BUSINESS COMMUNICATIONS SERVICES NEWS
DISASTER RECOVERY BRINGS TWO COMPETITORS TOGETHER.
2007 – DIRECT MARKETING MAGAZINE
MARKHAM, ON – Cover-All Computer Services Corp., based here, recently completed the purchase of SMART DM, in a deal that was touted as creating a single umbrella organization capable of servicing all mail communication needs of existing and prospective clients. Terms were not disclosed in the agreement that formally amalgamated companies that were both engaged in lettershop services, and data managing and processing.
Cover-All has been an established name in data managing, processing and laser imaging for 40 years, with specialties in the transactional market and variable colour segment. SMART DM has decades of experience in large volume lettershop and specialty finishing, much of it under its former names of SMR and SMR Tytrek.
There were obvious synergies from the union. Each gained from the others’ strengths and specialties. There was little client overlap. Both shared a tradition of family oriented and operated businesses.
But a major motive for the merger was less obvious. By operating and maintaining separate facilities, the companies can continue providing uninterrupted service if one of them goes down. It gives them a strong case for business continuity planning or disaster recovery. It’s something many companies are demanding these days from critical suppliers.
“The unique aspect to this arrangement” comments Cover-Alls President, Mike Coverdale, “is that Cover-All and SMART DM will be running on ‘like’ platforms with the intent being that work will be hot swappable. In other words, the ultimate disaster recovery capabilities. Ultimately it allows clients access to two separately managed, stand-alone facilities, yet with combined expertise going back decades and vast volume capabilities.”
THE 9/11 EFFECT
Ever since 9/11 big companies have been emphasizing disaster recovery including looking at the location of key supplier plants for risk exposure such as being near an airport or susceptible to power outages, says John Leonard, Vice-President of sales and marketing for SMART DM.
More recently concern over possible global bird flu has widened their disaster recovery scope to encompass pandemic planning and how to stay functioning under the prospect of widespread illness to their employees and those of their suppliers.
A lot of bigger organizations are pointedly asking for business continuity plans from suppliers, he says. It started with financial institutions, automotive makers and the larger retailers.
Aligned with this is data security, he says. A lot of direct marketing is undertaken in less than secure environments which will only produce more data breaches. All these issue of disaster recovery, data security and integrity will eventually trickle down to medium and smaller sized companies.
Long before the amalgamation, Cover-All and SMART DM have been supporting each other as friendly competitors, he says. It began a number of years ago when Mike Coverdale talked with David Dunnett, Vice-President and General Manager of SMART DM, at an industry event. This led to the two companies supporting each other as unnamed co-suppliers. It grew into an informal partnership where the companies names each other as backup providers. The arrangement was formally consummated with the recent Cover-All takeover.
Leonard recalls SMART DM making presentations to prospects identifying Cover-All as its warm site. It often elicited the surprised reply: “But they are a competitor”.
The combined entity operates from three sites. At the Etobicoke plant SMART DM does basic data manipulations like address accuracy and letter carrier presorts (LCP). It also produces fairly complex personalized forms. As well, it does laser imaging, lettershop tasks and runs a fairly substantial bindery specialty finishing.
At it’s direct mail and document facility in Markham, Cover-All operates a smaller lettershop that has colour laser imaging. It does data processing, lots of programming and forms creation.
At third managed IT division works out of a nondescript building about two miles away. It manages data performing data mirror backups and/or data transactions for organizations.
The managed IT division handles things such as loyalty programs for retailers that don’t want to look after the details of reward programs. It is doing this now for a couple of large reward programs.
In other cases, the division will take care of the computer hardware needs of organizations and provide the staff to run the equipment. It offers this from mainframes to mid-range AS 400 type systems.
“It positions our companies as being able to service data all the way through to the mail stream, and not just LCP and address accuracy,” says Leonard. “But we can actually house your data as well and help manage it, and manage those transactions.” He characterizes Cover-All as a tier 2 data providers. The tier 1 suppliers are IBM and the global management consultant firms that work for the big banks and other huge organizations. Tier 3 or 4 suppliers are small shops that may handle 5,000 names. The tier 2 operators manage hundreds of thousands to upwards of five or six million records.
Cover-All is the only tier 2 provider in Canada, he says. It is the only one with the necessary hardware on the floor.
TOP SECURITY STANDARD
The managed IT centre in Markham is certified as compliant with section 5970 of the Canadian Institute of Chartered Accountants (CICA). Leonard says it is a security designation more stringent than some of the toughest ISO standards.
CICA section 5970 is a set of audit procedures applicable to Canadian companies that outsource some functions to service organizations like Cover-All. It requires the service provide to employ a licensed public accountant to review and test its systems and procedures, assess the design and implementation of financial reporting controls, and/or conduct an actual audit of its fiscal year.
All this gives SMART DM the opportunity to offer its clients data management from a secure site, he says. It opens up a broader range of services to its large volume mailers including data management and warehousing.
Only 10 clients including a couple of large ones overlapped out of the client bases for the two companies that combined numbered in the hundreds of organizations. He says they are in the process of resolving those conflicts. Part of his new role to identify and align benefits to clients stemming from the acquisition.
“We see way more opportunity than overlap. We cal sell some of our clients on the colour laser that Cover-All has, and Cover-All can sell some of their clients on our finishing expertise.”
The two companies will keep their separate names for the foreseeable future, he says. The intention is to maintain the two names because Cover-All is a venerable brand spanning more than 40 years.
While SMART DM was renamed a little longer than a year ago, it has still built up some solid brand equity.
SMART DM began as a family business founded by Harry Tier in 1929. Thirty years later he purchased Hamilton Ruling & Bindery which became Tytrek Graphic Finishers. In the late 1970s Bob Tier began to take over the business from his father and introduced innovations like ink-jet printing on bindery equipment.
In the 1993s he saw a need to get more into direct mail. In 1996 he bought lettershop SMR and formed SMR Tytrek. The new SMART DM name reflects the old brand through the letters S. M. R. T.
Cover-All was also a family business founded in 1966 by Jim Coverdale. His son entered the business and eventually became president.
The comparable family cultures have made the convergence of the companies a comfortable fit, says Leonard. The companies discovered they were similar in many ways – how they conducted business, related to clients and cared about staff.
Tier, who had been President and CEO of SMART DM, has retired from an active role in the business. For the overall organization, Jim Coverdale remains CEO and Mike Coverdale President.
Dunnett retains his existing position and continues to oversee the daily operations of SMART DM. He is also looking at ways to make the integration of the companies more efficient and at areas of growth.
SMART DM employs about 120 people full time. Cover-All has slightly more than 100 employees.
Copyright 2007 Lloydmedia, Inc.