2016 Rocket Award: Crestwood Makes 'Slow and Steady' a Winning Strategy
This year's award winner is Crestwood Associates, a small ERP partner that overcame an uncertain start, two recessions and an overall trend of channel consolidation to achieve multiple consecutive years of double-digit growth.
- By Gladys Rama
- October 10, 2016
When Brian McGuckin and Timothy Thompson founded Crestwood Associates LLC in 1998, their small staff found themselves doing a bit of recalibrating. The original aim of the Mount Prospect, Ill.-based solution provider was to sell Great Plains ERP software to small and midsized businesses (SMBs) in the Midwest. But co-founders McGuckin and Thompson, at the time both recent veterans of multinational Ernst & Young, had little context for operating a small business servicing only slightly larger businesses.
"We really had no idea what we were doing," says William Schroeder, Crestwood's director of development, who joined the company in 2001 when it had only eight employees. "We knew what we should not do in order to stay in business, [but] we did not know how to actually grow, how to make our standards, our own processes and so on."
After nearly two decades in business, it's safe to say that Crestwood has it figured out. The company is the winner of the fourth-annual RCP Rocket Award, which is co-sponsored by Redmond Channel Partner magazine and Revenue Rocket Consulting Group, and recognizes partner firms whose business strategies have resulted in strong and sustained growth.
Crestwood's recent trajectory clearly has the "strong" part covered. From 2013 to 2014, the company's revenue increased by 12 percent, followed by a nearly 20 percent jump in 2015. In the last six years, Crestwood has doubled its customer base to around 630 companies throughout North America and, through a series of mergers and acquisitions, doubled its headcount to 72.
As for "sustained," Crestwood's longevity -- increasingly rare in this era of channel consolidation -- is its own proof. That longevity has been hard-won. Besides weathering two worldwide recessions, Crestwood has made and survived multiple adjustments to the way it operates. The way Schroeder describes it, in its infancy, Crestwood's team had to transition away from thinking in terms of "big-company processes," only to do a controlled 180 during a period of post-recession growth.
"We had to learn how to scale down," Schroeder says. "Then, as we went along through the years, we had to rethink that approach and scale back up again. It's been a lot of up and down."
Lately, though, it's been mostly up. Schroeder says the last six years have been a time of "explosive" growth for Crestwood, which has Microsoft gold competencies in ERP and Small and Midmarket Cloud Solutions.
Though the company started out selling Dynamics GP, it has lately participated in a string of mergers that have beefed up its portfolio and expanded its geographic reach while giving it enough human capital to manage it all -- factors that have been key to Crestwood's success, according to Schroeder.
In 2012, for instance, Crestwood added Dynamics SL services to its practice through its merger with Chicago-based consultancy Feterick & Associates Inc. The merger also gave Crestwood Feterick's Acumatica business and further solidified its foothold in the Midwest.
In early 2015, Crestwood merged with another Dynamics SL and Acumatica consulting firm, Custom Computer Resources Inc. (CCR). Later that year, Crestwood added Vision Business Solutions to its roster, absorbing that consulting firm's expertise in Acumatica, Sage and Greentree software.
Crestwood inked its latest merger this past July with Stanley Stuart Yoffee & Hendrix Inc. (SSYH), a Dynamics and Acumatica partner based in Florida. The deal positions Crestwood "to offer even more value to our current and future customers," said McGuckin in a statement at the time. "SSYH's selection of Crestwood further solidifies the value that Crestwood delivers."
The mergers have extended Crestwood's presence to four other states in addition to its Illinois headquarters: Indiana, Michigan, Wisconsin and Florida (where the company has two offices). It also inherited those companies' clients and employees. Not surprisingly, all of this organizational growth has corresponded to an increase in Crestwood's revenue.
Besides mergers, Crestwood also engages in partner-to-partner (P2P) relationships, boosting its capabilities -- and attracting more customers -- at relatively little cost.
"We also partner with other Microsoft partners to deliver solutions that we can't deliver, or that we don't have the bandwidth to handle ... like network services, for example. Or application hosting or cloud services that we did not have before," Schroeder says. "So we have reached out to forge and cultivate those relationships."
