Outsourcing - Making The Switch



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Making The Switch

light switch in on position On-line stock brokerage firms continue to snare market share because traders like the speed of their transactions. A market order goes straight to the market. When breaking news rocks the stock exchanges, traders can jump instantly into action. Individuals, however, have no guarantee they can place their orders on-line if they have to sell. Their Internet service provider (ISP) can be down. Or the brokerage firm's servers can't handle the avalanche of orders.

Brokerage firms want to take that uncertainly out of the trading model. One company, according to Sanders Partee, CEO of ViewGate Networks Inc., is building its own Internet connection. Its customers are encouraged to use the brokerage firm's private ISP at no extra cost to them. "You'll be assured your trade will get through because this ISP guarantees you will get an HOV lane (a high occupancy vehicle lane usually is the fastest moving lane on a U.S. freeway) into the server," says Partee.

The CEO believes ASPs will also pay for transport into their Web sites because they want to promise premium service to their customers. Primo data connections are one of the foundations of the ASP module.

Until now, premium Internet connectivity was a game of chance. Internet service providers have been connecting their customers to the Internet by their "best efforts." Sometimes the Internet connection is speedy. Sometimes it's pokey. It's the luck of the draw. As Partee puts its, "Sometimes you can sit in first class, while other times you have to go to the back of the bus." Customers pay for connectivity, period. Quality and service are not part of the equation.

First Class Interent Connections

That's not good enough for companies who are outsourcing to an ASP or who have large volumes of ecommerce transactions. They must have first class Internet connections and they want these high quality lines consistently. On the other hand, they don't mind retrieving their email over the slow lane.

Partee says these connection sensitive companies are turning to service retail carriers that can provide different classes of service. But these carriers can't charge for champagne connections until they can prove the customer actually received them. For the user, data services are invisible. All they see is a monthly charge on their bills.

That's where ViewGate comes in. Its software monitors the performance of today's new "intelligent" routers, detecting each class of service. "We can tell customers they paid for champagne but got Diet Coke," says Partee. Its utility can monitor routers manufactured by Cisco, Nortel, Alcatel and Newbridge.

"We are a start up with a history," continues Partee. Since 1992, the Alexandria, Virginia-based company has created utilities for managing telecom switches. Back then, it was selling its program to large long distance carriers using Alcatel's network.

In 1997 Sprint approached the company and asked if its utility would work for Sprint, which uses Nortel's network. The company received $5.5 million in venture capital funding to handle the Sprint business.

Affording Siebel

The Internet has added a new wrinkle for switch monitoring. Now ViewGate's main market is virtual private networks using the Internet Protocol, which is how a user connects to the information super highway. ViewGate's market focuses on the business side of the Internet.

Partee is a devotee of great customer service. He felt ViewGate had to utilize a top quality Customer Relationship Management (CRM) application "to help me manage new customers and service existing customers" in the fast paced Web world. He searched on-line and narrowed his selection process to six applications before he chose Siebel.

However, he had a problem. Siebel was the second most expensive application. The firm had limited capital and couldn't afford a Siebel installation. He says cost was forcing ViewGate to use a cheaper solution it didn't want.

To ensure it could use Siebel, it decided to outsource to Outtask, a business service provider for new economy companies also located in Alexandria, Virginia. Partee says outsourcing solved three "humongous" problems for ViewGate. On the financial side, he likes paying a monthly rental fee instead of coughing up "massive up front purchase costs." He believes this is the only way he could afford a top quality application.

Using an ASP also eliminates all personnel problems. ViewGate employs a consultant who keeps its desktops running. When Partee mentioned he might be interested in hiring the consultant to implement his Siebel CRM module, the consultant quoted a price of $40,000 and insisted he hire a full time person, too. "I said, 'That's just nasty.' I would rather hire a salesperson than hire a person to manage this,'" says Partee.

Solving The London Connection

The ASP decision solved the international dilemma, too. ViewGate has a London, England office. The company would have had to purchase two Siebel licenses "which was unacceptable." Instead, ViewGate purchased a permanent dedicated connection to Outtask.

Outtask offered more than just Siebel hosting to ViewGate. Partee says the ASP "has a nice suite of applications." It is now implementing a Great Plains accounting package which interfaces with its Siebel module allowing the company to have integrated billing. It also plans on adding a time management application.

Partee says ASPs are a "great solution for a start-up. I can run Siebel and integrate it with other programs far below the price I would have to pay to buy the software myself," he reports. Moreover, he likes not having to worry about the technology. "Running the programs isn't helping me get and keep customers," he adds.

Lessons from the Outsourcing Primer:

The ASP module is cost effective if you have an overseas office. You don't have to purchase two software licenses to use a program.
The ASP module allows companies to use expensive software solutions they couldn't afford to use otherwise.
Customers can connect to their ASPs with high quality Internet connections. Many of the ASPs will pay for this service for their customers.

Publish Date: November 2000

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