By Tom Still
MADISON – Two news stories in the past week have stirred debate about the future of Wisconsin’s high-tech sector. Is the state competing in the global economy, as CDW Corp.’s acquisition of Berbee Information Networks Corp. suggests, or a low-talent, high-tax backwater, as RedPrairie executive John Jazwiec repeatedly insists?
While there’s good reason to listen to Jazwiec when he says he has trouble recruiting top-flight executives to Wisconsin, the $175-million acquisition of Berbee by Fortune 500 company CDW is a far stronger signal about the state’s standing in the knowledge-based economy of the 21st century. If a corporation as large and as successful as CDW can spot value in a homegrown Wisconsin tech firm, perhaps other companies should be able to grow and prosper here, too.
In acquiring Berbee, CDW will move beyond selling mostly computer equipment and software to offering high-quality services to information technology customers. The two companies have complimentary, not competing, interests – and that means more cross-selling opportunities. Berbee needed to find a broader market; CDW needed a proven partner to provide IT services.
Best of all for Wisconsin, there’s every indication Berbee will continue to grow in the state. While time will be the true test, corporate leaders and analysts agree CDW wasn’t looking for a cost-cutting merger, but a pathway to capturing more of its customers’ total IT spending and to cement its reputation for being one of the world’s largest technology providers.
Berbee was founded by Jim Berbee, an entrepreneur who remains as humble today as when he launched the company in 1993. He’s more likely to be seen biking or running around the Madison area than hobnobbing, yet he and his company have always found ways to contribute to the state and the community. Berbee, who is now attending medical school, was never one to publicly gripe about the business climate, taxes or regulation. If he had complaints, he largely kept them to himself and focused on growing his company.
RedPrairie executive Jazwiec is cut from a different silicon chip. He’s missed few opportunities lately to complain about Wisconsin’s lack of executive talent, its high taxes and its “welfare mentality.” Jazwiec has said RedPrairie, a software developer for supply-chain logistics, may move out of its Waukesha County headquarters to another state if that’s what it takes to attract enough world-class talent to grow into a $1 billion company.
In his latest speech to the Independent Business Association of Wisconsin, Jazwiec called for a 50 percent income-tax cut, urged UW-Milwaukee to attract “a dynamic world leader to lead the university” (sorry, Chancellor Carlos Santiago, you’re apparently not good enough), and referred to Madison as a “small town.” He also called for phasing out welfare by “clearly giving its recipients a past-due notice.” Jazwiec must have missed all those national news stories about Wisconsin’s W2 welfare reform program.
Don’t get me wrong: Jazwiec has his points. He’s not the only Wisconsin tech executive to say he’s had trouble attracting management talent. But most of them will also admit that once they attract the right talent, those folks happily stay put. And while Wisconsin’s tax burden has been reduced relative to other states, it is still a place where taxes per capita are above the national average and incomes per capita are below the national average. That gap isn’t sustainable for the long term.
It’s still hard to imagine, however, that RedPrairie’s future as a company depends so much on external factors – taxes, welfare moms and East or West Coast snobs who don’t find Milwaukee “cool” enough. If Berbee can make it big in the “small town” of Madison (actually, the even smaller suburb of Fitchburg), then RedPrairie should be able to grow in the Milwaukee area.
Note to human resources departments everywhere: If you tell job prospects the place stinks, sooner or later, they will believe it and stop applying.
Wisconsin has most of what it takes to succeed in the global economy. It can produce companies that grow from an idea to an IPO. The state doesn’t produce enough fast-growing companies, to be sure. But it has exciting models in companies such as Berbee Information Networks Corp.
Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.