Southern Gem: Foray into South Carolina Fuels Growth-Minded Systel Business Equipment

It’s never easy being the leader of a $50-plus million office technology dealership, and many executives have pondered how much more productive they would be if they could clone themselves to divide and conquer the day-to-day tasks. Systel Business Equipment may have many business interests, but cloning just isn’t one of them. However, the Fayetteville, North Carolina-based dealer may have the next-best thing in the form of a leadership triad.

Jacqueline Smith, Janene Aul and Cara Spencer have been referred to as the Systel Sisters for as long as they can remember. The three daughters of founder Keith Allison—who transitioned into a board chair/advisory role in recent years—have taken the reins of the company and are continuing down the growth path through strategic acquisitions despite strong downturn headwinds created by the pandemic. In the past 12 months, the trio completed a pair of acquisitions in South Carolina—Baker Office Solutions in Florence and Office Copying Systems in Greenville—that helped bridge its territory between its North Carolina holdings and Atlanta office.

Systel Business Equipment’s leadership team of Cara Spencer,
Jacqueline Smith and Janene Aul

Each of the execs has her own area of oversight which intersects with the others. Smith, the vice president of marketing and business development, directs sales, marketing, real estate and acquisitions. Aul, vice president and general counsel, handles service and operations in addition to legal issues. Spencer is sales support manager/IT special projects. They confer with Allison on a weekly basis and keep him updated on new product lines, launches and M&A strategy.

“We don’t always agree on everything, but we work really well as a team and hold each other accountable,” Smith said. “Finding the time for strategic meetings is important, but we’re so involved with day-to-day tasks, it can be a little burdensome. It really helps that we have our different areas of focus and sometimes have to compromise on decisions, but for the most part, we’re all on the same page. Janene’s a little more risk-averse, and I’m a bit opposite, so we balance each other out.”

As an attorney, Aul takes a fact-oriented approach to decision making, analyzing data and historical trends. “We brainstorm, go back and forth on decisions and hash out what it is we want to do,” Aul added. “Once we talk it through, we’re able to work toward the end goal.”

Extensive Platform

Founded by Allison in 1981, Systel Business Equipment has more than 250 employees and offices in 12 cities, including nine in North Carolina. The dealer has sales authorizations in Tennessee and Virginia as well, providing clients with copiers/printers, scanners, digital presses, wide-format/production, managed print and IT (including security), cloud solutions, unified communications and other services. They include an in-house printing shop that matches the capabilities of a commercial printer.

The dealer counts Konica Minolta, Ricoh, HP and Lexmark among its primary equipment lines to service a wide variety of clients and has developed a strong core of business among the state and local government, health care and higher education sectors. Systel was recently named one of Konica Minolta’s top 50 health care dealers in the world. The company also boasts about 35% of the community colleges in North Carolina.

The acquisitions were the highlight of what proved to be a challenging 2021 for Systel. Sales and service volumes were essentially flat compared to 2020, but in Q1 2022, service contract revenues are up 10% over 2021, lagging the 2019 performance by roughly 10%. Sales have remained level as Systel maintains headcount and the company ushered in three new sales reps in 2022. Smith is optimistic that it will provide the jump start necessary to eclipse the 2019 performance.

Systel spent much of the pandemic era focused on developing and maintaining current accounts, and Smith and Aul both believe that triggering more net-new opportunities is critical to surpassing 2019 figures.

Aul points out that strong demand in the health care industry, as well as the state/local government pacts, helped defray the losses Systel experienced in the K-12 education space. North Carolina had a voracious appetite for printers and package bundles when the work-from-home edicts were enacted, and Systel sold more home-use printers in 2020 and 2021 than ever before.

“The K-12 sector is where we suffered the most during the pandemic,” Smith added. “In our home county (Cumberland, North Carolina), we had one of our biggest new accounts that was only a year or two into the contract, and it was one of the only counties that didn’t go back to school that year. It took until halfway into 2021 to really see (that business) pick up.”

M&A Inroads

Aside from generating more net-new business, conquering South Carolina may be just the elixir Systel requires to resume its pre-pandemic growth trajectory. Last June, Systel announced its acquisition of Baker Office Solutions in Florence, which also included Baker’s 7,100-square-foot facility—located less than two hours away from Systel’s headquarters. Earlier this year, the customer base of Office Copying Systems was obtained, along with a new facility to help serve the western portion of South Carolina.

