News Article

Konica Minolta Acquires IT Services Provider to Spur Growth

By Daria Hoffman, Managing Editor, January 11, 2011

Konica Minolta Business Solutions U.S.A., Inc. (KMBS), announced Friday it has acquired All Covered, Inc., a leading provider of IT services to small and medium-size businesses (SMBs) for an undisclosed sum. As a result, KMBS expects to enjoy significant growth in the $18 billion SMB IT services market. Indeed, KMBS Senior Executive Vice President and COO Rick Taylor said he believes a doubling of services revenue is “clearly achievable” over the next 12 to 18 months. And, of course, there’s the opportunity for Konica Minolta equipment to be sold into the 2,000 clients currently being serviced by All Covered.   

With revenues of just over $60 million, All Covered becomes a wholly owned subsidiary of KMBS. It has 324 employees (250 of whom are engineers) in 22 offices throughout the United States for on-site support, as well as two 24/7 network operations centers that enable it to provide around-the-clock computer and network services to customers in remote locations.

Taylor described the acquisition and the expansion into IT services it represents for Konica Minolta as “the culmination of the direction Konica Minolta has been heading” for the past several years—shifting from a hardware provider to a services company that can help customers with every aspect of their information/workflow throughout its lifecycle.”

Synergy Abounds

Konica Minolta’s acquisition of All Covered follows similar moves by Xerox and HP in recent years. Taylor said that All Covered is a great fit for Konica Minolta because of its very strong brand; because it’s one of very few large national providers that focus on the SMB market, which accounts for roughly 75 percent of Konica Minolta’s revenues; and because of its excellent management and staff, which will remain in place, headed by Todd Croteau, All Covered president.  

Croteau pointed out that the two companies have a “shared vision” of acquisitions as the way to achieve critical mass in the IT services space. All Covered has acquired 16 IT service providers in the past 13 years and the plan is for acquisitions to continue. No stranger to acquisitions, Konica Minolta’s Taylor oversaw 52 acquisitions in his years at Toshiba, expanding the firm’s TABS direct sales channel. In his tenure at Konica Minolta, he completed that company’s acquisition of Danka in just nine months.

Noted Croteau, “By joining forces with Konica Minolta, we get the benefit of their deep, rich technology experience and a huge small business client base [200,000 SMB clients].” He added, “What’s exciting and visionary here is that we’re not aware of anyone on the scale of Konica Minolta playing in this arena. We’re glad to have the resources and the marketing backing us. And they have a broad vision for a whole slew of services, not just managed IT, but also a range services for specific vertical markets.”

How Will It Work?

All Covered will retain its brand and be identified as a division of KMBS. Konica Minolta sales associates in the direct and dealer channels will be able to introduce all of their existing and new customers to the additional managed IT services All Covered can provide. Sam Errigo, senior vice president of Konica Minolta’s Business Intelligence Services Division, pointed out, “There’s a natural progression for customers who request managed print services to then want to take advantage of managed IT services, so they have one source to come to for all integrated services to help with the flow of information.”  He added that because keeping up with rapidly changing technology is an expensive proposition for SMBs, he believes there’s a “huge opportunity for growth in hosted services,” which Konica Minolta can now provide through All Covered, as well as for serving vertical markets with very specific offerings.

Likewise, All Covered can now offer Konica Minolta hardware and software to its customers. Although products currently account for very little of All Covered’s revenues, Taylor pointed out the potential by noting that 80 percent of the customers under an IT services contract with a Konica Minolta-owned company in Phoenix with a business model similar to that of All Covered use Konica Minolta equipment.

While products and services will be provided by the vendor with the appropriate skill set, Taylor said, “The customer will be able to get from either organization one agreement that covers all of our services, making it very simple, which is what our customers are asking for.”