Integrated Circuitry

For Bob Issenberg and John Rogate of Vermont Technology Exchange Co. the passion is in the putting-together

by Craig Bailey

Photos: Jeff Clarke

Bob Issenberg and John Rogate recall the old days of the computer industry like war veterans might recount memorable battles. Instead of bombs and battalions, the topics are money and megabytes. "We sell a desktop now with 128 megabytes of memory and 10 gigabytes of disc," starts Issenberg. "When I started upstairs in Digital, I sold $500,000 systems with 512 kilobytes of memory and a 256 megabyte disc."

"There was a disc," says Rogate, "which was 456 megabytes and went for $16,000."

"It was as big as a refrigerator," mutters Issenberg.

"Now a 10 gigabyte disc is $100," according to Rogate.

With computer hardware, two things are certain: Prices will drop; power will increase. If only the sales model were so predictable. Issenberg and Rogate founded Vermont Technology Exchange Co. (VTEC) of South Burlington in response to manufacturers' beginning to favor resellers over direct sales. Six years later, that trend might be changing.

Issenberg & Rogate

Bob Issenberg (standing) and John Rogate say the trend in computer networking is high-speed, switching technology -- one result of the inevitable advance in chip speed. The two own Vermont Technology Exchange Co., a systems integrator in South Burlington.

"VTEC is a systems integrator," explains Issenberg from the company's Kimball Avenue suite. "We help provide computing solutions to the end user." Seventy percent of the products the company handles come from Compaq, with the balance coming from manufacturers like Cabletron Systems, Nortel and Cisco Systems. Software solutions come from Microsoft, Netscape, IBM and others. VTEC's Compaq enterprise business partner designation means it's the only business in Vermont authorized to sell the complete Compaq Computer Corp. product line -- from machines built with Intel processors to high-end, Unix-based systems.

"We'll sell the desktops; we'll sell the servers; we'll sell the software. It'll all be configured and tested here," explains Rogate, "and then we deliver it on-site."

Salesperson Tom Blair and engineers Tom Fiske and Ghislain Lahaie round out the staff. "We also can take advantage of Compaq services," says Issenberg. "We can mix our own people's capability with the Compaq service organization and provide a complete solution."

"They're right here in the building," adds Rogate, "and we've worked with them for 12 years." VTEC's owners have made sure to mold their tenure with the former Digital Equipment Corp. office one floor above them -- now a Compaq office since Digital was bought by the Houston, Texas, firm last summer -- into a competitive advantage. Many of the approximately 100 business and institutional clients VTEC serves became associated with Issenberg and Rogate during their years together at Digital.

For Issenberg, a native of Andover, Mass., working for Digital was all but assumed. He recalls Digital and Wang "were just growing like gangbusters" in that area during his years in college. Following a 1975 undergraduate, biology degree from the University of Massachusetts, and an MBA from Boston College a few years later, he applied to both. "Wang went out of business before Digital got bought," he says, "so I say, luckily, Digital was the one that hired me." He started in the company's marketing department in 1979, following a stint selling televisions to hospitals for a division of American Hospital Supply Corp. of New York City. "The Medical Center Hospital of Vermont was one of my customers!" he says.

Memory crunch

Vermont Technology Exchange Co. buys computer components from a number of out-of-state resellers, which often ship overnight to meet demand. "We don't keep inventory," explains John Rogate. "You can't," says his partner, Bob Issenberg. "Things become obsolete before you can get them off the shelf. Or the price will drop."

"The only thing we should have done is buy memory, because that just tripled in price," Rogate adds.

"Because of the earthquake in Taiwan," according to Issenberg. "They're saying it'll be the first of the year before it gets back to normal. It's the only time I've seen the price go up in this business in 20 years."

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Issenberg had always come to Vermont to ski, and when Digital announced a sales opening here, he transferred to the South Burlington office in 1984. He was promoted to sales manager and oversaw a staff of six who handled Vermont, northwest New Hampshire and northeast New York. He still enjoys the slopes during the winter, bikes during the warmer months and keeps busy raising a family with his wife, Gail, a former Digital employee. The couple has a 3-year-old daughter, Erica, and another child due in February.

Lahaie & Fiske

VTEC augments the skills of its three employees with staff from the Compaq office just above its Kimball Avenue suite. VTEC engineers Ghislain Lahaie (left) and Tom Fiske.

Rogate beat Issenberg to the Green Mountains by two years. After a double-major degree in photojournalism and economics from Lehman College in 1973, he stayed in the Bronx, where he grew up and went to college, to work for the Social Security Administration (SSA). In Nanuet, N.Y., he worked as an SSA field representative before becoming manager of the Mount Vernon, N.Y., branch.

Meanwhile, Rogate was working on his master's degree in computer science at night at Iona College in New Rochelle. After graduating in 1979, working for a couple of technology firms in New York and Connecticut, he went to work at Digital's manufacturing plant in South Burlington in 1982.