Breaking into South Carolina has been on Systel’s agenda for at least the past five years, according to Smith. The state lacked a truly dominant dealer presence, she said, and even the manufacturers hadn’t saturated the coverage area. So when smaller dealers began to suffer from the pandemic and had difficulty reconciling a going-forward plan, Systel saw the opportunity to bridge its coverage to the Atlanta office and better serve the clients with roots in both Carolinas without having to partner with outside dealers.

The only sticking point was that Baker carried the Toshiba line, which wasn’t part of Systel’s portfolio. And with the OEM authorizing other dealers within the vicinity of Baker, the pressure intensified on Baker’s management to align with an organization that could onboard its employees and take on its real estate. It was a competitive situation, but in the end, those two factors tipped the scales in Systel’s favor.

The Systel Sisters divide and conquer when it comes to guiding the dealership into its next phase of growth

“That was a huge factor,” Smith allowed. “We met with them and were struck by what loyal employees they had. We knew that if we had the opportunity to acquire a really good service team and additional machines in the field, it would make sense to move forward with it.”

Dealing with the Toshiba issue has been a challenge, according to Aul. “Ideally, we target core manufacturers, but Jacqueline and I felt strongly about Baker’s focus on customer service. They have the same type of culture as we do, with really good employees and technicians. In that regard, they were the perfect target for South Carolina. But we didn’t have any experience with Toshiba, so that’s been difficult to navigate through, and it’s still a work in progress.”

Despite some obstacles, Smith notes the technicians have tested well on the Systel OEM brands, and Baker’s clients are extremely happy with the new Konica Minolta and Ricoh devices. The timing of switching out devices may not have gone as planned, but the deal is already proving successful.

Systel is still in the market for strategic fits, but the next deal the sisters sign off on will likely be for a bigger dealership. The relationships Systel has forged in the Carolinas may provide the opening, and as dealers flourish rather than tread water in the aftermath of the pandemic, it could add clarity for opportunities to partner up.

Without a dedicated acquisition team, Systel’s leadership is taking a more measured approach to future opportunities. And with two additions in a shorter timeframe, the team doesn’t want to lose focus on other priority tasks.

“There are some projects we need to work toward internally while we nurture those acquisition relationships,” Aul said. “Strategically, we want to move past some of the projects that are really important to our growth. Then we’ll look outside again for acquisition growth.”

NPS Excellence

Historically, service has been Systel’s forte, but its Net Promoter Score paints a broader portrayal of the company’s value proposition. For 2021, the dealer registered an impressive 91.1, its highest score in the 10 years Systel has been tracking performance. In 2020, Systel also notched its first perfect score. Smith sees this as a true point of differentiation.

“During the pandemic, showing up for our clients during that time was important to them, and the NPS reflects that,” she said. “A lot of it goes back to the culture we’ve created. We felt it was important to keep our employees on board during the pandemic, no matter what happened. It goes back to our dad and the loyal, dedicated employees he cultivated. Along with the new people we’ve brought on the last couple years, we wanted to make sure they were all part of our growth strategy. We like to operate as a family, and it was important for us to tend to that culture.”

Aul believes it’s important to emphasize customer service from the top down, not only to make necessary corrections but to also communicate positive comments clients make on customer service surveys. These notes are also shared through Systel’s internal newsletters. She makes every effort to thank technicians for their dedication to customer service.

Growth Sectors

While representing less than 10% of its overall business, Systel enjoyed strong growth in managed IT and software during 2021. The uptick in security solutions, fueled by the incidence of clients suffering intrusion hacks, has keyed more client solutions. Systel also invested in a tool for providing network assessments as the company looks to offer more in-house solutions as a first tier of support.

“We’ve abandoned what we used to call the I-have-a-guy methods; we’re training all our sales reps to have those conversations with their customers and stress the importance of what managed IT services and cybersecurity protection can look like,” Smith said. “The clients may have seen the value in it before, but they can see what a necessity it has become.”

An increase in placing off-lease equipment has been somewhat fueled by supply chain constraints in sourcing new boxes, but Smith points out that off-lease gear has long been a fairly lucrative component of the dealer’s business. Having an in-house financing portfolio has been critical as clients seek cost-savings alternatives that can bridge the gap until new equipment is available.

