What Happened to Scott Consulting

I appreciate all the e-mail readers send me. Some days, I think I’m flooded with it, but it’s neat to be flooded with e-mail from people who read what I have to say and take the time to comment on it. For a skinny bald guy from Minnesota, this is the best complement anyone could offer.

You may have noticed the author blurb at the bottom of my column changed a few months ago. Instead of president of Scott Consulting Corp., I’m now chief technology officer of Cross Consulting Group. Some of you sent e-mail and asked what happened, and I promised to write an explanation. Here is what happened.

On May 7, 1999, Cross Consulting Group acquired all the assets, liabilities and employees of Scott Consulting. The fiercely independent, rugged individualist sold out, and it made good sense for everyone involved to do so. This event taught me yet another lesson that I should have learned long ago -- never say never.

It all started when our sales tanked in late 1998 and early 1999. We lost several major customers, mostly due to reasons beyond our control. One customer closed its data center and moved to Texas. Another had a change in management and decided to replace all outside contractors with permanent employees. Another hired away our onsite contractor, and yet another customer went bankrupt, leaving a debt of several thousand dollars.

Our sales dropped by almost two-thirds and never recovered. This all happened shortly after I made a long-term commitment for 2,200 square feet of office space, a T1 Internet connection and an expensive training package. By spring 1999, I was losing about $5,000 every week, with no end in sight. To make matters worse, some of our remaining customers got into cash flow problems and were late on payments to us.

It’s really bad when all this happens at once.

Looking back on it now, I think we were a victim of Y2K freezes and a fundamental market shift. We found that nobody wanted contracting and consulting services, unless they had a pre-existing, long-term relationship with a consulting firm that had something unique to offer. Technical talent was no longer enough.

My suspicions were confirmed when an IT recruiter friend told me about the number of resumes he had gotten from sales people leaving consulting companies and looking for new jobs. It seems we weren’t the only company in trouble.

In the middle of a labor shortage, sales for contracting companies went in the tank. Go figure. Since we had grown beyond what I could personally oversee, we were no different than any other contracting company.

Meanwhile, our attorney introduced me to his brother, founder of Cross Consulting. Cross has a really neat concept -- rural software development centers that outsource long-term legacy application maintenance for customers in the U.S. These centers deliver work for a price competitive with off-shore contracting houses, but without major time zone differences or language barriers.

Cross had the rural development centers, management depth, project managers and financial backing. I also got along well with Cross’s owners. We had office space, local technical talent, an infrastructure of servers, PCs, and a high-speed Internet connection. We could not have complemented each other any better.

We did the deal. Combined, we have about 60 employees, including two owners, a vice president of finance, a human resources director, a consulting manger, a general manager for the development centers, and me -- the technical services manager and chief technology officer. We expect to have 100 employees by year-end. We do strategic planning, project management and technical services.

We have some nifty challenges ahead. First, we are working on an internal network that was cobbled together from leftovers to handle a dozen employees. Now we need to make the network support 100 employees spread across multiple states. We’re also dealing with rural phone companies that don’t have massive amounts of bandwidth to sell, so we’re inventing creative ways to move data between our customer sites and the development centers. We’re taking on work I wouldn’t have dreamed possible for us a few months ago.

I would be lying if I tried to claim this hasn’t been a personal adjustment for me. Besides, nobody would believe it anyway. I’m emotionally working my way through losing my first business venture and becoming part of a bigger organization again, but I’ll get over it and learn from the experience. --Greg Scott, Microsoft Certified Systems Engineer (MCSE), is Chief Technology Officer of Cross Consulting Group (Eagan, Minn.). Contact him at gregscott@scottconsulting.com.