5251 DTC Parkway, Suite 1400
Englewood, Colorado 80111
Fax: (303) 220-7100
Web site: http://www.ciber.com
Sales: $156.8 million (1996)
Stock Exchanges: NASDAQ
SICs: 7371 Computer Programming Services
A leading, middle-tier information technology company, Ciber, Inc. provides computer consulting services that help corporate clients keep pace with the ever-changing capabilities of computer software. With more than 30 branch offices nationwide and a team of more than 2,100 consultants during the mid-1990s, Ciber was a company whose time had come during the 1990s, a decade that witnessed a meteoric rise in annual revenue volume from barely more than $10 million to the $156 million generated in 1996.
Origins in 1974
Ciber was founded in 1974 by three individuals, one of whom would remain with the company and guide its fortunes for its crucial first two decades. Of the three original founders of Ciber, Bobby G. Stevenson emerged as the key figure in Ciber’s history, shaping a start-up computer consulting firm into a leading national force by the 1990s, when the computer consulting industry was generating more than $30 billion worth of business a year. A graduate of Texas Tech University, Stevenson spent the years between his formal education and the formation of Ciber working as a programmer analyst for International Business Machines Corporation (IBM) and LTV Steel in Houston. By the early 1970s, when Stevenson was in his early 30s, he and two other colleagues decided to make a go of it on their own and organized Ciber, an acronym for “consultants in business, engineering, and research.”
At the time, Stevenson and Ciber’s other co-founders perceived a need in the corporate world for specialized, technical assistance in keeping pace with the technological advances in computer hardware and computer software. The trio saw an opportunity to provide contract computer consulting services to clients lacking either in the resources or the expertise to use the promising power of computers in their day-to-day operations. Through Ciber, the founders tapped into a market that would grow explosively in the decades ahead. Few realized at the time how important computers would become to the business world. As the use of computers increased and wave after wave of computer innovations swept away yesterday’s technological vanguard, the need for sophisticated service firms like Ciber to implement the frequently indecipherable technology of tomorrow grew exponentially.
Although Ciber entered the business of computer consulting services at a relatively early time, the company’s physical and financial growth did not mirror the growth of its industry. Ciber grew at a modest pace initially, then embraced a new business strategy during the mid-1980s that ignited prolific growth. Stevenson watched over Ciber during both of the company’s two eras, heading the company during its contrastingly slower period of growth and leading the charge during its decided rise during the 1990s.
During Ciber’s inaugural year of business, Stevenson served as the company’s vice-president in charge of recruiting and managing the fledgling firm’s technical staff, a post he would occupy until November 1977, when he was named Giber’s chief executive officer. From late 1977 into the 1990s, Stevenson was responsible for all of Giber’s operations. At first, Stevenson and the two other co-founders targeted their consulting services exclusively to the automotive industry, establishing Giber’s first office in the hotbed of automotive production in the United States, Detroit, Michigan. Ciber did not remain wedded to the automotive industry for long, however. A few short years after its formation, Ciber began tailoring its services to the oil and gas industry as well, a move that occurred at roughly the same time as the company’s geographic expansion. Two years after the company opened its doors in Detroit, an office in Phoenix was opened. A year later, in 1977, an office was established in Houston. A Denver office was opened in 1979, followed by the opening of a Dallas office in 1980 and an Atlanta office in 1987. The following year, Giber relocated its corporate headquarters to Englewood, Colorado. While executive officers circulated throughout Giber’s Englewood facility, the company embarked on the most prolific growth period in its history to that point.
Growth Strategy Developed in the 1980s
A year after the move to Englewood and 15 years after its founding, Ciber competed in the burgeoning industry of computer consulting services as a minor player. Total sales in 1989 amounted to a mere $13 million, small change when compared with the revenue volume generated by the country’s leading computer consulting firms. By this point, however, Ciber executives were plotting an era of dramatic growth for their company. During the mid-1980s, Stevenson and other Ciber executives adopted a new growth strategy that focused on the development of a new range of services and the realization of both physical and financial growth through the acquisition of established computer consulting firms. Although the strategy embraced during the mid-1980s would take half a decade to manifest itself in any meaningful way, once the strategy for the future began to take shape in tangible form, Ciber began its resolute rise to the upper echelon of its industry.
