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Posted: August 10, 2011

Colorado success stories: Latisys

Success is in the "private cloud"

David P. Mead

Editor's note: This is another in a series of Colorado company success stories as told by CEOs and business owners.

Latisys provides data center solutions, including colocation, managed hosting and managed services, that extend and enhance a company's IT infrastructure. Customers are primarily Fortune 1000 companies and government. Latisys, headquartered in Englewood, was listed on the Inc 5000 List of Fastest Growing Companies in both 2009 and 2010, and has enjoyed consistent 35 percent year over year revenue growth and 45 percent annual EBITDA growth.

It currently has 145 employees in four strategic geographical locations across the U.S, including suburban, non-Central Business District locations in the Orange County, CA, Chicago, Washington, DC and Denver markets. Since 2007, the company has raised over $225 million in debt and equity capital to fund its expansion. I recently had lunch with CEO Pete Stevenson, who shared some insight about Latisys' growth and opportunities.

Latisys was created as a consolidation of data centers. Historically, most consolidations - or roll-ups - don't succeed as ongoing entities. What has helped Latisys succeed?

We saw a consolidation opportunity in 2007 in a data services arena that was a fragmented industry. More importantly, there were three of us who set out to build a great company, work with the very best people, those we wanted to work with, and to have fun. It was fortuitous that, at this same time, we met with some private equity investors who saw a similar opportunity but had not yet met the right management team to back. The timing was right and it has been a great partnership.

Having major investors certainly helped you get started, but why do customers select Latisys?

We have several big advantages based on our strategy: The first is flexibility. We have a customer -focused service approach. We offer flexibility in contracts, for example. We understand that customers need to change over time, modify their needs, and do things that were not in the original agreement. We also invest heavily in developing automation and software tools that make it easier for the customer to access information and to do business with us. Second, we have a "power strategy." We have developed a physical infrastructure that is built for the future with lots of power and lots of high density computing capacity. Third, we believe in investing in capacity. We believe that in order to attract large enterprise customers you must demonstrate the ability to meet their current and future needs. Currently, we have the capacity to quadruple our business. Fourth, our people are the very best "A players" that can offer our customers the technical know-how and strategic direction, project management, and customer-focus they need.

You have spoken about the changing role of the Chief Information Officer?

The role of the CIO is changing rapidly to the purchaser and manager of resources and services - both internal and outsourced. Latisys is offering a suite of services aimed to help the CIO accomplish his/her goals within the enterprise and truly function as a strategic partner to the business.

You have accomplished growth both through acquisition as well as internal organic growth. Is there more M&A activity in the future?

We expect that to continue. We have some real advantages when it comes to acquisitions. We know what we are looking for so we don't waste time -either ours or our prospect's. We are credible because we are funded and have completed some acquisitions. We take the time to build relationships with the target companies. They know we will take care of both their employees and customers. They want to know they will be selling to a reputable firm that is committed to the customer.

What's in store in the future for the Managed Services Industry and Latisys?

We're really only in the second inning of the outsourcing business - of a 15-year trend. The industry will continue to evolve. Latisys needs to continue to have the right products and services. That means innovation in the "private cloud". A few weeks ago we made a major announcement that Latisys has selected HP CloudSystem as the core infrastructure platform for the Latisys Private Cloud. This platform is a key component of the firm's unified architecture that supports highly secure cloud services and enables a hybrid managed hosting cloud. In plain language, this means a highly secure, highly available and privately managed cloud for large enterprise customers.

Technology is very important. But we are in the "trust" business. If you don't have a customer focus, customers will not continue to grow with you and they will cap their business. We strive to provide a great customer lifecycle experience - from our pre-sales contacts throughout the process. We are very transparent and we have the customer's back and learn from our mistakes. Our culture is focused around the customer, teamwork, trust, and better communications. As we like to say, we make better decisions faster.
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David Mead is President of The Mead Consulting Group, a consulting and advisory services firm, based in Englewood, that has been helping Colorado companies grow since 1981. The firm's 40+ senior consultants with operating backgrounds assist Colorado-headquartered companies with strategic growth and execution, improving profitability and cash flow and maximizing value at exit. Dave is the past Chairman of ACG Denver and a long-time Board member and is on the Board of Young Americans Bank. Contact Dave at: meaddp@MeadConsultingGroup.com or (303) 660-8135.

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