Tapping into the telecommunications industry: one of the nation's hottest industries looks like a gold mine for small businesses seeking procurement opportunities.

One of the nation's hottest industries looks like a gold mine for small businesses seeking procurement opportunities

HOW WOULD YOU LIKE TO HELP build the information superhighway? Sound like an opportunity too good to be true? Well, it is within your reach, especially if you own the kind of small business that can adapt to the continual shifts of our technologically driven society. Indeed, the information superhighway could be an expressway to riches for entrepreneurs--if they can strategically position themselves to service the burgeoning needs of the $600 billion telecommunications industry.

The key to linking up with the billions of dollars in procurement contracts that will potentially become available over the next decade is to remember that the information superhighway is still under construction. Competition to develop systems that will bring a new generation of high-tech interactive services to consumers has spurred a recent flurry of partnerships between phone-service providers, cable companies and computer giants. Since there is no master blueprint for these corporations to follow, being the first to enter into emerging billion-dollar markets is a top priority.

Over the next decade, these high-tech telecommunications firms will spend billions of dollars to develop the new technologies and information transmission systems that will make up the infrastructure of the information superhighway. So, considering the type of small business you own, if you can help the telecommunications giants build these new systems quickly, and in a cost-efficient manner, you can benefit from the coming golden age of telecommunications (just like the companies profiled in this article).

Right now, the telecommunications industry is made up of several different components: telephone services (wired, wireless and cellular); broadcast (including cable and satellite); and computers (hardware and software). On each front, new technologies and uses are emerging every day. All of these areas are expanding. Just consider: Miniature satellite dishes are being sold for home use; cable systems will soon have the capacity for 500 channels; and you can now make cellular phone calls from coast to coast or send faxes via wireless transmissions. Many more mind-boggling advances are on the horizon. If small businesses(those with annual revenues of less than $10 million) devise strategies to serve the needs of companies developing these advances, they'll have the potential to get rich twice: during the development stage, and after the new technology becomes popular.

What kinds of small businesses stand the best chance of aligning themselves with the telecommunications giants? The winners will be efficient companies with a strong understanding of new technologies, the financial resources to provide quality service, a solid track record of success with major prime contractors and the responsiveness to give their clients what they want on time. As D. Linda Garcia, project director and senior associate at the U.S. Congress Office of Technology Assessment in Washington, D.C., points out: "You don't need a big company to make good these days. In the telecommunications industry's competitive environment, small is good, smart is good and being able to react quickly is good."

But why would a large company want to cut a small firm in on potential billions?

"Telecommunications companies are eliminating the role of middle managers. These firms are focusing on what they do best--developing technology and systems--and outsourcing other things to reduce their overhead," says Garcia. "If you can supply a very specific service to a larger business, it could be a bonanza for your company.

FINDING OPPORTUNITIES

Wireless and cellular services provide a good example of how opportunities are created within the telecommunications industry. Today, the cellular telephone industry has more than 9 million cellular service subscribers and accounted for $12.6 billion in revenues for the 12-month period ending in June 1994. Because of their foresight and creativity, manufacturers of spinoff products, such as pagers and beepers, have benefited greatly as portable phones are no longer considered a luxury, but a business necessity.

As the industry continues to expand, the demand for products and services to aid that expansion will increase. For example, licenses for the next major platforms for wireless information transmissions were auctioned off last year, and auctioning will continue through this year. Industry experts project that Personal Communications Services (PCS) and Interactive Video and Data Services (IVDS) will experience growth similar to the cellular phone industry. These new platforms provide the foundation for everything from sending wireless faxes to allowing opponents thousands of miles apart to play interactive video games against each other.

Maceo Sloan, CEO of Sloan Financial Group, a Durham, N.C., black-owned investment firm with over $3 billion in assets, recently led a group of investors in a successful bid for five PCS licenses that will provide national coverage. Under the name PCS Development Corp., the group is expected to use its license to provide wireless communications that could link fax machines, pagers, portable computers and cellular phones. Don't expect to purchase a license; however, the development of such systems offers the greatest opportunities for small businesses.

