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TMCNet: Saturn suceeds by "offshoring to the North Shore" [Duluth News Tribune, Minn.]

[June 22, 2009]

Saturn suceeds by "offshoring to the North Shore" [Duluth News Tribune, Minn.]

(Duluth News-Tribune (MN) Via Acquire Media NewsEdge) Jun. 22--Despite the ongoing recession, one Duluth business has continued to grow: Saturn Systems Software Engineering reported record revenues in 2008.

Although the company is privately held and does not publicly disclose its sales, founder and President Keith Erickson said revenue for 2008 rose 25 percent from the previous year and exceeded $2 million.

Saturn is on pace to turn in an even stronger 2009, said Scott Risdal, vice president of business development.

The company now employs 17 people in Duluth and eight more in Charleston, S.C., where the company services its largest single client, the U.S. Navy. The Navy accounts for 30 percent to 40 percent of Saturn's revenues, said Mark Chmielewski, Saturn's senior vice president.

Of late, Saturn has been marketing itself as an alternative solution to sending programming work overseas.

"Our sweet spot is small- to medium-sized firms that don't have the ability to very well manage overseas operations and that maybe don't have the financial ability to use a higher-cost provider such as Accenture," Chmielewski said, noting that more and more clients have been deeming Saturn the best value for their programming needs.

"I think there has been a push not to send as much work offshore," Risdal said.

"There's work that readily can go overseas and that works with that model," he said. "But R&D [research and development] can be difficult because it requires so much communication and detail. Language, time zones and culture can all become real barriers." Sometimes overseas programmers deliver inferior service because of a tendency towards subservience, Risdal said.

"One of the things I've heard is that sometimes it's part of foreign cultures not to disagree with the customer you're contracting with," he said. Risdal explained that sometimes it's beneficial to point out to clients that there may be better ways to accomplish a task than the path proposed.

In contrast, Risdal said that at Saturn: "We very much become part of the development team, and we often tell our customers what they ought to do." You may have heard Saturn marketing its services as an underwriter for Minnesota Public Radio, with the pitch: "Offshore to the North Shore." Saturn serves a diverse lineup of customers from all over the nation, but one of its key customers is local. Amsoil Inc., a Superior-based manufacturer of synthetic oil and other products, uses Saturn Systems to help manage its e-commerce operations, back-end programming, user interfaces and lookup services.

"They bring a lot of resources to the table and a lot of creative insight," said Dewey Asbach, Amsoil's manager of electronic communication. "I've found them to be indispensible." With Saturn Systems' help, Asbach said Amsoil probably has doubled the amount of e-commerce it does in the past five years. He noted that the Superior company's Web site was recently ranked about 12,000 by Quantcast, a monitor of Internet traffic. That puts Amsoil in the top 2 percent of most-visited sites on the Web.

Saturn is currently involved in a wide variety of work, using cell phone technology to track vehicle fleets for clients, developing software that controls power supplies for medical devices, assisting companies with software that can be used for 401(k) compliance testing, developing a control system that can be used to direct a machine that drills fastener holes in the wings of F-18 fighter jets waiting to be resheathed, and compiling and managing a database from landfill monitoring stations throughout the state.

The company occupies the ninth and 10th floors of the Torrey Building at 314 W. Superior St.

Risdal said the company's relatively low overhead expenses in Duluth help keep its rates competitive.

Erickson said the recent economy has made clients more mindful of their spending but it also has had a positive side effect.

"It's helping us find many more qualified recruits and candidates. We receive tons of unsolicited resumes every day from all over the world," he said. "A year or so ago, our biggest challenge was trying to attract people to Duluth, but now that has flip-flopped."

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