Bob Bernard thrives on analogies.
“We want to be the third card in the CEO’s Rolodex,” says the 36-year-old founder and chief executive of Whittman-Hart Inc., one of the fastest-growing information-technology services firms in the country.
The first two cards, Bernard explains, identify the legal and accounting firms a chief executive can’t live without.
That third card, he adds, should have Whittman-Hart’s name on it–and it now does at hundreds of midsized firms and even such biggies as Amoco Corp., Walgreen Co., Abbott Laboratories, Aon Corp. and Caterpillar Inc.
With last year’s revenues up 76 percent, to $87.5 million, and with a roster of some 500 clients whose projects average $300,000, Chicago-based Whittman-Hart is having a banner year. It bought two companies in the last six months and will open its 10th office outside Chicago within weeks.
“If you could bottle what he has,” says Paul Carbery of Chicago-based Frontenac Co., which helped launch Whittman-Hart with a $4 million investment, “you’d be assured of having a successful company.”
Analysts, too, are writing reports that are positive to glowing, particularly in lauding an effective management team and in projecting growth prospects of Whittman-Hart, which helps companies better use their computers and software.
Acknowledging that Whittman-Hart has consistently beaten his revenue and earnings estimates, Christopher Paul of San Francisco-based Volpe Brown Whelan & Co. predicts an equally rosy outlook.
Shares in the company, which went public in May 1996 and were split in December, closed Friday on the Nasdaq stock market at $25.75; a year ago it was at $18.62 on a split-adjusted basis.
Profits soared almost 400 percent in 1996 to $5.5 million, while per-share earnings jumped 275 percent, to 30 cents.
Aptly targeting the middle market as Bernard did is a huge factor in Whittman-Hart’s success, say analysts.
Medium-sized companies–too small for Big Six accountants such as an Arthur Andersen–need what Bernard and a few others offer: custom tailoring of technology systems along with a growing network of branch offices for consulting or upgrading. Bernard calls it one-stop shopping.
The potential in that middle market is substantial. Businesses with revenues under $250 million spent a total of $17 billion on computers last year.
“And a lot of them don’t know what to do with them,” says the fast-talking, peripatetic Bernard during an interview in the company’s 35th floor headquarters on Wacker Drive, a view-filled set of offices with interiors that Bernard designed himself.
“Sure, they have the business people and they have tekkies,” he adds, “but they don’t talk.”
With intense growth in mid-sized businesses requiring up-to-speed technology, Whittman-Hart, along with some of its main competitors, such as Chicago-based Technology Solutions Co. and Cambridge Technology Partners in Massachusetts, have plenty to do.
“Many are like us but are not identical,” says Bernard of the competition. “We’re better in basic fundamentals, better in execution, better in understanding what executives in the middle market are going through, because we’re in the same situation.”
Targeting a specific market also seems to be part of the success story of Technology Solutions, which now has 23 offices, including nine that are overseas. Its 1997 fiscal year, ended May 31, saw revenues jump 69 percent to $165.1 million. Its record fourth quarter revenues of $51 million were up 82 percent, while net income doubled to $5.2 million.
Its client base is generally companies with more than $500 million in revenues and more likely to be those that are at or just above $1 billion. “And their projects tend to be highly competitive,” said a Technology Solutions spokeswoman, noting that confidentiality can be crucial.
Bernard, on the other hand, enjoys that middle ground, where he sees nearly infinite potential.
A South Side native and newly minted millionaire, Bernard is the son of a woman who retired as a bus driver last year and a man who worked a lifetime in the steel mills. He founded Whittman-Hart in 1984, six months after his graduation from Ball State University in Muncie, Ind., pulling the company’s name out of the air “because it sounded good.”
He bought out two partners and kept flying.
A computer nerd? Hardly.
“I’m in the middle. I’ve learned about business and about technology and I’m able to speak very intelligently about how the two should complement each other and I can tell you which is better for your company and your industry but I’m not the guy who’s going to tell you about the database, blah blah blah,” he says.
Others can do that. Whittman-Hart has some 1,400 employees (up from 915 in July 1996); a network of branches (Milwaukee; Indianapolis; Grand Rapids, Mich.; Denver; Dallas; Cincinnati; Cleveland; Columbus, Ohio; Peoria, and soon Atlanta) with plans to open six more in 1998.
Aided by acquisitions, he is confident that Whittman-Hart can grow at a rate of 40 to 50 percent compounded annually for the next five to seven years.
Frontenac’s Carbery says that as Whittman-Hart grows, there’s always the challenge of “maintaining the magic” and “not diluting the talent.”
And, of course, Whittman-Hart could one day be a takeover target itself, though analysts say Whittman-Hart’s share price seems too high to be an attractive acquisition right now.
“I can’t say we’re yet a Class A consulting company,” Bernard says. “We’re on the verge of becoming that, but we haven’t achieved all the milestones. The building blocks are in place.”
Then, he can’t resist: “I want Whittman-Hart to be a hundred-story skyscraper. Right now, we’re at 25 stories, with about a 10-foot foundation, which has to go to 50 feet to support the extra stories. So, right now, I’m going deeper and deeper and, at the same time, adding the upper floors. They have to balance.”
