Annese & Associates


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September 22, 2014 Issue

The Most Powerful Name In Corporate News and Information


Integrated Communications Systems Provider



About Annese & Associates

Headquartered in Clifton Park, NY, our business is the art, science, and passion of connecting devices to networks, people to people, and ideas to action. Founded in 1970, Annese is a women-owned integrated communications systems provider in its second generation of ownership and fourth generation of leadership, serving New York State and New England.


Ray Apy


As the CEO and head of the senior leadership team, reporting directly to the Board of Directors, Ray is the driver in the design and successful execution of overall corporate strategies and the development of target growth, profit, and operating objectives. Direct reports include the CFO, VP of Services, VP of Sales, the Director of Marketing, and the Chief of Staff.

Interview conducted by:
Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – September 22, 2014


CEOCFO: Mr. Apy, your website indicates that Annese & Associates is in the business of connetology. What do you do?

Mr. Apy: We effectively connect people to devices, devices to networks and ideas to action. That is the phrase that we wrapped around that made up word connectology. Historically, the company was a network company providing wide area, local area, wireless, and data center networking. We have expanded our business over the past 15 years to include collaboration technologies including voice and video over IP over public or private networks. We also launched a data center practice in 2010 which has been the fastest growing component in the company. Our data center practice encompasses servers, virtualization, storage, high speed routing and switching, rack and power. Our current focus is building toward cloud offerings. We have some now and we are in the process of adding more to our portfolio. Part of our strategy for 2015 is to hire cloud sales people and cloud business analysts to build our cloud business around our core competencies.


CEOCFO: What do you understand overall about the industry that perhaps others do not grasp quite as well?

Mr. Apy: One of the biggest buzz words or concepts in the industry right now is cloud. There is so much talk about it, and many of the well-known industry analysts are touting that there is so much IT business that is going to “be in the cloud.” One recent study stated that 80 percent of IT spend will be in the cloud by 2016. I think there is a great deal of hype and panic around that and I know I am not the only one who thinks it is being over-stated. Nonetheless, there is an obvious transition of technology business to cloud-based applications and cloud providers, but it is not moving anywhere near the pace that industry analysts suggest. We see cloud transition activity in the small to medium commercial business segment. We see small companies looking at an opportunity to outsource, for example, their voice system, email, key applications like CRM, Microsoft file share, servers, data storage and backup or disaster recovery. Email, for example, is something that has been moving to the cloud for many years now with things like Google Mail. CRM customer relationship management is another shining example. wrote the book on this, as they were one of the first true cloud application providers. Many organizations that have a CRM type of requirement have moved to Salesforce or something like it. Those are the kinds of applications that are being consumed as a cloud service, and where we see that happening first and foremost is in the smaller, private sector commercial business market, under 1,000 employees or, more realistically, under 500 employees down to as low as five employees. In that space, the cost of owning infrastructure and hiring the person or people to run it really outweighs the cloud opportunity. Many of the applications that you need to run your business, you can outsource now to a cloud provider and not have to maintain as much or any internal staff depending on what your business needs are. That is where we see it happening. Up market and in the public sector, we see some movement but not nearly as fast or as aggressive as industry analysts are suggesting.


CEOCFO: Are your customers taking advantage of a variety of your services or are different types of customers using distinct parts?

Mr. Apy: To answer that question, I have to break down our primary customer markets for you. We serve, for example, the K-12 public education market. They consume our services and products to enable wired and wireless networks, voice communication, sometimes video, and both network and physical security. But the K-12 education clients do not have large data center projects because they often outsource this function to state chartered and funded, regional education system technology providers which, in New York, are called BOCES RICs and that means Board of Cooperative Education System Regional Information Centers. We also serve state and local government entities and within that space, all of the services and products that we provide are of relevance. Another market that we serve is what I refer to as enterprise private sector; so think large private or publicly held companies. Those organizations consume any or all of our services and solutions. By contrast, data center deployments in large health care organizations such as clinical hospitals is driven by the software they use to run their business, which is called electronic health records, or EHR. The providers of such software wield tremendous influence over how hospital data centers are structured. Therefore, we rarely provide data center solutions in that market but we do provide network, voice and related services. Yet another market nuance would be in the small to medium private sector business space, where we often provide any or all of the products and services that we offer, and where we see a growing need for and adoption of cloud based technology services.


