Innovation

Allegro Inside

The smart strategies that propelled the gangbusters growth of Canada's Fastest-Growing Company for 2009

Written by Michelle Warren

Conceived in Hawaii and born in Italy, Allegro Mobile Solutions now resides in a humdrum industrial park in Mississauga, Ont. It’s a long way from the beautiful Hawaiian beach where its co-founders met in 1996 and bonded over a passion for technology and Ultimate Frisbee. And it’s farther still from the picturesque town in the Italian Alps where they holed up for most of 2002 and 2003 to build the software platform at the heart of their company.

But Allegro CEO Savino Griesi isn’t bothered by the nondescript surroundings and barren office walls that make it look as if his firm has just moved in. Appearances don’t amount to much in the IT architecture business. It’s what’s inside that counts.

You can’t see the Allegro software inside the rugged handheld computers that are fast becoming standard issue in jobs as varied as grocery-store clerk and photocopier technician. But it’s hot stuff nonetheless. Organizations across an array of sectors are rushing to equip staff not tethered to desks with sturdy mobile devices so they can use their time more efficiently and deliver better customer service. And Allegro is a key player in this explosively growing field. In partnership with huge companies such as Motorola and Hewlett-Packard, Allegro has in just six years propelled itself from obscurity to Canada’s go-to company for mobile business applications and the gamut of accompanying services.

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Griesi and co-founder Wes Rupel saw an opening to become the first firm in this software category to hire a high-end team of developers to create a platform. “When we looked at the applications out there, the uptime was an atrocity, the design was an atrocity,” says Griesi. “They left so much on the table.”

The partners invested heavily to make their platform more reliable and easier to use, scale up and customize than any rival offerings. Their next challenge was ensuring their firm didn’t crash and burn before getting its product into the right hands. Griesi and Rupel, Allegro’s president and chief technology officer, gambled big more than once, delivering a million-dollar project for next to nothing and keeping their word even when it almost bankrupted them. “We’re too stupid to know when to give up,” says Griesi. “We paid the price, but in the end it paid off.”

Their reward was exponential revenue growth, from less than $200,000 in 2003 to $17.7 million in 2008 — an 8,471% increase that tops this year’s PROFIT 100. And Canada’s Fastest-Growing Company isn’t stopping there; it’s expanding abroad and into business applications for the iPhone and BlackBerry.

The fulsome praise from Allegro’s partners suggests that its best days are yet to come. “They have that wonderful combination of always striving to be better when they’re already fantastic,” says Janet Schijns, vice-president of global channels at Holtsville, N.Y.-based Motorola Enterprise Mobility Solutions, which has twice named Allegro its Canadian Partner of the Year. “There’s no complacency in their business model.” And Zsombor Burany, manager of business solutions at Mississauga-based HP Canada, which recently named Allegro a Centre of Excellence for Mobility, is at least as laudatory. “As far as mobile applications are concerned, they are probably the best in the world,” he says. “They are the core of our mobile-applications practice and a strategic component of our objectives going forward.”

At first glance, it’s not obvious why Allegro has elicited such lavish accolades and attracted clients of the calibre of Loblaws, Canon, Sobeys and several hospitals and police forces. Does it really take top-notch software developers to write the code so Calgary cops can use their handhelds to write tickets?

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In fact, the handheld’s interface is just one element in Allegro’s offering. It also develops and integrates software to transfer data wirelessly from, say, handhelds in hundreds of grocery stores to back-end servers housing Loblaws’ database. Allegro is a master of the fiendishly complex art of ensuring that even woefully outdated back-end systems riddled with bugs can make sense of incoming data. It crafts dispatch-system software used to assign technicians on service calls. And, while its partners handle most of the sales and marketing, Allegro’s 40 staff get to know clients’ business challenges, shadow their field workers to see how they do their jobs and train those who will train the end-users. The only thing Allegro doesn’t do is make the hardware.

For each vertical Allegro serves — retail, field service, health care, government and transportation — the company has built a template it can swiftly customize to new clients. This flexibility is an effective barrier to would-be competitors. “Nobody is going to get up to speed quickly on what we do,” says Rupel. “Even if they had a dedicated crew, it would take years.”

Griesi says Allegro and its partners land new clients by selling a complete package that includes hardware, software, infrastructure, security and fulfilment. That’s how they scooped Loblaws, Allegro’s biggest account, from IBM. “We are a niche player with the dedicated resources to provide a value proposition the IBMs and Bells can’t,” claims Griesi. “Our so-called competitors don’t have the breadth and diversity of applications, and they lack the vertical knowledge.”