By the end of 1989, when annual sales had slipped past the $10 million mark, the plans formulated midway through the decade moved from the drawing board to implementation. Ciber’s expansion in 1990 included the opening of offices in Cleveland, Orlando, and Tampa, moves that were associated with the development of new clientele in the telecommunications industry. As Ciber focused its marketing efforts toward telecommunications providers during the early 1990s, securing contracts with industry giants such as AT&T, GTE, and U.S. West Communications, Inc., the company found itself occupying fertile ground in the computer consulting market. Not only were computers and their technology becoming increasingly sophisticated, progressing at a pace that demanded the help of experts such as Giber’s consultants, but the shifting dynamics of the corporate world also favored companies like Giber.
The early years of the 1990s were marked by a national economic recession that forced many of the country’s corporations to alter their business strategies. As business declined and profit margins shrank, downsizing became the mantra of business leaders from coast to coast. Payroll was trimmed, entire departments were cut from corporate budgets, and, as a consequence, many companies found themselves lacking the resources and skills to perform certain tasks in-house, creating a greater need for the specialized services offered by Giber. To meet this demand, Giber contracted out specialists to help the nation’s largest corporations complete computer projects and cope with hardware and software problems as they arose. Giber consultants wrote and maintained software that performed a host of chores, including inventory control, accounts payable, and customer support.
Although the conditions were ripe for rapid growth as the 1990s began, Giber’s stature at the start of the decade prohibited it to a certain degree from capturing a sizable share of the computer consulting market. The company was too small to realize the growth potential that surrounded it. Mac J. Slingerlend, who joined the company in 1989 as executive vice-president and chief financial officer before being named president and chief operating officer in 1996, reflected on Giber’s diminutive size years after the company had grown into a genuine national contender, noting, “We wanted to be a survivor. We were the smallest national player, and we needed to get larger quickly.”
Explosive Growth in the 1990s
Getting larger quickly ranked as Giber’s chief objective during the first half of the 1990s, engendering a period of growth that lifted the company’s revenue volume from the $13 million recorded when Slingerlend joined the company to more than $150 million by the time he was promoted to the twin posts of president and chief operating officer. Growth was achieved largely by purchasing established computer consulting firms, as Giber embarked on an acquisition program that ranked it as the most active computer consulting acquirer in the nation during the first half of the 1990s. More than a dozen acquisitions were completed in six years’ time, adding more than $70 million to the company’s revenue base and greatly increasing the Colorado-based firm’s national presence. Equally as important as the growth achieved through acquisition was the added expertise Giber gained by swallowing up established computer consulting firms. During the 1990s, the push was on to grow larger quickly and to gain personnel that would enable Giber to tackle more complex projects. Instead of just writing programs tailored to the specifications of its clients, Giber executives were endeavoring to create a consulting firm that could identify problems and provide solutions, a transformation that would propel the company into the market for higher-margin services.
CIBER, emerging as the affordable leader in information technology consulting, combining our major national customized application software engine with specialized consulting services in packaged software, data warehousing, and modeling, network services, Internet and intranet expertise.
The majority of the acquisitions that helped Giber expand its services and broaden its national presence were completed after the company’s initial public offering of stock in March 1994. Once the company converted to public ownership (Stevenson retained control of more than 50 percent of the company’s shares), acquisitions followed in steady succession. In June 1994, Giber acquired all of the business operations of $16-million-in-sales C.P.U., Inc. for approximately $10 million. Based in Rochester, New York, C.P.U. operated as a computer consulting firm employing 190 consultants in six branch offices and served clients such as Northern Telecom and Xerox Corporation. The C.P.U. acquisition was Giber’s fifth of the decade and by far the largest. In the coming two years, as expansion picked up pace, annual sales more than doubled, and the company’s net income, inflated by the move into more complex, higher-margin services, nearly quadrupled.
