Computer bug: Network Magic's team of consultants dare to tread where in-house information technology departments have failed.

EARLIER this month, a computer failure at Barclays Bank in London left millions of customers unable to draw cash from their own bank accounts. Last month, Visa's computer network got hit, making it impossible for hundreds of cardholders to use their credit cards. And last year, a computer network at Palm Beach County's election office crashed just before a new test of touch-screen voting machines.

With so much dependent on computers, work often grinds to a halt when networks crash.

So what are the many small and medium-sized businesses supposed to do when their IT departments are unable to troubleshoot a problem?

More than a few are turning to companies like Santa Monica-based Network Magic Unlimited, a computer reseller and provider of security systems and technical support.

Like many resellers, Network Magic got stung during the dot-com bust, when surplus PCs lined the virtual shelves of eBay. But in the past year, Network Magic's revenues have jumped 30 percent, to roughly $4.4 million, thanks to the booming business of security solutions--software to counteract viruses, worms, spam and spyware that infect computers daily.

"Things have gotten so complicated in networking that many times there isn't enough staff able to figure out what happened," said Network Magic President Susan Pignotti. "The network needs to be a positive, not a negative."

Often, Network Magic gets hired to assess where a company is most vulnerable and where its IT money should be spent. Engineers also offer help on setting up procedures, such as backing up the network every night. One of the first things Pignotti tells her clients: "Don't use junky equipment."

Pignotti, who received a degree in art history from Wellesley, got into computers after being hired out of college as a marketing rep by International Business Machines Corp. She spent 10 years at IBM and then joined a start-up with her husband called Ocean Computers, in Los Angeles, which leased used computers and provided service to IBM systems.

By 1994, Pignotti formed Network Magic and her husband, Thomas Masi, joined a year later. Eventually, customers wanted to buy personal computers and the company made the shift to being a PC reseller, selling computer systems to businesses.

During the dot-com years, the company was heavily involved in reselling, with 80 percent of revenues coming from the resale of computer parts and just 20 percent from service. Now the mix has changed to roughly 60 percent reselling and 40 percent services, primarily because hardware has become a commodity business. The company no longer sells personal computers and the margins on its service business are far higher than on reselling.

"The dot-com bubble didn't kill us, but it took out a lot of our competitors," said Masi, adding that the business struggled for a year or so because eBay Inc. was inundated with used computer systems that were on sale. "This is a very unstable industry."

Network Magic shifted gears to survive. The company, which had expanded to an office next door and employed as many as 18 people, pared back staff by one-third and de-emphasized computer sales in favor of services.

Pignotti noticed that as the Internet matured along with the networks of client businesses, their need for hands-on services grew. The company got a lift as demand for security software sparked an industrywide rebound.

Pignotti admits that the company has stayed alive by adapting to changes in the computer industry. "It's a very difficult business to stay solvent in," she said.

Network protection is an example. A few years ago, firewalls were the main way to protect computer networks from intrusions. But the proliferation of various computer intruders has created a surge in demand for new products to thwart invaders.

"Now a company needs URL filtering, anti-spam software, an interior detection box and a secure socket layer," said Pignotti, adding that many companies do not have extra layers of security to protect them from spyware, which attacks Internet users surreptitiously and then infiltrates home offices and laptop computers. Spyware allows Web sites to monitor the activity of visitors when they leave to go to other Web sites.

Most assaults on network problems come from within a company, even if inadvertent.

David Perry, global director of education at Trend Micro Inc., a network antivirus and Internet content security software firm in Cupertino, said more computer resellers are taking the role of troubleshooters, particularly for security software.

"It's a world that's getting a lot of attention because security on our systems is not very good today," he said.

"Those of us at home and at small businesses are vulnerable, because there's a shift in the basic paradigm of 'malware,' "he said, using the common term to describe any form of malicious software. "Rather than dealing with students and kooks, we're dealing with businesses that are using spyware because there's a profit to be made from collecting data on consumers."

PROFILE

Network Magic Unlimited

Year Founded: 1994

Core Business: Computer technical support, network security and solutions

Revenues in 2003: $3.3 million

Revenues in 2004: $4.4 million

Employees in 2004: 12

Employees in 2005: 12

Goal: To provide the best advice and service to Clients

Driving Force: The ever-changing computer industry