The best of two computer worlds - supplying hardware and software

The Best Of Two Computer Worlds When Tim Warren graduated from the University of Oregon in 1976, he had an important decision to make. Should he accept a job with IBM, the blue chip giant of the computer industry, or should he expand the computer programming business he had started while in college?

Warren stayed with his own business, and it now grosses more than $1 million annually.

With an ad in the Yellow Pages and $250 borrowed from his dad to pay for a telephone and the first month's rent, he opened an office in downtown Portland. Capitalizing on the fact that many businesses wanted data processing services but could not afford to buy their own computers, Warren began calling on small firms, offering computerized accounting and other business services. In the evenings he processed his client's work on a rented computer.

Warren bought his own mainframe computer in 1978 and offered his customers shared time on it through terminals in their own places of business. He provided the software programs and training; they paid only for actual computer time and services.

He financed this step with an $80,000 loan, more than four times his total worth. Impressed with the carefully researched, comprehensive business plan he presented, bank officials gave him the loan and some kindly advice not to get discouraged if it took longer than anticipated to achieve his goals. His company, J.T. Warren Computer Service, was on its way.

But Warren was back in four months. Not only was he doing better than expected, he also needed more money because he could not expand his business fast enough.

Warren added a second computer in 1979, and in 1980 he acquired Software Systems, Ltd., the firm that developed the accounting program he has used so successfully.

He has since supplemented the accounting package with other programs, which he markets nationwide to more than 1,000 customers.

Time sharing was profitable in the 1970s because computers were so expensive. With the introduction of mini and micro computers, prices tumbled and many companies wanted to buy their own. Unfortunately, says Warren, as the price of hardware came down, so did the level of customer support. But service was the critical ingredient his company supplied.

Warren also started selling the Data General computers he used, so he could offer his customers the best of both worlds.

Warren's customers can try out both computer hardware and software programs to see how they work. They can either remain on time share indefinitely (for an average monthly fee of $500) or buy a system. If they buy from him, they are already familiar with the equipment and programs they purchase, and it is a simple matter to transfer their files from Warren's computer to their own.

By 1984 Warren was "getting bored." He decided to tackle a new challenge. After considerable preparation and an investment of $250,000, he announced early in 1985 that his company, renamed JTW Computer Systems, would franchise its computer service business.

Start-up costs for a JTW franchise range from about $60,000 to $78,000, including down payments on the necessary computer hardware and software. In return, investors will get the benefit of Warren's nine years of experience. And Tim Warren definitely expects to win. With this latest expansion, he will reap sales of about $1.5 million in 1985, 85 percent over 1984, and projects a "conservative $2 million plus" in 1986.

COPYRIGHT 1985 U.S. Chamber of Commerce
COPYRIGHT 2004 Gale Group