Following the C.P.U. acquisition, Ciber purchased Holmdel, New Jersey-based Interface Systems, Inc., a systems-consulting firm with 48 consultants and $5 million in annual revenue. Interface Systems was acquired in January 1995 and was followed by the May 1995 acquisition of Spencer & Spencer Systems, Inc., a 141-consultant, $13-million-in-sales computer programming provider with offices in St. Louis and Indianapolis. Next, in June 1995, Ciber reached across to the West Coast and acquired Concord, California-based Business Information Technology, Inc., a five-branch, 125-consultant computer consulting firm with $20 million in annual sales. A fourth acquisition was completed before the end of 1995 when Ciber purchased Broadway & Seymour, Inc., its Rochester, Minnesota office, and its 45 consultants. By the end of 1995, sales had increased from the $79.8 million generated in 1994 to more than $120 million, and company executives were set to launch Giber’s CIBR2000 division, a venture representative of the company’s desire to provide more complex, higher-margin services.
Introduced in December 1995, CIBR2000 service was designed as a solution to a potentially devastating problem with wide-ranging ramifications. Many software programs written between the 1960s and 1990s used a two-digit date format to record calendar dates, thereby rendering a host of computer calculations inaccurate after 11:59:59 p.m., December 31, 1999. Without the ability to recognize “00” as the beginning of the new century, computer programs that performed calculations related to inventory control, invoices, interest payments, pension payments, contract expirations, license and lease renewals, and myriad other tasks would generate false reports, create computer “bugs,” and perhaps cause systemwide shutdowns, all under the presumption that “00” signified the year 1900. Giber’s CIBR2000 division was created to solve the dilemma posed by the century date change and represented an area of substantial growth potential for the company during the latter half of the 1990s.
At the time CIBR2000 service was being introduced, Ciber employed roughly 1,800 consultants and operated 28 branch offices scattered throughout the country. More than half of the company’s sales was derived from 20 clients, including industry stalwarts such as American Express Company, AT&T, Ford Motor Company, IBM, MCI Telecommunications, Mellon Bank, Monsanto Corp., U.S. West Communications, Inc., and Xerox Corporation.
On the acquisition front, 1996 proved to be a busy year, eclipsing the achievements of 1995. In March, the company acquired Columbus, Ohio-based OASYS, Inc., a provider of contract computer programming services that gave Ciber a new geographic location in Columbus supported by 20 information technology consultants. In May 1996, Ciber acquired Practical Business Solutions, Inc., an information technology company with offices in Boston and Providence, Rhode Island. Two months later, the company completed yet another acquisition, purchasing the Business Systems Development division of DataFocus, Inc., a computer consulting firm with offices in Fairfax, Virginia and Edison, New Jersey. Not stopping there, Ciber brought another company under its corporate umbrella in September, when it acquired Spectrum Technology Group, Inc., a management consulting firm based in Somerville, New Jersey that strengthened Ciber’s management consulting and project management services.
Before the end of 1996, Ciber acquired an additional company, picking up Bellevue, Washington-based Technology Management Group, Inc. in November. By the end of the year, the company’s acquisition spree had lifted the total number of its consultants to 2,100, a work force that operated out of more than 30 branch offices in more than 20 states. Looking ahead to the remainder of the decade, Ciber officials were targeting further acquisition candidates, intent on increasing the company’s stature. Aside from the growth realized through future acquisitions, company executives were anticipating a substantial boost in business from CIBR2000 as the century drew to a close, particularly in 1998 and 1999. According to industry analysts, Ciber was headed toward annual sales growth in excess of 35 percent for the remainder of the 1990s, a prognostication that fueled confidence in Englewood, convincing Stevenson, Slingerlend, and other top executives that the years ahead would witness the continued ascendancy of Ciber.
C.P.U., Inc.; Eurosystems International, Inc.; Business Information Technology, Inc.; Interface Systems, Inc.; Spencer & Spencer Systems, Inc.
“Ciber, Inc.,” The Wall Street Transcript, May 13, 1996, p. 1. Krause, Reinhardt, “Filling Clients’ Need for High-Tech Skills,” Investor’s Business Daily, August 15, 1996, p. 20.
—Jeffrey L. Covell