VeriSource Takes Call: Merger Gives Firms Leg Up on Line Data

Two Benton County information technology firms have joined forces to help manufacturers harvest their most critical product — information.

Advanced Control Solutions Inc. of Bentonville and VeriSource Inc. of Rogers have merged to form a $3 million IT company that expects to shorten the trip data takes from the production line to decision makers and make it more useful when it gets there.

Jeff Call, president and founder of seven-year-old ACS, said his company writes software and builds interfaces that drive production lines for manufacturers. Well-known VeriSource is essentially a for hire IT department that develops software and facilitates the flow of information across networks.

Chris Maddox, VeriSource’s CEO, said together the firms will gain access to new customers and revenue streams by helping managers make better decisions.

“Where Jeff’s group is great is on getting information in some medium state, we pick up from there and finish the delivery of that information,” Maddox said. “All the way out to the managers and owners of the company so they can make good decisions about what’s going on.

“Their abilities to deal with the physical world are going to enhance our ability to provide business solutions in the virtual world.”

Neither company will divulge financial information about the merger, but the Northwest Arkansas Business Journal reported in July of 2001 that VeriSource expected to gross $2.5 million that year. Call, president and founder of ACS, said his company averages $1 million in annual revenue. Maddox confirmed the combined revenue would exceed $3 million.

Maddox and Call started talking after a former ACS employee joined VeriSource and introduced them as potential outsource vendors to one another. The duo decided they were a good fit because manufacturers are constantly trying to measure and improve efficiencies and tie tangential information together.

Movin’ on Up

Among half-opened boxes, piles of stray power cords and a corral of crippled computer towers, Maddox showed off the U-shaped desk where six ACS employees will continue their work in VeriSource’s 6,800-SF office at Pinnacle Point.

Maddox said the companies “began dating” in August and the marriage officially took place on March 1. Furniture from Call’s former office was still being moved in early April.

The 1,400-SF space at Ridge Lane near Bentonville that served as ACS’ office and panel shop will still be used by the company as a place to build control panels.

VeriSource opened its doors in 2000 when four partners bought Millennia LLC from Arkansas National Bank for an undisclosed amount.

The company continued to develop ANB’s network and online-banking software and now manages the bank’s servers. It also processes transactions for ValuTec Card Solutions, a Franklin, Tenn., gift-card company, and manages servers and information systems for text-book wholesaler BudgeText Inc. of Fayetteville.

Before the merger, VeriSource served about 200 clients. The merger will add about 25 manufacturing clients. VeriSource manages 260 servers and more than 2,500 desktop computers in Northwest Arkansas.

Maddox described the company as a Fortune 500 IT department that doesn’t work for a Fortune 500 company. He and two of his partners — Don Goff and Chad Hinton — worked together at Lowell’s J.B. Hunt Transportation Services Inc. during the late 1980s and early ’90s. Other employees have worked for high-profile companies such as Wal-Mart Stores Inc. in Bentonville and the Boeing Co. of Seattle. Maddox and Chief Operating Officer Don Goff worked at Papa John’s International Inc. in Louisville, Ky., for three years.

Maddox doesn’t expect much culture shock between the teams or management.

“We’re very compatible in our beliefs and philosophies,” Maddox said. “We both approach running a business the same.”

All in the Timing

A lot of ACS’ work is in timing.

The company designed a custom conveyor system for Guardian Industries Corp.’s glass manufacturing facility in Rogers. The system moves glass across conveyors into an oven where it’s tempered.

Existing conveyors and machinery were used, but ACS developed the software to drive the system and built an interface. The software positions the glass properly and times the movement throughout the conveyor system so the oven is never empty, increasing Guardian’s assembly-line efficiency.

“We work at the device level,” Call said. “All the way to the wiring into the process logic controller (PLC) that’s the brain that turns on the program that turns on and off different devices.”

ACS has done work for Xerox Corp.’s Oklahoma City toner manufacturing plant, Whirlpool Corp. in Fort Smith and both Tyson Foods Inc. and Advanced Environmental Recycling Technologies Inc. of Springdale.

Call said it doesn’t matter what a manufacturer produces, ACS is interested in adding value and efficiency to the production line.

Over the last five to 10 years, PLCs have become smarter, allowing networking capabilities, thus the ability to collect data, Call said. He said he can develop systems that report how many parts have been made in an hour, how long the machine’s been down, what problems there were and who the operator was.

“Traditionally, manufacturing plants are islands of automation,” Call said. “[Plant operators] are struggling right now to tie all these islands of information into one system so that they can make good decisions.”

Call, who has been in this line of work for 15 years, said with ACS, he wanted to develop information systems for manufacturers, not just operate the machines.

ACS is one of only three Arkansas companies licensed by the Contractor’s Licensing Board to build and install control systems for their applications. Companies that do jobs for less than $20,000 aren’t required to have a license through the board.

ACS will keep its name but be known as the manufacturing division of VeriSource. Call will remain ACS’ president and add the moniker of vice president of manufacturing systems for VeriSource.

Veri-Good Timing

Maddox said the merger particularly makes sense when looking at regional and national trends such as Wal-Mart’s mandate for vendors to add radio-frequency identity systems. Wal-Mart will require its top 100 vendors to use RFID tags on crates and pallets going to three Dallas-area warehouses by January 2005 (see related cover story).

“Almost all of those points, long before you get to the store, involve conveyor systems, making decisions is about were things need to go,” Maddox said. “Those are all things that [ACS] knows how to do … It’s clearly on my mind as one of the benefits.”

Maddox said he won’t put all of his eggs in the RFID basket until VeriSource first proves itself with a couple of clients.

Maddox said that in the past, VeriSource relied on someone else to deliver them good data to analyze. But now his team can talk with Call’s and ask for specific information to be built into the reporting process.

VeriSource, Maddox said, can do impressive things with the data once it’s collected for them.

“It’s very hard to get your hands around what it is technology does,” Maddox said. “All these things that are information based, there’s no real tangible, physical aspect to it.”

Most common mergers in the control systems industry are with construction or electrical companies, Call said. He said he’s not aware of another local union between a company like his and a company like Maddox’s.

“In my opinion, it’s the wave of the future, because manufacturers have to get more sophisticated,” Call said.