"With PCS, which is the preeminent service right now, there will be opportunities to help build the infrastructure for voice data," says Anthony Williams, director of the Federal Communications Commission Office of Communications, Business Opportunities, in Washington, D.C. According to Williams, "There will be a substantial need, not just in PCS, but in cable television for companies that are capable of laving wire and cable, and companies that provide software and programming for these systems."

The need for wiring, software and transmissions equipment cuts across different segments of the telecommunications industry. Phone service providers are expecting continuous growth in coming years as they upgrade their systems to handle interactive technology. Philadelphia-based Bell Atlantic and Basking Ridge, N.J.-based AT&T Network Systems are currently building a "full-service network" to provide online shopping and on-demand movies that can be dialed up over telephone lines. "We're talking about wiring a massive amount of homes," says Sherry Embrey, manager of woman and minority business programs at Bell Atlantic. "Internally we don't have the people to do that."

Embrey says that the partnership to build the full-service network is part of an $11 billion capital improvement program. AT&T will distribute subcontracts to firms to install "inside premises" wiring and "set-top" boxes (similar to cable-TV boxes), provide construction services for telephone lines and cable installation, supply mechanical hand tools and perform maintenance services. The two companies have agreed to a 15% goal for participation of minority- and women-owned businesses. Other major phone-service carriers have similar needs.

Cable companies, such as New York-based Time Warner Cable, TeleCable Corp. in Norfolk, Va., and Comcast Corp. in Philadelphia, also see growth ahead. Anticipating delivering telephone voice and data services in the near future, each company is upgrading its cable lines to handle the increased load. Furthermore, with cable's capacity increasing to 500 channels, there is "a massive need" for programming, of both games and video, according to the FCC's Williams. "To the extent that minority entrepreneurs develop programming niches, there are going to be significant opportunities," he notes. The SEGA Channel, headed by African-American CEO Stan Thomas, began capitalizing on the demand for games last December, offering up to 50 video games on cable systems using a pay-for-play" format.

Another innovation, satellite broadcast services, is still in its infancy. Cost is a problem for satellite transmissions. As with cellular telephones, satellite broadcasting will rely on companies that can create new technology that will decrease costs for consumers, while spinning-off products that help make the service into more of a necessity.

Computer hardware and software have always been a major part of the telecommunications explosion. The need for specialized software is strong and will fuel future growth. Developing the next generation of computers that will run these new programs will also keep computer companies forging ahead. To keep the quick pace of developing new products, these high-tech computer companies need high-tech assistance to help them stay competitive.

Large corporations play a role in developing new technologies across the spectrum. Anthony Brown, minority sourcing engineer at Dallas-based Texas Instruments Inc., says that this semiconductor, defense equipment and systems, personal computer and integrated circuits manufacturer has lucrative contract opportunities for computer sales and software providers, cable manufacturers and installers, electronic component suppliers and consultants. "We have a minority-owned consulting firm to help us find opportunities for minority suppliers," he notes.

The computer giant IBM, like many high-tech firms, needs help centralizing and consolidating its telecommunications operations. Phyllis McCarley, manager of IBM's Minority- and Women-owned Business Program, based in Somers, N.Y., says she is looking for companies that can do everything from supplying pagers and cellular phones to providing video teleconferencing services or moving complex phone systems from one location to another.

Small businesses should also look for telecommunications procurement opportunities from federal and local government agencies. Glen C. Moore, associate director for procurement management at the Defense Information Systems Agency in Arlington, Va., says his agency procures about $3 billion annually for the Department of Defense (DoD). He estimates that about 12% of that is contracted out to minority-owned businesses.

Most opportunities at the agency are in systems engineering and the integration of computer systems, says Moore. The latter includes developing plans, analysis, methodology and training for advanced application systems, along with their implementation. The DoD, in particular, has a heavy need for high-tech equipment and computer technology to help it stay on the cutting edge of developing systems and equipment vital to our national defense. "We must figure out how to integrate and maintain a seamless way of doing business between different computer platforms and technological systems," explains Moore. Almost every government agency and business faces similar dilemmas, and needs help in upgrading their current computer systems to take advantage of new technologies.

