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Interview with Michael Proper, DirectPointe

Michael Proper is the founder, president and chief executive officer of DirectPointe (www.directpointe.com), a provider of managed IT services to small- and medium-sized businesses for a monthly fee. Established in 2000, DirectPointe is headquartered in the Salt Lake City suburb of Lindon, Utah. Last year, the company acquired four businesses, completed a second round of venture financing (Zions Bank) and opened a new office in Phoenix. Recently, Techrockies.com managed to corner Proper and chat with him about his company, its growth and its future.

To start our readers off, please tell us how and why you founded DirectPointe.

Michael Proper: I worked with small businesses for some time, and then I spent five years consulting for big companies with distributed enterprise-type businesses. The consulting centered around storage solutions, LAN solutions, wireless solutions, etc.

When you take that theme, having worked with small businesses and with large enterprises, it was very clear to me that there was a void in which small businesses weren’t leveraging economies of scale and standardization that the enterprise was leveraging. There was a void in the marketplace specifically for distributed environments for small- to medium-sized businesses. And it was clear that, through combining hardware, software and services, a monthly service fee could be derived.

How has your company grown since its founding in 2000?

Michael Proper: Since then, we’ve grown to have customers in all 50 states and in 29 countries. We’ve grown to 150 employees centrally here at our main headquarters in Utah, and we’ve got different offices peppered throughout the country and even internationally. We’ve got an office in Toronto and we’ve just opened an office in Sydney.

Australia?

Michael Proper: Yes, but that hasn’t been formally announced yet, so I guess I better leave it at that.

Anything else on the horizon you’d care to hint at?

Michael Proper: (laughing) We’ve got Earth Day coming up. We’ve got an integration with iTok, which is now DirectPointe Home. We’ll be launching that product offering later this year. We’ll also be taking the service delivery platform to another level.

That all sounds like more growth. So you’re not expecting that looming economic downturn that everyone has been talking about to have much bite?

Michael Proper: The reality is, we do believe there is a correction that needs to happen. As a matter of fact, in our company meeting (last) Monday, we talked about some things that our leadership team has seen. And we do feel it’s important to button down the hatches in advance. Based on some indications we’ve seen, we believe that’s necessary, and we believe this month is the month to start.

All you have to do is look at the trends. Here in Utah, we’ve seen a 44 percent increase in bankruptcy filings for an individual, and that’s going to creep upstream one way or the other. But a recession—I hate to call it that but we’ll use that for now—can actually be a healthy thing for businesses and for the economy. On the positive side, our business, because of the type of service business that we run, it is a business that is very stable, even through recession periods.

We buttoned down the hatches in 2001, and it was a very, very positive thing for us and the industry. It continued to keep competitive advantages and other barriers up for other competitors, and it helped us to be more disciplined and focused on our customers, so I look at these as positive indicators within our environment.

Describe the sort of managed services your company provides.

Michael Proper: We basically quantify the costs associated with IT—information technology, which we consider as file, print and messaging, including network, server and PC. In other words, we bundle hardware, software and services for a monthly fee. And when I say services, I’m talking about remote backup, virus protection, 24-hour support for PCs or server, server monitoring, server backup, intrusion detection, spam filtration, content filtration, asset management, software distribution—those are some of the services that we deliver for a quantified fee.

Has the outsourcing of IT services abroad, to places like India or the Philippines, eaten away at your base?

Michael Proper: We’ve had a couple of competitors who have leveraged offshore outsourcing, and every one of them has brought it back on shore. Every one of them.

That being said, I believe in a world without borders. If somebody can provide something that is just as valuable from somewhere else, great, but security realities and language realities make it unlikely that they can match our service.

Your offerings are geared for small- and mid-sized companies. Is there any temptation to expand your business model and woo large corporate/Fortune 500 enterprises?

Michael Proper: Yeah, actually, later this year, DirectPointe plans on doing two things: One, we’re going upstream to the enterprise with distributed offices or locations. And, two, we’re going downstream to the consumer.

Take H&R Block, the National Parks Service, banks, fast-food chains, Wal-Mart—those are all big organizations, but most of their offices are distributed, and each office probably has fewer than 50 computers. What DirectPointe is very good at is managing those locations centrally. That’s what we’re built to do—manage their network, servers and the PC.

And what was that about going downstream to the consumer?

Michael Proper: Sometimes, don’t you really wish you could push a button and have someone come online and make sure your files are backed up or your computer is protected? Or maybe you’d like help managing your spyware or malware, or you just want your computer optimized so that it is running as efficiently and quickly as possible? If you paid $20 a month for those services, would that be worth it for you?