Sharing wisdom on ASPs

Network executives contemplating the move to an application service provider might be wise to listen to those who already made that leap.

This is the first in a three-part series that will take an in-depth look at how three businesses selected an ASP, survived deployment and are living with the results. These customers will discuss the benefits and pitfalls to anticipate when teaming with an ASP, as well as offer tips on getting the most out of such deals.

While saving money is not the only reason cited for outsourcing applications, it was a big factor in the decision made by DaimlerChrysler Capital Services. The Connecticut company has been outsourcing SAP applications to Qwest Communications' Cyber.Solutions for more than a year and estimates it is saving 30% to 50% annually over the cost of deploying in-house, says Victor Inglese, global project manager. DaimlerChrysler Capital provides financing for aircraft, marine vessels, commercial real estate and industrial equipment.

"We wanted to conduct a rapid implementation of SAP while minimizing our costs," Inglese says. "We wanted to be able to create an environment where pockets of people all over the world could talk the same [SAP] language."

Besides wanting everything done in only three months, the company was looking to avoid ongoing maintenance. "We've all heard the horror stories about supporting SAP," Inglese says.

Deploying SAP in-house would have required a data center and staffing a help desk 24-7 to serve overseas employees.

"We also wanted to support future growth without incurring more costs associated with supporting an SAP environment," Inglese says.

Deploying internally would have meant delays associated with hiring and training employees, who then might not stick around that long. "The Northeast is extremely competitive for SAP talent," he adds.

A critical issue for DaimlerChrysler Capital was the need to accurately predict IT and support costs, Inglese says, and the ASP model allows more predictability.

DaimlerChrysler Capital began the process by drafting selection criteria. First, the winning ASP needed to be certified by SAP, and there were only four that met that test. The company also wanted to know how many customers the ASP had and of those customers, how many were using each module of SAP.

"All we were looking at were the financial modules and the purchasing function," he says. "We wanted to make sure whoever we used had expertise in the modules we were going to use."

The company also wanted the flexibility to take the application in-house if Qwest Cyber.Solutions did not live up to expectations. Intel servers, Windows NT and SQL Server were specified for the deployment even though these platforms were not standard for the ASP. In case the applications ever had to be brought back in-house, Inglese wanted to be sure his team of NT experts could easily integrate the system.

"Originally we set an extremely aggressive timeline for making a decision," Inglese says. "We wanted an answer back in two weeks with all of the ASP's pricing. We really wanted to see which vendors were interested in answering that call."

Pricing was very important.

"We knew we were early in the [ASP] cycle, and we knew we had the DaimlerChrysler name, which gave us some leverage," he says. "We were able to negotiate a great price without decreasing service levels."

The company pays a per-user monthly fee to Qwest Cyber.Solutions based on increments of 50, 75 and 100 seats, he says, declining to discuss specific prices.

Besides offering an aggressive price on a 36-month contract, Inglese also liked that the company could connect directly to the ASP's data centers, even overseas. The company headquarters in Connecticut and its sites in New Jersey, Kansas, Germany and the U.K. connect to Qwest Cyber.Solutions through dedicated private lines, he says.

While the four-and-a-half-month implementation took longer than expected, Inglese is happy enough with the service that he's looking to add more SAP modules. About 56 users have access to SAP, with 200 the ultimate goal.

Inglese did encounter bumps in the road.

The company wanted pricing and service information from the ASPs that were bidding within a few weeks, but that turned into nearly three months, Inglese says. In addition, the company found that promises made by ASP salespeople regarding specific applications and platforms didn't always hold water.

Because the firm wanted such a fast deployment, it also missed a couple of beats.

"We did not produce a detailed requirements document," Inglese says. "That caused additional delays because we weren't clear to the vendor on what we wanted and made them come back to us with additional questions before they could respond to us."

The company also did not push Qwest Cyber.Solutions to have a team in place to start the project as soon as a contract was signed. Once the project was under way, the ASP threw too many people at DaimlerChrysler Capital Services when problems arose. "It was not a coordinated effort," Inglese says.

Inglese stresses the need to assess the experience levels of anyone who might be working on your account.

"We looked at one ASP who said they had great experience, but the longest term of SAP experience of any one person was less than one year," he says.

Because there are so many new ASPs on the market, business users cannot ask too many questions or gather enough information, he adds.

Next week:Excite@Home is working with ASPs to relieve the burden of supporting once-disparate business units through a third-party centralized system. o