Rogate still lives in the Colchester home he bought that year with his wife, Lucy, a Lehman alumna he married shortly after college. Lucy works at Burton Snowboards. Like Issenberg, Rogate's a fan of the state's outdoor recreational opportunities, which was one impetus for his move to Vermont. The family spends summers at its second home on Lake Champlain when the busy soccer schedule of 16-year-old daughter Marissa allows. Older daughter Lauren, who turns 20 in February -- "I only have a couple more months of teen-ager," Rogate jokes -- studies at Syracuse University.

In 1987, five years before Digital closed its Vermont manufacturing facility, Rogate moved from manufacturing to the sales office, where he met Issenberg.

"At a point about six years ago, it became obvious to both of us that Digital was changing their sales model," says Issenberg. "We saw the writing on the wall. But it also presented an opportunity. When we actually got management within Digital to support our venture, it became a no-brainer."

Anticipating that Digital would follow the industry trend and begin working through resellers, Issenberg and Rogate went to their employer and explained their desire to form a business to resell Digital products. "Digital helped us," says Issenberg. "They actually gave us a little office space upstairs." He and Rogate incorporated VTEC in November 1993, a few months before they left Digital. Six months later they moved into space of their own -- conveniently located on the first floor of the same building -- and began building a staff.

Vermont Technology Exchange Co. competes with out-of-state mail-order houses like CDW and PC Connections for its high-end business. "They ship components in pieces," Rogate points out. "We get the stuff here and we put it together for the customer -- test the machine, make sure it works correctly. It goes on-site and is ready for the desktop." VTEC's customers attest that the company's close proximity and availability for service work are a bonus.

"They're local, and that's the big key," according to Al Clark, vice president of finance and information systems at Huber + Suhner Inc. in Essex Junction. "They're here and they answer questions," says Clark, who oversees local area networks in a half dozen Huber + Suhner facilities across the country. "They're a phone call away."

"We've had some out-of-state companies try to get our business, but they can't compete with the service," says Lynn Lacaillade, network administrator at Burlington law firm Paul, Frank & Collins Inc. Lacaillade administers a Windows NT network with nine servers connecting 75 workstations and laptops. VTEC sold the company most of its hardware and performs its warranty work. "I had Dell call me again this week," Lacaillade affirms with a chuckle. "Their pricing is close, but I don't think they can beat the service."

About a year ago, VTEC added Web services to its offerings. "We didn't think anybody was really addressing the small business," says Issenberg. "We decided to design a package and the avenue for a very small business to get on the Internet." Doing business as Advanced Internet Services (AIS), the company hosts Web sites for approximately 10 businesses and organizations. AIS charges $30 a month to host a site. Like VTEC, it acts as a reseller, buying server space and domain names from a large, national provider in bulk. For simple sites, the business performs the design work free. Rogate, who also teaches a night class at Champlain College in data communications, says Web design has become the favorite part of his job.

Tom Blair

Salesman Tom Blair worked for Wang for many years and sold IBM mainframes before joining VTEC.

"The Internet is what excites us now," says Issenberg, pointing out that handling Web content complements the hardware side of the business. Vermont Products (www.vermont-products.com), a site AIS created devoted to e-commerce for Vermont craft and specialty food producers, recently went online.

"They can list their products on our website at no charge," boasts Rogate. "We take care of the secure transaction with the credit card for them. Then we actually have them fulfill the order and then we pay them, minus a commission." Rogate says orders have been slow but traffic at the site shows promise. His goal is to add more vendors. Interest among craft producers is high; getting them to follow through with product photos and copy is another story.

VTEC is predicting a slow final quarter for 1999 as businesses postpone implementing new computer systems until the extent of the millennium bug is determined. "Hopefully it'll just pick up in the first quarter next year," shrugs Issenberg. If so, it'll likely be a busy time for VTEC as the company considers an expansion into New Hampshire at the same time.

Issenberg explains the bulk of the business to be had in the Granite State is in the Manchester-Nashua-Portsmouth corridor -- an area in close proximity to greater Boston. "They're so busy in Massachusetts," he theorizes, "they don't look north." VTEC hopes to meet demand with its first satellite office.

Meanwhile, Issenberg and Rogate are watching Dell Computer Corp., a Compaq competitor that sells direct to consumers. Dell sold 2 million personal computers July through September, compared to Compaq's 1.78 million. Industry analysts say it's the first time Dell has taken such a lead over its primary rival. "Compaq, which has always been successful through the reseller, is saying to themselves, 'Well, we're going to be competing against that, maybe we need to cut out the middlemen,'" says Issenberg. "This business is forever changing and the pendulum may be beginning to swing back."

He adds if Compaq moves into direct sales, VTEC shouldn't feel a great effect: The changes are likely to come in the small and medium enterprise market where Compaq competes with Dell, and less in the mid-range market, which is VTEC's bread and butter. "You can't do that direct," Rogate says of the larger systems. "It just requires too much pre-sales work as well as technical work."

In an industry where change is one of the few constants, Rogate says VTEC is prepared for the future: "We just go with the flow."