Sept. 25, 2023

As Paul Zweifel began to grow his company’s managed IT services business, there was one competitor his team never crossed.

“If we ran into Workplace, we respectfully walked away,” Zweifel said. “We just knew those customers were with the best-in-class model in managed services. (We said), ‘Nice to meet you,’ and we walked out the door.”

Earlier this year, Zweifel’s Sioux Falls-based Direct Companies became the new owner of Workplace IT Management, which was founded by Joe Zueger in 1997.

“He’s local, he’s smart, and he wanted to keep the brand, which was big to me,” Zueger said.

“Eventually, the biggest threat to every business is the general manager. Specifically, the general manager that thinks what got you here will get you there, and that’s where I was. We needed more formal management, better measurement systems, dedicated HR and internal accounting, and we didn’t have any of that.”

The deal adds about 45 employees to the Direct Companies’ workforce, bringing the team to about 130 people. They’re split among three divisions – automation, which largely serves industrial customers; technology, which is driven by managed IT and cybersecurity solutions; and data management, which focuses on mining, organizing and making sense of data.

“There’s people getting hired every week,” Zweifel said.

Learning young

Zweifel’s business career began in the late 1990s at age 14, when he responded to an ad in his high school newspaper for a job at POET’s first plant in Scotland in southeast South Dakota.

He was hired to help with data entry but ended up answering the phone as orders came in for feed and working in accounts receivable. By the time he was 15 or 16, he started doing lead generation and market research related to carbon dioxide sales.

“I called the state’s office to figure out who had a permit for large quantities of carbon dioxide and asked if they wanted to buy carbon dioxide locally from an ethanol plant versus a natural gas source,” Zweifel said.

Then, he got into database development when an employee went on maternity leave. Before he’d graduated high school, he was going to school four hours a day and working in the plant the rest of the day – sometimes even flying in a corporate plane out of state to assist the company’s business units.

“I just got a ton of exposure to a lot of different things in business,” he said.

Zweifel worked at POET until 2007 as a process control engineer and then in a senior process automation role.

After earning his MBA, he began an engineering construction company called Nelson Engineering with a former colleague, before selling his share in 2012. The company now is Nelson Baker Biotech in Sioux Falls.

“I started again,” he said, with the launching of Direct Companies in 2012.

“We started out doing the automation side of the world.”

That meant bringing custom solutions for computerized control systems, largely in industrial, power, utility and soybean plants.

“And because we were doing a good job and doing well by our customers, they would ask for other things like managed IT,” Zweifel said.

“We just found ourselves in a spot where people don’t like switching services unless they have a problem, and nobody really knows if they have a problem until it’s on the surface and they can’t get ahold of someone or they have a backup issue and can’t recover their material. So it was really tough for us to enter the Sioux Falls market to really make a difference in that business unit. We were successful, but we were kind of boutique. And then we got introduced to Joe, and surprisingly our mission, vision, values were spot on with each other.”

Connecting with Workplace

As an entrepreneur, Zueger had charted his own path through what can be a fragmented industry in managed IT.

An early location for Workplace IT Management at the Western Mall.

Workplace IT Management had grown to the point where nearly all its revenue was recurring, driven by regional, privately held organizations that averaged between 30 and 50 computers – “big enough to need direction and support and security and stability and not really big enough to staff it for themselves,” Zueger said.

“The only reason we were able to get to be in the top 15 percent of managed service providers was because of our culture. We outkicked our coverage with culture.”

He leaned heavily on a methodology around growing a business honed by his partner in Workplace, John Spader, president of Spader Business Management. It categorizes businesses among four plateaus, from startup through scaling up to maturation.

The current Workplace location in downtown Sioux Falls.

As Zueger explains, Workplace was at a point where it needed to go from the second to the third plateau of growth, and “I can’t lead 50 to 60 people to that next plateau by myself,” he said.

“And more importantly, am I the guy to get it to plateau three? I’m good on the fire-starting, leadership, growth, but once it starts to be a steady, stable, ongoing concern, that’s not where my capabilities and motivations are best used.”

He finally concluded that “against this time-tested business concept I was introduced to by Spader, I realized I was not the right guy for the sake of the Workplace brand and our clients and our valued staffs’ future,” he said. “This was a move to secure the future of Workplace and bring value to our staff and clients.”

For Direct Companies, “it became apparent if we want to grow in that space, and looking at Joe’s legacy planning and how he wanted to see it grow, it made a ton of sense to work together in this acquisition,” Zweifel said.

“We’ve got zero reason to have to change anything. It just fit like a glove into our model. They have the best platform for us to grow.”

Additionally, Direct Companies expands products and services available to Workplace clients, including offering security and access control solutions – products designed to help with theft prevention, personnel management, minimizing liability and delivering customer experience insights.

Future focus

Expect to see growth in the physical space needed for Direct Companies at some point, Zweifel said.

He owns the River Plaza retail center at 2425 S. Shirley Ave. and has office space that will include Workplace IT’s staff, combining them with his existing managed services team.

His other facility at 2320 W. 54th St. N. includes some manufacturing for internal projects, the automation team and the team that handles the company’s data management side. That covers everything from a customer’s lab information to its control systems, scale data, shipping and billing.

“We help customers aggregate information, do data analytics and bring visualizations to them so they can better operate their business based on data and not gut feelings,” Zweifel said.

In addition to Sioux Falls, there’s an office in Winner, two in North Dakota, one in St. Louis and people based remotely in other states.

As founder, Zueger plans to continue providing leadership and direction for Workplace into the foreseeable future as the business matures.

“Typically, you become a statistic when you do an acquisition, where there’s a fallout with the previous owner, and Joe and I just don’t have that,” Zweifel said. “We’ve maintained a very, very good working relationship, and I hope he’s part of the group for years to come.”