CEOCFO: Was working with schools a deliberate strategy or was it more opportunistic?

Mr. Apy: In the early years of our rapid expansion in the K-12 education market I have to admit we were more opportunistic and this was closely tied to our launch of IP voice technology. We entered into partnership with Cisco Systems in 1997, and in late 1999 we went to market with Cisco’s IP voice technology. We started going out to our existing school customers and offering that as a replacement to older technologies such as on premise analog PBXs, and carrier provided Centrex voice service. At the time, voice over IP was much more cost effective over a five to ten year span and it offered substantial improvements in functionality, so that really helped us grow our business quickly in the K-12 space. So yes, it was opportunistic, but it was also very technology focused. Voice over IP technology also drove network upgrades. When we would go into a school district and find an opportunity for the district to save money by consolidating and using newer technology, we would also enhance our opportunity there just to enable the voice over IP roll out. That took a life of its own, and we marched right across New York State with VoIP in schools. We currently have approximately 400 education market clients, most of whom utilize VoIP systems supplied and serviced by Annese.

CEOCFO: How do you handle the challenges of working with government agencies?

Mr. Apy: One of the challenges that we see now in our industry is consolidated purchasing. This is where the government has tried to get control of all the procurement that is occurring across many agencies and procure products and services in very large bids that occur less frequently, versus many smaller bids. As a taxpayer, I have to applaud the effort and it is the right thing to do. But it has some side effects. It gets the attention of many larger, national or international technology companies so it gets more competitive. It also reduces the profit opportunity on those procurements and it makes it harder to win them. On the upside, the government is continuously evolving and with change comes more and more opportunity. Here in New York State, many things are happening with technology consolidation and government, so while procurements grow more challenging, opportunities are simultaneously developing and expanding. The most important thing is to stay plugged in, understand our client’s requirements, stay close to the decision-makers, stay ahead of the technology curve, and bring new initiatives and technologies to them that create tangible value.


CEOCFO: Would you tell us more about the data centers? What is the plan?

Mr. Apy: The plan for growth of our data center practice at Annese is to continue to promote the concept of server virtualization across our client base and with our prospective clients. Server virtualization allows the client to run multiple virtual servers on less hardware where traditionally, nearly every application had to run on its own server appliance. The old model was unwieldy, expensive, and difficult to scale. In recent years, virtualization technology hit the market and began gaining ground quickly because of the comparable efficiency it provided. The companies that really drove this trend were VMware and Citrix. At the same time, the server hardware industry has grown by leaps and bounds. The computing power of a single box is so much greater than it was. You see evidence of this right down in the consumer products market with the capabilities of today’s computing devices. Your smartphone has more capability then an entire data center of 15 years ago. So the plan for Annese’s data center practice growth is really built on assessing the customer’s environment and finding opportunities for them over two to four years to run their business much more efficiently. For organizations that are transaction based where the speed of the computing system equates to real dollars, that is really important because we can go in and create a business case that shows them how they can increase revenues or profitability simply by a data center upgrade. The real key is in the quality of the assessment work. From there, opportunities that benefit the client and us naturally present themselves.


CEOCFO: With all of the changes in technology, how do you know what to keep on your radar screen?

Mr. Apy: In this industry, I think more than any, you can become distracted so easily by all the new shiny pennies that continuously pop up. It is amazing how many things enter the technology market that never gets legs. There is often a ton of hype around new technology, whether it is consumer gadgets, software applications, servers, network technologies, you name it. So many of these things come and go, but we have adopted what we call the hedgehog concept. We try like mad to stay focused on our core competencies, looking for things that are directly adjacent to those competencies, and we do not allow ourselves to spin off in directions of business development that are far outside of our comfort zone, not from a market focus, a technology focus or from a geographic expansion focus. When we stay focused, we find ourselves steadily growing larger and more profitable without any major investment risks.