Both government and business also need other types of assistance. "Training is a big area," notes Joann Anderson, director of the Minority Telecommunications Development Program at the National Telecommunications and Information Administration. "The changes arc so swift, not everyone has been able to keep up. Just think of all the software. For most people, somebody has to show them how to use it."

STARTING THE PROCESS

There is a wide range of opportunities for firms that aggressively pursue them. All you really need to know is who actually has control over granting the contracts.

Large corporations and many federal government offices have a procurement process that potential suppliers must adhere to. Generally, it works like this:

* First, contact the company's or agency's procurement officer and ask if there is a current or future need for the type of products or services you offer. Check to see if there is a minority- and women-owned business program.

* Usually, you will receive a package of information about the procurement process. It will contain a supplier capability information form, which routinely asks for information about your product or service, references, financial viability and past track record. Fill out the forms and send them back. You may also be encouraged to seek minority certification from the National Minority Supplier Development Council or a regional chamber of commerce.

* After the capability forms have been returned, your small business may be referred to different buyers within the agency or to different corporate offices throughout the country. Your company may also be placed on a database that these buyers have access to.

* Don't rely on the buyers to offer contracts to you. It is up to the small business owner to sell his business as an asset to each company or agency. That means calling constantly to inquire about opportunities, and showing real evidence that your company can do the job. Realize you are competing against thousands of other firms. You must be persistent. It may take months or years to win a contract. Good luck!

* For more information on contracts for minority- and women-owned firms, call the following companies: AT&T at 800-322-6923, (California residents call 800-321-6923); Bell Atlantic at 800-445-0325; the Defense Information Systems Agency at 703-692-3680; IBM at 800-IBM-3333; and Texas Instruments at 214-995-3271.

RELATED ARTICLE: AN INDISPENSABLE RESOURCE

Stampp W. Corbin is a perfect example of how a savvy entrepreneur can ride the telecommunications boom to riches.

Corbin is the 34-year-old president and CEO of Resource One Computer Systems Inc., a computer products reselling and distribution company ranked No. 88 on the 1994 BE INDUSTRIAL/SERVICE 100. After acquiring a majority interest in Resource One in 1992, he quickly engineered a turnaround that took the firm from $500,000 in losses on revenues of $12 million, to 1993 revenues of $18.2 million and a profit margin he conceals with a grin. The turnaround was so successful that by October 1994, he was able to move Resource One to new headquarters in Columbus, Ohio, and purchase 100% ownership of the firm.

Corbin's ability to understand the changing nature of the telecommunications industry is key to his success. "The industry is restructuring, and you're going to have new industry leaders, new competitors and new products," says the Harvard Business School graduate. "Positioning yourself really has to do with what kinds of products and services the major carriers are going to need."

Meeting the needs of major carriers is what has earned Resource One several million-dollar contracts. Last January, the firm partnered with AT&T to establish a Technology Acquisition Center inside the 6,000-employee AT&T Columbus Works manufacturing facility in Columbus. The center provides equipment and support services for AT&T's laboratories, administration, testing facilities and production.

"AT&T was looking at a better way to acquire computer technology, decrease the number of vendors they were using, control their costs and decrease nonconformity in their equipment... So they basically outsourced that function to Resource One," says Corbin. His firm has a multimillion-dollar contract that is renewable each year he operates the center for AT&T.

Corbin's experience as a salesman for IBM and Honeywell has also helped him net contracts. He aggressively courts the regional Bell companies, pushing computer products and systems from such top manufacturers as Sun Microsystems, Hewlett Packard, IBM, Apple, Dell and AST. As a result, Pacific Bell, Nynex, Bell South, Bell Atlantic and Ameritech are his clients. "Some purchase several million dollars from us every years," he says.

In fact, in 1992, Pacific Bell awarded Resource One a two-year, $15 million contract to provide computer products for their total network management project in California. And last fall, Corbin won an 18-month, $8 million contract to provide computer products and technical support to Bell Atlantic's upgrade of its digital phone network.

Such moves should position Corbin's firm as an indispensable "resource" for his telecommunications industry clients.

RELATED ARTICLE: CUSTOMIZED CONSULTING

From an office incubator in Portsmouth, N.H., Tom Perkins is slowly nurturing his consulting business on the growth of the telecommunications industry. Just four years ago, the president of Perkins Financial Associates concentrated entirely on providing computer-assisted accounting services. But the changing telecommunications industry quickly showed him another market with the potential to significantly multiply his earnings.

