In an industry where service levels differentiate information technology products, 35-year-old Kelser Corp. is launching a suite of new offerings anchored on its prime competitive edge — strong relationships with local companies.
“Ninety-five percent of our business is done in a 70-mile radius,” said Barry Kelly, president and CEO.
The hands-on approach enables Kelser to compete with industry giants such as Missouri-based World Wide Technology Inc., International Integrated Solutions Ltd. in New York, India-headquartered Tech Mahindra Ltd., and AdvizeX Technologies LLC in Massachusetts in the enterprise – or large company – segment.
Now, Kelser is responding to increased cyber attacks against its fastest-growing revenue base — small businesses — with a cybersecurity offering dubbed Defend Forward, targeted at organizations with 75-1,000 employees. Last year, Kelser accrued 17 percent of its $86 million revenue from its small business customers.
Sold as a service, an emerging model in cybersecurity where products, service and education are bundled, Kelser’s security architects collaborate with a client’s internal IT staff to assess risk and then set up and maintain defenses for the company. These include firewalls, anti-virus software, and employee training that includes some simple advice: Don’t plug in USB keys that are handed out for free at product shows.
“You might say, ‘I only have a shop of 40 people, who cares about what we do?’ Well, there are people out there who care about getting into your system and keep you from getting the data required to do your business,” Kelly said. “They may ask only a small amount of money in return to get your data back, but that’s pretty disruptive and they can lock you out if you don’t have proper protection in place.”
The National Small Business Association, in its year-end 2015 report, found that 42 percent of small businesses surveyed reported they were victims of a cyber attack, costing them on average $7,115. For firms whose bank accounts were hacked, that number was higher at $32,020, up from $19,948 in 2014. Sixteen percent of respondents said it took longer than two weeks to restore their data.
The threat even prompted a warning from cybersecurity experts at a House Small Business Committee briefing July 6 about the rising risk of attacks against small businesses from foreign hackers.
The environment presents a growing business opportunity for IT partners like Kelser, which offers a range of products and solutions from vendors that include Cisco Systems Inc., Palo Alto Networks and Hewlett Packard Enterprise Co., a spin-off from Hewlett Packard Inc., which sells hardware such as servers.
Earlier this year, Hewlett Packard Enterprises told IT publication CRN that the company will sell more of its security products through partners. Kelser’s Defend Forward will compete with offerings from the Walker Group in Farmington and Level 3 Communications in Hartford. Another new offering, Flexible Capacity, will allow companies to add on and pay for additional storage capacity as the business grows.
Kelser is planning to launch three more offerings within a year, including device-as-a-service (DaaS) for small businesses and large firms that would pay a monthly fee for the lease of IT hardware, like a laptop or server, and maintenance. “Our industry is headed that way,” Kelly said.
In a survey earlier this year of IT firms across the U.S., International Data Corp. found that about a quarter of buyers were looking actively at the DaaS model. Nearly 20 percent of respondents said they had plans to enter into contracts within a year. The advantage? Freeing up stretched internal IT teams to focus on the core business.
Kelser also is planning to launch hyper-converged IT infrastructure solutions that help companies reduce costs and improve efficiencies through maximum utilization of products — desktop, storage, servers, the whole IT environment.
The company’s offerings are priced from $500 for a system with a display to up to $2 million. The company now has 44 employees and is poised to hire at least a dozen more in the next two years. But there are challenges. “It’s tough to get younger people to move to Connecticut,” Kelly said.
Kelly bought Kelser from his brother, who has Alzheimer’s, in 2010 and led two acquisitions soon after — Massachusetts-based business consulting firm HSG Global Services Inc. in 2011 and Connecticut-based network infrastructure firm Foundation Systems Group LLC in 2013. The company has no external sources of funding.
Even though revenue has grown steadily from $66 million in 2010, Kelser is seeing a slowdown in demand from large customers. The firm is well-diversified across education, health care and insurance — clients include the Manchester Community College, Jefferson Radiology, Aetna Inc. and the Travelers Companies — but revenue from large clients fell 10 percent in 2015. Kelly attributed that to buying cycles that affected several firms, including competitors.
“It’s a low margin, high demand services [network security, storage etc.] business,” Kelly said.
Kelser has since added employees to boost growth in the large business segment.
The company has successfully built a base of loyal customers, including the Hospital for Special Care in New Britain. “The EMR [Electronic Medical Records] rollout allowed HSC to document the clinical information necessary to apply for its designation as a Patient Center Specialty Practice for autism,” said Carl Ficks, vice president for corporate and donor relations at the hospital. “As a result, in February 2015, HSC was named the first PCSP in the country for children with autism, and remains the only one to date.”
Kelser supports causes that include the Alzheimer’s Association, the American Lung Association and Hands on Hartford.
“Through the Kelser Foundation, our employees, families and friends have donated over $825,000 and more than 60 boxes packed with non-perishable food items, clothing, sporting equipment, games and toys, and more,” said Lisa Carroll, marketing manager.
Culture is clearly important to Kelly. “I want people’s experience here to be productive, enjoyable and meaningful,” he said. “Those things are not easy, but I get the most joy when I start figuring those things out.”