Though it does have a Dynamics CRM practice, Crestwood's bread-and-butter is selling and implementing ERP solutions to SMBs. Then, further along the sales cycle, the company offers additive services such as integration, report writing, training and customization -- services "to meet the needs of a client that can't be met solely by the out-of-the-box software," Schroeder says.
He adds that Crestwood is also working on developing its own set of IP solutions. "We have this grand idea to make that a bigger component of our revenue than our services offerings," he says.
Microsoft has been leaning on its partners to create their own IP for some time now, so Crestwood's approach is mostly just good business sense. Where it truly differentiates itself from many other ERP partners is its focus on three specific industries: manufacturing, distribution, and food and beverage. While Crestwood certainly has clients that fall outside of those categories (including the Breeders' Cup, Lilly Endowment Inc. and the Elizabeth Glaser Pediatric AIDS Foundation), companies in the manufacturing, distribution, and food and beverage industries tend to present a wider range of opportunities than, say, companies in the financial services sector.
As Schroeder explains, companies in those industries generally run on aging or downright antiquated systems. Those companies need IT services firms to "streamline what they do, get them out of the book ledgers and into ledger systems that are automated." Another reason these industries are such a goldmine for partners like Crestwood is that they're generally less regulated than others. Because of that, a company in the financial services industry likely has less room and demand for custom ERP services than a company in the food and beverage industry. "It's ripe for customization," Schroeder says about the latter.
Crestwood's focus wasn't always on these markets. When Schroeder first joined the company, many of its customers actually dealt in finance and real estate. Crestwood's client pool only eventually narrowed down to distribution, manufacturing, and food and beverage because, as Schroeder puts it, "that just seemed to be where the sales calls were coming in, frankly."
"We didn't look at it like, 'Hey, let's focus on those industries.' That's just where the calls came in from," he says.
Crestwood may have just been following the demand, but the move has paid off. The company has been able to develop a reputation in those industries as a technology leader, Schroeder explains, positioning it favorably against competitors. Some of its bigger clients in these sectors include Blommer Chocolate Company, Batory Foods and APICS (a supply-chain management association).
"Now we feel like we know those industries, so it's one of those situations where there's a competitive advantage for us going into prospects. 'We've got a stable of food and beverage/durable manufacturing clients. Here are some references. Let us know how we can help you,'" he says.
'Slow and Steady'
Besides cultivating a core base of customers in lucrative markets, Crestwood has developed a distinct approach to customer relationships that's focused on helping customers develop a practical understanding of the products and services they buy -- enough to give them a certain degree of independence from Crestwood, at least on the maintenance end.
"We need clients to understand their software, understand what we deliver for them. We want to transition [them] so they can be self-sufficient and not be so dependent on the mundane maintenance of the system, but rather look at the big picture of what else we can do for them, and what else we can do to make their business stronger, healthier, more robust and more efficient," Schroeder says. "So, we do want to deliver, we do want to provide, but we also want the client to own."
Schroeder credits this philosophy as being integral to Crestwood's growth strategy. Another key to its success -- the one that "turned the corner" for the company after the Great Recession, according to Schroeder -- has been its support of remote workers. Given Crestwood's rapid expansion over the past six years, entailing the addition of multiple offices across the United States and exponentially more personnel, it makes sense for the company to embrace and nurture its workers -- wherever they might happen to be located.
"I think what really turned the corner for us ... was embracing the remote worker and realizing that we didn't have to be in the office. We didn't have to have local talent. We can have talent wherever it lived as long as it was the best talent, as long as we can find clients in that area that can be serviced," Schroeder says.
As for what the future holds for Crestwood, one of its goals -- what it describes internally as its "20/20 vision" -- is to increase its headcount to 100 and double its revenue within the next four years. Schroeder expects the company will get there via the same kind of measured, methodical expansion that has brought it to where it is now.
"It's been kind of slow and steady," Schroeder says, noting that other overused chestnuts like "stay the course" and "take your lumps," while clichéd, have been undeniably effective at Crestwood. "At the end of the day, we are where we are because of that approach."
"We have to keep growing," he adds. "We're going to keep growing and expanding our customer base, expanding our reach, perhaps expanding our ERP offerings and becoming more expert -- if we can -- in those products."