Mixing an old economy company with a new economy company turned out to be the easy part. Getting every financial system to talk to everyone else’s was the tricky part. Fortunately, an ASP came calling.
PTEK Holdings of Atlanta, Georgia started as a calling card company selling the now ubiquitous cards to road warriors, businesspeople who travel extensively for their companies. “We’ve always targeted the mobile professional,” says Mike Havener, vice president finance and accounting for PTEK. The company went public in 1996.
As the world changed radically, PTEK decided its niche remained the same. However, now the options to provide unified communications abilities to these peripatetic professionals increased. PTEK began purchasing companies that could provide the talents it needed, including a fax company and a conference calling firm. Its programmers developed a software utility program that allowed customers to access all of their telephone numbers remotely from one number.
Two years ago the company expanded that service to the Internet when it launched a product called Orchestrate. Its customers can retrieve all their faxes, phone calls and emails from the Net or by phone. Its software allows users to listen to their emails over the phone and then reply to that email with a voice attachment which recipients can hear if they have loaded RealPlayer on their computers. Customers can put together a nine person conference call on the Net or over the phone.
The Order To Shed All Non-Core Activities
The company has now become a holding company, letting each business run on its own. Today it is a mix of its legacy phone businesses –some customers today are just interested in its telephone service and its new economy Internet offerings.
In addition, it has become a source of venture capital for fledgling firms. Havener says PTEK invests its excess cash in young start up companies. As venture capitalists, PTEK selects companies that “might turn into big players for us one day,” he explains.
In late 1998 PTEK’s CEO told Havener he wanted to shed all non-core activities. Havener felt he was looking straight at him. Every time PTK acquired a new company, it had to install its financial system on the new company’s accounting program. Financial reporting was becoming slow and tedious. “There was no discipline in reporting,” Havener reports. A bad result: PTEK could not meet Wall Street’s expectations.
The CEO wanted a consistent financial reporting system across all PTEK units. And he didn’t want to hire an IS team to maintain this accounting program internally. PTEK programmers were already stretched thin working on the company’s own products.
The company chose PeopleSoft as its accounting application. Trying to use it was quite a shock after using a DOS-based system “with few moving parts.” Havener reports with a laugh. Implementing the complicated program was hard on PTEK’s staffers; they kept leaving.
An Implementation Nightmare
The company hired a consultant to straighten out the mess. But even with professional help, it still suffered too much down time. Then, its backup system failed at the same time its hard disk crashed. “We almost lost all our data since the PeopleSoft implementation,” recalls Havener with a shiver.
PTEK fired its consultants and put out a Request For Proposal (RFP) for a consultant who could fix its mess and then roll out a working application to all its divisions. It selected Transchannel for two reasons: First, its proposal was the cheapest. Second, it, too, was an Atlanta company; its executives would always be nearby if things went south.
Transchannel arrived on the scene and interviewed everyone who was involved with the application. The consultant was able to get PeopleSoft running at headquarters in just six weeks. Then the outsourcing consultant rolled out the application to PTEK’s other divisions.
However, the application itself was still residing on PTEK’s server. The original instability continued. Transchannel executives met with the head honchos of PTEK with a new solution. Transchannel was willing to become an ASP and host the application on its hardware. PTEK would be able to access it through a T-1 line. Havener says Transchannel promised “we could come into work and not worry about anything.”
PTEK ran the numbers and concluded the company could save money in the long run “This was risky for us putting our financials in someone else’s hands. And we were Transchannel’s first ASP customer. But we didn’t have any choice,” recalls Havener.
It signed an outsourcing agreement in May 1999. The transformation only took four weeks.
The acid test came when PTEK acquired two new companies with a combined total of 200 employees. Havener is still amazed the provider was able to have both companies running on all PeopleSoft platforms in just two weeks.† “We didn’t have to deal with the mess of working with legacy systems or installing software on every PC,” he reports.
Havener meets with the executives of Transchannel every two weeks to discuss the relationship and focus on the problem tickets. They usually end up requiring modifications. “They are things PeopleSoft didn’t deliver,” he notes.
Havener says the best part about outsourcing is “I get to come into work and the system’s not down. I don’t have a bunch of IS people reporting to me blaming the hardware or the software if there’s a problem. Instead, I call Transchannel and they fix it.” Even though he was the boss, if he called one of his IS people whenever there was a system problem, “I’d leave a voice mail and never get a response.”
The executive likes the ASP model because he can access his software from anywhere in the world over the private network.
Havener now has so much confidence in this ASP he scheduled a much needed vacation when transchannel went live with its PeopleSoft 7.5 upgrade. “With most upgrades, it’s all hands on deck,” he says.
Lessons from the Outsourcing Primer:
- Outsourcing allows holding companies to easily amalgamate new purchases. Financial reporting becomes important if the company is publicly held.
- The ASP model allows executives to access their information from everywhere. The ASP model provides a portable solution.
- Complicated upgrades are easy if you leave it to them.
- Meeting with the provider on a regular basis and face-to-face helps build the relationship.