Systel founder Keith Allison (second from left) has passed the leadership mantle to his daughters Jacqueline Smith (far left) Cara Spencer and Janene Aul

“I think the most successful reps at Systel have learned there needs to be some component of used equipment in most deals to make it profitable not only for them, but for the customer as well,” Smith remarked.

In March of 2021, Systel created a production print and business solutions division, giving its sales reps another tool for clients and prospects. According to Smith, the dealer was able to assemble a “dream team” of experts, some of whom were sourced in the wake of manufacturer layoffs. The results have been quite encouraging—last year, Systel posted $1.5 million in production print sales and has already equaled that output in 2022, with another $5 million in the pipeline.

Systel ushers in the acquisition of Baker Office Solutions in Florence, South Carolina, with a ribbon cutting ceremony

A recent partnership with Mimaki, in tandem with a strong Konica Minolta and Ricoh portfolio, gives the dealer even more alternatives on the wide-format end, and having team members also trained in production software has ushered in a world of opportunities. Additionally, Systel has an internal printing shop in its Greensboro office, which acts as not only a showroom for production equipment but also as a backup to print out customer files. This has helped spark net-new opportunities—a stated focus for Systel moving forward—highlighted by a key takedown of a Xerox account.

As the company looks to gain momentum in the wake of the pandemic, Smith believes strategic growth and the ability to tap into net-new business will be critical to achieving its objectives. It’s important for the dealer to remain loyal to its manufacturers, and Systel resisted the urge to expand its OEM roster during the supply chain struggles, an approach some dealers embraced.

Despite not gathering in person, the dealer nonetheless hosted a “Systelebraton” virtual holiday party

Aul feels the ability to do more with less through technology will be important. “We’re having significant challenges with hiring and backfilling positions,” she said. “We’re trying to use technology, and on the sales side, finding new and creative ways to prospect for new business in this virtual world. We need to use these ideas, and from a corporate operations standpoint, leverage technology more and streamline the things we’re doing. As we scale and grow, that’s going to be really important.”

Looking Ahead

On the heels of the company’s first in-person sales meeting in roughly two years, Systel’s executives emphasized the importance of developing new business, particularly in light of the company’s territory expansion. A new business development team, reporting to Smith, has been tasked with devising and executing the plan. Tentative plans are to hire 10 account representatives now that the need to be especially lean has passed, but the battle for quality reps will be hotly contested in the current hiring environment. Additionally, fully integrating the newly acquired dealerships will be another focal point. Aul added that becoming more efficient with remote diagnostic tools will be vital to delivering service efficiency.

Providing meaningful training on a monthly or quarterly basis will continue through 2022, and Systel has invested in corporate leadership and sales training consultants to bolster its efforts to improve every employee at every level of the organization.

“During our holiday party last December, we told employees that we want to give them the tools they need to be successful not only in business, but their personal lives as well,” Smith said. “We told them we wanted to focus on having fun again. If we can do that, I think it will serve us well.”

During the Darkest of Days, the Systel Family Pulled Together

It’s been said that we all have two families: the one we’re born into, and the other we choose. In the case of Systel Business Equipment, there’s little distinction between the two.

Jacqueline Smith, Janene Aul and Cara Spencer—the daughters of founder Keith Allison—have been charged with continuing to build upon the foundation created by their dad. Loyalty is immensely important to them, which is why they resisted the urge to reduce headcount during the heart of the pandemic period, opting instead to run as lean as possible. It hasn’t gone unnoticed by the staff at Systel.

“You know, there are good days and bad. But at the end of the day, everybody has each other’s back and everybody’s happy to work together,” Aul observed. “That really makes for a family atmosphere that I enjoy.”

Forming lasting relationships isn’t lost on Smith. Many of the members of her extended Systel family endured hardships during the past two years, but she believes the shared experience help bring the teammates closer than ever before.

“There have definitely been some challenges, and there are still some ahead, but I think we weathered the storm better than most,” Smith noted. “We’re trying to help other businesses but also help our employees and their families as well. We saw a high level of commitment from our employees over this past year. People did a lot more for a lot less, and it’s our goal to try to give back to them over the next few years. From additional training to evaluating their career paths, we want to take the opportunity to make everybody in the Systel family stronger.”

Erik Cagle
About the Author
Erik Cagle is the editorial director of ENX Magazine. He is an author, writer and editor who spent 18 years covering the commercial printing industry.