George Valentine is glad PeopleSoft is actually people hard.
Valentine is the CEO of transchannel, an Application Service Provider (ASP) in Atlanta, Georgia, dedicated to companies that have already installed that ERP (Enterprise Resource Program (ERP). In a classic outsourcing scenario, transchannel “frees companies from the daily headaches of managing complex ERP programs and lets them focus on their core businesses,” according to Valentine.
Transchannel has targeted customers that have already purchased PeopleSoft and have suffered “the pain” of trying to implement its modules on their own. Typically these companies have been struggling for at least six months. “We come in and say, ‘PeopleSoft is complex stuff.’ Then everyone nods their heads,'” says Valentine. After that “it’s a relatively easy sale,” the CEO says, suppressing a smile.
His prospects like his offering because they don’t want to tie up their limited IT resources managing ERP systems they really don’t understand. After months of struggle, they like of idea of signing an ASP agreement and having an almost instant solution. Transchannel can add customers by “just flipping a switch.”
Transchannel is currently focusing on corporations with annual revenues of $250 million or more. To date few other companies are focusing on this market; Valentine says most ASP offerings are geared toward the small to mid-size market. So far, most ASPs have a one size fits all approach.
Providing Value Added Customization
That will not work with an ERP program like PeopleSoft because customers require customization and integration with their other software applications. Transchannel specializes in this value added customization without forcing its clients “to give up the value of using an ASP.”
Valentine has made a career of making PeopleSoft make sense to its users. He noticed that after companies installed PeopleSoft software, there were no firms in the marketplace available to help the company on an on-going basis after the implementation team packed up. “These programs are really complex. Without help, companies are not optimizing their return on their investment,” says Valentine. He estimates the software can cost between $1 and $5 million and the consulting to install it can be “five times that.”
Valentine and his partner Dennis Ehle founded Transchannel in 1997. The two partners were working at the accounting firm KPMG† doing PeopleSoft implementation and project management. The two were working on a project together and one day suddenly looked at each other and said, “Let’s get out of here and start our own PeopleSoft implementation firm,” Valentine recalls.
The two had no paychecks for six months while they organized their operations and found their first client. Two years later they had completed 20 PeopleSoft projects.
In 1998 the two flew into Birmingham, Alabama to visit a client. On the plane Valentine read an article about ASPs. Ehle was already thinking about switching to an ASP model. Over dinner that night they decided to become an ASP, using their corporate profits to build the requisite data center.
Solving Post-Implementation Problems
“Becoming an ASP solved a problem every one of our clients had: post-implementation support,” says the CEO. Post-implementation support can be very costly. Most consultants specialize in one area of PeopleSoft. If a company buys an ERP application with 10 different modules, “they can’t afford 10 experts,” Valentine points out.
An ASP solves that problem, however. Transchannel has all the experts on its staff. Its customers can afford them because their fees are shared by all of tranchannel’s customers. Moreover, Valentine says client needs vary. Few need this advanced expertise on a daily basis. Many clients only need them twice a month while others are in hyperdrive and need them 60 hours a week. ASP clients only have to pay for what they use.
Valentine says the ASP model also solves a personnel problem. The talented whiz kids on his help desk don’t want to be stuck answering the same questions from continually clueless customers at the same company. But when an ASP supports a dozen different companies, the questions vary, taking away the tedium.
Transchannel supplies a 24/7 help desk. To keep the frustration level low, Valentine believes his company “must have a person answering another person’s issues over the phone.”
Controlling Frustration With Outsourcing
Another way to control frustration with the outsourcing relationship is to make all service level agreements (SLA) as detailed as possible. “The industry is doing a poor job of defining the gray areas,” posits Valentine. The only way for a customer to fix this is to understand the SLAs. “If you don’t know what’s included and what’s not, ask!,” advises the CEO.
Outsourcing is changing its focus, Valentine observes. Instead of buying brands like PeopleSoft, he predicts customers will simply purchase solutions from their outsourcing providers. Then the SLA “will become the end product.”
Lessons from the Outsourcing Primer:
- ERP programs like PeopleSoft are very complicated and generally require on-going support.
- Eventually software† brands will disappear as companies outsource for solutions.
- Standardized ASP solutions will not work for ERP applications because customers need customization and integration to other their other applications.