Accountability Drives SEI Growth

March 18, 2005
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GRAND RAPIDS — In a market space dominated by original equipment manufacturers (OEMs) like Sun Microsystems, Hewlett Packard and IBM, Service Express Inc. has grown comfortable working in the shadows of giants.

Originally a division of a local hardware sales company, SEI has focused on maintenance contracts for mid- to high-end servers since 1993. Its core product is a customized service package offering 24/7 coverage and onsite assistance within four to eight hours.

The firm has averaged annual growth of 20 percent, and since 2001 has increased its work force by 38 percent and opened four new offices.

But SEI President Ron Alvesteffer knows those aren’t the statistics his customers are listening for.

“When we first call them, most companies have never heard of Service Express,” Alvesteffer said. “We’re going in there and asking them to turn over all their critical systems that they’ve had IBM or HP manage for 20 years — that run their business — and we’re asking them to turn it over to us, who they’ve never heard of before.

“We have to have a good story to tell.”

There aren’t many statistics better than a 98 percent customer retention rate.

“That really gets people’s attention,” he said.

A $15 million company in a multi-billion-dollar market, it has used its size as an advantage, carving a niche in the enterprise hardware market by being mobile, flexible and service-oriented.

Every city has a local company that maintains PCs and printers, Alvesteffer said. Just as those firms attract businesses that do not require SEI’s scale of service, SEI has positioned itself to serve mid-market and larger companies that the OEMs have regarded as second tier customers.

“When we go after the OEMS, typically we’re going after the revenue they don’t even want. They treat it like how we look at the PC/printer market,” he said. “They keep laying off engineers and focusing on just national companies, and service has really dropped for some good-size players on a regional or local basis. That’s our niche.”

The walls of SEI corporate headquarters in Grand Rapids are lined with reference letters from satisfied customers: colleges, hospitals and manufacturers, many of them high profile.

Each service contract is customized to fit the client’s needs. Starting from the first sales call, SEI fashions a set of goals and standards around each customer.

Each has its own set of measurable values, and through these, SEI tracks its success through every facet of its business, producing a feedback mechanism and measure of internal and external accountability.

“Our culture is that everyone’s compensation is based on results,” Alvesteffer said. “Our vision as a company is to work with employees to reach their personal, professional and financial goals.”

Each employee states his goals to management upon entering the company, revising them on a regular basis.

This support system helped propel Alvesteffer from sales manager to top executive in just five years. He surpassed his goals professionally and financially, and also personally with a growing family.

“If we help every individual meet all of their individual goals,” he said, “the sum of all those goals would far exceed our goals as a company. That’s what we are all about as a company; it just happens that maintenance contracts is what we do.”

Together, these goals have created SEI’s three-tiered Performance Measurement System.

“We measure everything,” Alvesteffer said. “What gets measured gets done.”

At the company level, scorecards are drawn up for sales, service and operations.

Revenue from contracts, time and material, and hardware are some of the values tracked as sales benchmarks, along with calls and new contracts. Also tracked are operational areas like the efficiency of accounts payable and receivable.

“From a service standpoint, we can hold ourselves accountable,” Alvesteffer said. “If we promised a 30-minute callback, are we doing that? Are we on site in the response time we guaranteed? Are we bringing the correct part the first time to get it fixed?

“It’s a non-verbal way of communicating,” he said. “We can show we meet that 30-minute callback 98 percent of the time, that we are on site in four hours 95 percent of time. We bring out the right part the first time 85 percent of the time.”

On a deeper level, each employee has a measurable job description, an ROI (Responsibilities, Objectives and Indicators) tracked on a monthly basis.

Alvesteffer files one as well, which he shares with the entire company.

“You can see at a glance how I’m doing,” he said. “If you have the right people, they want to be measured because they are doing well. And whether they‘ve been successful or not, it helps them make the appropriate judgments.”

The final component is a “5-15 Report,” called that because it takes five minutes to read and 15 to prepare. Here, a general overview of an employee’s tasks for the week are presented, and the success of each.

“I think (the measurements) empower people,” Alvesteffer said. “They know what direction you’re going in, what you want to accomplish. We use them to help them reach their goals and to communicate the company’s goals.

“If someone isn’t hitting their numbers, we don’t beat them up over it,” he said. “We look and see why and how we can help them.”

This transparent system is helping SEI to develop leaders from within, much like Alvesteffer’s own professional growth.

Local and regional leadership is imperative to SEI’s growth strategy, Alvesteffer said, as it intends to grow through geographic expansion.

This year, SEI intends to expand into Cleveland and Cincinnati, then into Louisville, and Pittsburgh the following year.

The plan is to create offices modeled after the original 15-employee Grand Rapids office in each market, as it has already done in Detroit, Chicago, Milwaukee, South Bend, Indianapolis, Flint and Columbus, Ohio.

As a company, objectives of customer service, employee satisfaction, revenue growth and margin retention are measured on an equal basis. If the balance of those objectives is thrown off, the company or office must respond to fix them just as it would to any of the micro indicators within each office or department.

“It takes the emotion out of decisions,” Alvesteffer said. “It’s like the legs of a table; if you’ve got one out of whack, you’ve got a wobbly company.”    

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