"Over the last two years, we've gone from being focused on accounting software to recommending technological solutions to people," says Perkins, who was named the 1994 New Hampshire Minority Small Business Person of the Year. His client's confusion over buying and using accounting software inspired Perkins to move into computer consulting.

"People are just uneducated when it comes to computers and software," the 35-year-old Perkins says flatly. Capitalizing on this void, he has strategically diversified his business. "We provide clients with needs analysis. First, we do a thorough investigation by talking to the staff, and accessing their hardware and software," says Perkins, who earned on associates degree in accounting from New Hampshire Technical College. "Then we give them a written report with our recommendations." If requested to, Perkins can install and upgrade equipment or recommend a third-party contractor.

Consulting services are a huge part of the telecommunications boom. According to Perkins, consulting accounts for 50% of his business, which last year posted revenues of $200,000.

Although he is virtually a one-man operation working out of two offices, he has painstakingly built a fine track record with 50 small company clients in the New England area. last year, he landed a $30,000 contract to help the Peace Development Authority switch from a combination Digital Equipment Corp. a UNIX network system to a standard Novell network computer system. The state agency, which is redeveloping the old Peace Airforce Base, also purchased a security badge system and upgraded its accounting and property management software.

Now Perkins is pushing to win contracts from major corporations and the federal government. "I've been trying to get big contracts for a year and a half," he says. "The problem is, I haven't had money for marketing until now."

Despite his problems, he's gotten his firm onto the bid lists of about 100 companies, and he expects to receive Small Business Administration 8(a) certification this year. He is currently preparing bids on contracts with the U.S. Department of Treasury that range from $200,000 to $2 million. He's optimistic but, because he runs such a small business, he's proceeding cautiously. who knows--Perkins himself may need a consultant before he's through.

RELATED ARTICLE: A PERSONNEL TOUCH

Sometimes obtaining opportunities in the telecommunications industry requires a special touch --a hard shove. Ask Shirley Blair, a 20-year veteran in the temporary employment industry, who used every ounce of her experience to land a five year, $10 million-plus contract from Bell Atlantic last October.

Blair, the president of Blair Temporaries & Staffing, says that Bell Atlantic was looking for a national agency to provide part-time data entry and clerical workers. "They didn't think a small firm of any sort could handle their needs," says Blair, who earned her business degree from Howard University.

But by constantly calling and using superior salesmanship, "We convinced them that they weren't looking for a national firm; they were looking for their needs to be met," he says. "Knowing that I had been doing technical bids for 20 years, I felt comfortable that no other temp agency was going to come close to what we could propose. Fortunately, we were correct."

Blair Temporaries is the prime contractor, and will subcontract out to six additional women-owned temp agencies in New Jersey, Pennsylvania, Delaware, Maryland, Virginia and West Virginia. The firms will share a contract that is expected to be several times larger than the publicly announced $10 million because Bell Atlantic has not tracked its spending on temporary services in recent years. If those expectations hold, it could also be the largest contract Bell Atlantic has ever awarded to a minority firm.

The contract is a major win for Blair, whose two-year-old firm is Silver Spring, Md., intends to use the same strategy of persistence and partnering to go after temporary services contracts for MCI and the other regional Bell companies. She has shown that even if your small business isn't a technical firm, there are still telecommunications opportunities that you can shoot for and win.

She reasons, "If the independent temp agencies don't strategize on how to attract these contracts, the big boys will eat them up because they've got the resources, the manpower and the offices."

The 45-year-old Blair is particularly upbeat because she believes this contract verifies her firm's ability to service the industry's giants. And that will help land more contracts as the telecommunications industry expands. "If the telecommunications community becomes as innovative as Bell Atlantic has, it could be extremely lucrative," she notes.

Blair Temporaries had revenues of $3 million last year, but Blair says the information superhighway could soon produce a system for recruiting by computer that would increase her revenues even more. In the meantime, she has set her sights on becoming the first minority temporary agency to go national. For Blair, that would be the perfect finishing touch.