The roots of the 2006 Loblaws win go back a decade earlier, to the beach where Toronto-born Griesi, who was running an IT consultancy, met Rupel, an American tech whiz who’d been on the 10-person team that developed Microsoft Windows. Over hours of tech talk, they concluded that various trends would converge by 2002 to spark a takeoff for rugged handhelds. And that would create a killer opportunity for a software platform and associated services.

So, Griesi and Rupel devised a plan and then waited — for six years.

In 2002, they dipped into their savings to rent an office in a small Italian town (Griesi is a dual citizen of Canada and Italy) and hire seven handpicked software aces to spend 18 months getting the platform just right. It took almost a year after that to land their first client. But the co-founders remained unruffled — at least, as much as you can while watching your savings dwindle — because they were confident they had a breakthrough product on their hands. They poured their energy into developing partnerships with manufacturers of rugged handhelds, pitching Allegro’s ability to integrate its leading-edge platform with the hodgepodge of databases used by prospective clients.

The strategy bore fruit in 2004, when Symbol Technologies Inc., a handheld maker acquired in 2006 by Motorola, hired Allegro to help equip Canon photocopier technicians with mobile devices to track parts inventories, maintenance history and billable hours. The project put Allegro on the map. Today, the company is Motorola’s second-biggest revenue-producing partner in North America for enterprise wireless LAN technology.

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But Allegro lost a bundle on its earliest projects. Griesi says its pricing was deliberately “absurd,” at times less than 10% of what others would have charged. The idea was to impress handheld makers — above all, Motorola, the No. 1 player — and get them “to see the value in bringing us in to opportunities, as opposed to little Allegro knocking on the door of a multibillion-dollar company and being told to get lost.”

Griesi and Rupel repeatedly bet the business on their belief that they’d be rewarded for doing whatever it took to fix a client’s problems. Allegro once stepped in to rescue a 400-device rollout for an undisclosed client that was running three years late and countless dollars over budget. It replaced the original system with its own for free, promising to restore the original, also for free, if the client didn’t like Allegro’s. In return, the client agreed to pay Allegro half of whatever its system saved on wireless costs. These proved so large the client wound up paying Allegro more than it had the original three contractors.

“That project really taxed our company and slowed our growth, because we leveraged such high-end resources to fix the problem,” says Griesi. “But in the long run, which is how we build our company, the customer was dazzled and we came across as miracle workers.” Once Allegro’s reputation was made by projects like this, it raised its rates to competitive levels. By 2008, its profit margin topped 10%.

Allegro is able to dazzle clients thanks in part to being highly selective when hiring. Of the job applicants — often up to 150 per position — who complete a slew of online tests, Allegro interviews only a few of them. Interviews often run six hours, replete with brain teasers. Rupel says most applicants say they’ve never faced such a gruelling process.

Griesi admits Allegro must still figure out how to maintain such stringent standards as it staffs up at least tenfold by 2013 as part of its bid to become the most respected mobile-solutions provider in the world. But if the firm can retain a culture of pulling out all the stops to avoid failed projects, it will be well-placed to replicate its success in new markets.

Allegro has two alliances in place to facilitate its expansion ambitions. In May, it deepened its partnership with HP to take Allegro beyond Canada, as well as into business applications (such as time-tracking tools for lawyers) for the Windows Mobile, iPhone and BlackBerry platforms. “HP has a salesforce with penetration into pretty much any customer in the world,” says Griesi. “And we have the product to sell that they haven’t had.” Allegro signed another deal in May to support its foreign foray, this one with an as yet undisclosed partner. (The deal had HP’s blessing.)

Griesi and Rupel plan to have world domination under their belts in three or four years, then move on. “Our goal is to be acquired by a company that is like-minded in terms of cultural fit and integrity,” says Griesi.

At that point, he and Rupel plan to leave Mississauga and launch a new venture in the more scenic locale of Palo Alto, Calif. They’ve extrapolated from trends in genetic research and concluded that by 2013 there’ll be a killer opportunity for a high-speed genome-mapping service. Although this sounds like an entirely different business than Allegro’s, the underlying premise is the same: it’s what’s inside that counts.

Originally appeared on PROFITguide.com
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