 revenues of $115.8m, a 52% rise on 1997, with net income of $7.7m before extraordinary charges. Despite strong revenue growth since the IPO, the company not been treated kindly by the market. After over a year hovering between $20 and $35, its share price collapsed to under $10 in December 1998, and has not risen above its IPO price since. Panicking, the company initiated a share buy-back program in January, declaring itself undervalued.
The company is unlikely to make any major acquisitions in the short term. A period of integration among its recent acquisitions seems likely, to maximize earnings per share and help its share price reach the levels it reached in the first half of 1998. Analysts recommend Aris as a long-term investment. The company’s geographical expansion strategy has taken them into German recently, and this is likely to be only a first step into the lucrative European IT services market.
