From Sagestone Consulting to RCM Technologies – The Evolution of a West Michigan Entrepreneur
From the time he was a kid, Keith Brophy had an interest running his own business. The entrepreneurial seed germinated throughout his college years pursuing a degree in computer science at the University of Michigan, an eight-year stint at IBM in Washington, D.C. and sprouted when he landed a job in his home town, returning to his Grand Rapids roots. He joined a company that was a magnet for IT personnel and expertise; a company that grew from $15 million to a $100 million company during his tenure.
“During this time, I continued to think about starting my own business,” Brophy relates. “During my off-work hours, usually between 10 pm and 2 am, I started writing books on emerging technologies relating to the internet,” he continued. His third book was translated into 14 languages and he began receiving emails from all over the world relating to internet and software issues and questions. He began to think that he could actually build an internet focused business. Simultaneously, he had the opportunity to hear Bill Gates expound that this new era of technology represented the easiest time in history for an entrepreneur to start a business.
Brophy and a small group of his colleagues spent considerable time deliberating the wisdom of starting a company of their own. While they were wrestling with this decision, Brophy’s mother, who frequently clipped news items relating to his interests, sent him an article on the Small Business Technology Development Center (SBTDC), a network that offers business counseling and training to those in business or interested in starting businesses. “I stuck the article in my sock drawer, I thought it was just another gimmick,” Brophy relates. He came across the article a short time later and decided to give the SBTDC a try. “It was one of the smartest things I’ve ever done,” Brophy states. “The SBTDC took me through each step of starting a business. Nancy Boese, business consultant, and Carol Lopucki, at the time center director, taught me business infrastructure; connected me to attorneys, CPAs, marketing specialists; and, most importantly, gave me the encouragement to start my own company.”
Sagestone Consulting was launched in Brophy’s basement in 1996 with $100,000 pooled from Brophy and his former colleagues, now co-founders. The company started growing right away, developing custom web software based on Microsoft technology, initially for Michigan customers and quickly expanding its customer base throughout the country. Sagestone continued to take advantage of the SBTDC, receiving services and training in financial projections, marketing and sales techniques. “My vision for Sagestone was to build the software scaffolding for our community and I think we achieved that vision. I am proud that Sagestone built software for 21 of the top 25 west Michigan companies,”Brophy states.
Despite becoming one of Microsoft’s top partners, creating Sagestone Asia in Shanghai, China, and having a coast-to-coast business base, Sagestone repeatedly faced challenges when it came to conventional bank financing. “On three separate occasions we put intensive development into new software products and were successful in selling these products. When we sought financing for these ventures we were told no by the banks because they didn’t understand our business,” Brophy relates. “It was frustrating. I wanted to take the company to the next level and become a world class company but the banks just didn’t cooperate even though they agreed I had a great book of business,” he continues. Brophy used his personal resources to explore the acquisitions market to find a complimentary company. After searching nationwide, Brophy found the company he was seeking – in southeast Michigan.
In 2005, NuSoft Solutions acquired Sagestone Consulting. The new company now combined NuSoft’s expertise in IT infrastructure with Sagestone’s specialized web and custom software development solutions. Brophy and Dale Mansour, NuSoft Solutions CEO, had similar business perspectives and both believed the new company could become a national leader in the IT market. “While the move was technically an acquisition, it felt more like a merger. The visions of NuSoft and Sagestone were extraordinarily aligned and joining forces significantly enhanced our capabilities,” Brophy states. Together they built one of the largest privately held technology solutions companies in the U.S.; a company with a team of nearly 200 people, a Microsoft Gold Partner and a solid national reputation.
Brophy’s relationship with the SBTDC continued to evolve. Referrals now were two way and Brophy often became a mentor or advisor to other SBTDC clients. His strong sense of contributing to his community became part of his business operations. He helped the SBTDC with its web solutions; launched a technology council at the Right Place, the Grand Rapids area economic development organization; and co-founded the Michigan Homeland Security Consortium which aimed to open up opportunities for small companies to enter the defense and homeland security markets.
Both Brophy and Mansour now believed the time was right for NuSoft Solutions to transition from a privately held to a publically owned company. An IPO seemed an unlikely option, so Brophy embarked on a two-year search for the ‘right’ company to acquire NuSoft. They had done their homework and established specific criteria as the basis for any acquisition consideration. They knew they wanted to remain an independent business unit; continue to be recognized as an industry leader; keep the company team intact; maintain their Microsoft focus; and remain a U.S. company.
In 2008, Brophy found the company that would allow NuSoft to respond to more opportunities and increase the scale of its business in RCM Technologies. “RCM was interested in NuSoft because it lacked expertise in Microsoft technologies and we were interested in RCM because we were increasingly running into scalability issues with larger client projects,” Brophy states. New Jersey headquartered RMC is a diverse provider of IT and engineering services and purchased NuSoft Solutions to enhance its competitive advantage by allowing customers and prospects to select a single partner for many or all of their complex technology needs. The acquisition of NuSoft resulted in the creation of a new RCM business unit, Enterprise Integration Services, headquartered in Michigan. Brophy, now RCM Vice-President of Enterprise Integrated Solutions, is excited by what he sees as building business momentum. “The fact companies in all sectors are transforming, shifting and finding new business models offers great software opportunities and increasing web activity for us. I also tremendously enjoy interacting with emerging businesses; helping them create software, working to foster their growth and generally providing what counsel I can,” Brophy relates.
Brophy views himself as one of Michigan’s business success stories – he’s evolved from a basement operation to become an integral part of a global company. “I must acknowledge the SBTDC and its key role in my success. The encouragement and practical advice the SBTDC has provided along every step of our journey has been invaluable”, Brophy states. “RCM has given us long term stability and solidified our team. They have ensured that Michigan software engineers will continue to create software for companies all around the world.”