Brothers Shane and Tony Nejad are typical sm@rt partners. Their five-year-old consultancy, Mnemonic Computer Solutions, employs five people and currently serves about 30 clients. "Most of them are in the 10- to 20-employee range," says Shane, and few have more than 50 employees.
There are 6.5 million such small businesses in the United States. They will spend more than $200 billion on information technology this year, up from $150 billion in 1999, predicts Cahners In-Stat. What's more, networking infrastructure and services account for an ever-rising share of small-business IT budgets—more than 38 percent in 1999.
The big vendors and service providers have taken aim at the small-business market. But it takes a small outfit like Mnemonic to think like a small client.What Small Businesses Want:
"The wave of the future for computer consulting firms such as us is immediate, low-cost response to our clients," says Tony Nejad. "All customers want is a quick response to their everyday problems."
"Our former [solutions provider] grew too rapidly," says Virginia Lee, executive assistant for Mnemonic customer United Television. "Response time degraded. Smaller clients became nonpriorities." Lee's 11-person office includes a pair of Novell servers, an e-mail system and a handful of mobile executives.
"The biggest benefit of working with Mnemonic is their timeliness and flexibility," agrees Alan Strasberg, spokesperson for private-equity investment firm William E. Simon & Sons. His 40-person office has relied on Mnemonic for three years to provide network consulting, training and system support.
"They are very smart guys," says analyst Jon Christianson of Doheny Asset Management, referring to Mnemonic. "We're a 10-person office with very limited IT expertise. Mnemonic developed our quotations system, and recently equipped us with DSL."
Mnemonic also has implemented DSL at United Television and William E. Simon & Sons, among other clients. In fact, DSL now plays a key role in Mnemonic's strategy for small businesses. But first came the search for an affordable, secure DSL solution.
In Search Of DSL Security:
"We have been doing remote access support through PC Anywhere for our clients for quite some time now," says Tony Nejad. "The bandwidth through modem access has always been a problem, and we always wished that there was a way to get more. Then came affordable DSL access. That changed the way we looked at everything. Not only could a small business have all or specific users access the Net, it gave us remote access at speeds that were great."
But, says Shane, "The DSL providers don't really provide [customers] with any sort of firewall or VPN solutions," which poses risks for remote maintenance via PC Anywhere, not to mention e-mail, Web server and file-sharing security holes.
DSL security solutions were rare and expensive when Mnemonic began offering DSL service two years ago. "We would have needed a Linux box or Checkpoint firewall, at a cost of about $4,000 to $7,000 just for hardware," recalls Tony. That was too steep for most of Mnemonic's small clients.
Soon came affordable firewall appliances such as Webramp and SonicWall, but secure remote access remained a problem. "VPN capabilities were options that cost more" with such firewalls, says Tony.
"Then we found the Netopia R-series routers, which include VPN capabilities at no extra charge. Now we can offer a low-cost firewall solution and not only give the users VPN access, but also a dedicated VPN to our own office and remote-control their desktops at any time," he explains.
"[The VPN] allows us to check backups, update virus definition files, troubleshoot problems, perform some software updates etc.," Tony continues. "These DSL routers can be managed remotely, so we can tap into them and make specific changes, such as upgrading their firmware or simply opening up or closing a port."
Mnemonic charges $85 per hour for remote maintenance, billed in 15-minute increments. "Most clients use about 15 to 20 hours per week," says Shane.
Maintenance is not Mnemonic's only business, he adds. "If a client requires e-mail with their own domain name, we sign them up with a Web hosting company such as Valueweb. For $20 a month, they get 20 POP3 e-mail boxes, 150MB of disk space, and 10GB of data transfer per month. This is sufficient for most small offices. Valueweb is a great company, since its chat support helps us solve problems within a few minutes. Not that we had any major problems, but those little ones were solved real quick."
Mnemonic now offers a $1,199 package that includes installation of a DSL connection, a Netopia 9100R appliance, and configuration of up to 20 network workstations. "There are separate setup charges for e-mail, VPN and remote maintenance," says Shane. Some clients pay as little as $100 per month for ongoing e-mail, Web hosting and remote maintenance services, he adds.
A Way Of Life
With its emphasis on low-cost solutions for the smallest businesses, Mnemonic isn't going to grab Wall Street headlines. But that's just fine with the Nejad brothers.
"We don't want to make the company big and then sell it," declare the brothers. "This is a way of life for us, and we want to grow it and keep it."
"A few weeks ago, a collection agency called us and asked us if we have any clients that have outstanding payments. When she found out that in the past four years we never even had one [bad debt] problem, she told me to keep it up, as it is very unusual." Some consultancies and integrators might even call it unique
"Not having lost one client since we started back in 1995 up to now is another sign that we're doing something right," they add. Never having been sued by a client (or shareholders) is another hallmark of good business.
But don't assume the Nejads are content with the business that bigger players don't want. They're negotiating with major DSL service providers to offer the firewall, VPN and remote maintenance services that complete the DSL picture for small businesses. They're also exploring partnerships with hotel and office-building managers to provide IP-based voice and data solutions for guests and small-business tenants.
When you're after small business in quantity, a reputation for affordable, dependable service is worth more than a barrel full of venture capital. Mnemonic is rich in what really matters.
A Glimpse Into The Big Picture
Customers: Small businesses (fewer than 50 employees)
Business Needs: Broadband Internet access, rapid support response
Integrator: Mnemonic Computer Solutions
Hardware: Netopia 9100 firewall/VPN appliance
Software: PC Anywhere
Partner: Value Web hosting service (www.valueweb.com)
Results: No lost clients or bad debt problems since company's inception