CEOCFO: How do you reach prospective customers, or are they coming to you at this point?

Mr. Apy: In some cases, new clients find us but in most cases, our business grows through referral, especially in the markets in which we are already strong. We also have a fantastic marketing department that helps to generate brand awareness and demand for our company. They attend industry and trade show events, they do customer appreciation events, and they execute very well on targeted marketing campaigns to attract very specific customer sets with a specific technology. For example, if we know that a particular vertical market has a business challenge or a need that is consistent across that market, we will try to address that need with a specific solution and then we will target a campaign to a specific customer segment size within a specific geography. These are multi-touch campaigns where we provide information about a solution via direct mail and email, and we invite prospects to events to get a chance to meet in person. However, credit for the primary growth of the business I have to give to our sales team. We have a direct sales force that operates consistently across all of our markets and regions. They are constantly prospecting new customers and building their business through referrals.


CEOCFO: Annese & Associates was named to the Inc. 5000 again. In your press release about the recognition you talk about family values. How do you keep that feeling which sometimes gets lost as a business grows?

Mr. Apy: There is a multitude of ways that we do that. First of all, from a company board and leadership team perspective, we make sure that we are providing information to all of the employees in the quantity and complexity they can consume so that everyone is clear on what the company’s mission and evolving strategy is each year and throughout the year. We are also very open book as it relates to our finances. We share information relevant to the company’s success in business right down to the details of the income statement so that each department and employee can see what their contribution means to the bottom line. Not everyone wants to be an accountant, but we make that information available nonetheless. We provide this information in quarterly seminars to all of the employees at a high level as well as monthly updates at the departmental level and they always have access to more detail if they want to understand more. The company’s finances are always right out there in the forefront and that helps to drive a culture of accountability relative to producing operating profit. We can show specific activities that increase operating profit and other activities that do not. When people understand that, they can help impact it. The big question is, why should they care? The answer is in our fantastic profit bonus program. On top of our 401k employer match up to 6%, we also have a net income based profit bonus that we offer at the end of every year based on actual performance. Last year, we paid every employee an additional 7% of their W-2 in bonus dollars. That is something very real and tangible that most of not people appreciate and are willing to work as a team to help maximize. There is also a great deal of recognition at Annese. We are constantly recognizing people for their achievements, whether they are professional development or customer success oriented. So there is this constant awareness of all the good things that people are doing, and that generates a lot of good will. The company started in 1970 as a family-oriented business. The founder was very adamant in that he knew if he took great care of his employees and treat them as partners, they would in turn take great care of his customers. We still run the company that way. In fact, we have built on the concept and taken it to new heights. Even though we have grown to over 100 employees with an expectation of exceeding $100M in revenues this year, we are still a fairly small company able to maintain that family culture. Everyone feels like they are part of something, no one feels like a number. The benefits are fantastic, the pay grades are very competitive, and there is a fantastic profit sharing opportunity. On the very first line of my strategy plan document for every fiscal year, it says “drive high employee satisfaction and high customer satisfaction,” in that order. If I start with that, everything else falls into place. We have had feedback from our employees because we do employee satisfaction surveys every year. We use a third party that is the New York State version of the best companies to work for run by the New York chapter of the national Society for Human Resources Management organization, and we have been ranked in the top 7 each time we have entered the competition. So that gives us direct, 3rd party feedback validating that we are doing the right thing.


CEOCFO: Put it together for our readers. Why choose Annese & Associates?

Mr. Apy: You will have a different experience and a better experience than you do with your existing vendor of supplier. You will feel like you have a partner, not a supplier.


“On the very first line of my strategy plan document for every fiscal year, it says ‘drive high employee satisfaction and high customer satisfaction,’ in that order. If I start with that, everything else falls into place.” - Ray Apy


Annese & Associates

747 Pierce Road, Suite 2

Clifton Park, NY 12065







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