First the stock market was red hot. Now it’s stuck in a stall. Will it fall? People who have their savings parked in mutual funds want to know where they stand.
Standard & Poor’s has a division in London, England which gathers information on over 9,000 mutual funds. The firm contacted each fund manager every 30 days to determine the exact composition of the fund for that month. Its staff then prepared monthly reports that it distributed in a timely manner to its customers.
Standard and Poor’s staffers had to deal with fund managers speaking a welter of languages and operating in dozens of time zones. Every month. “It was insane,” says Ralph Potente, president of CyberData, Inc., a Hicksville, New York Business Service Provider (BSP).
Standard and Poor’s, realizing this was a costly and inefficient method to gather dated information, turned to CyberData for help. The company, which opened its doors in 1989, specializes in complex outsourcing solutions. CyberData, which has become a Business Services Provider (BSP) in this Internet Age, originally devised a fax solution to this problem. The company has proprietary fax publishing technology that enables its staff to create and deliver documents to virtually every fax machine in the world.
CyberData took the mutual fund manager database and created a fax program. Every month a computer automatically faxes the managers a form with spaces for all the pertinent information. The managers just have to fax it back.
In today’s Internet world, the supplier has updated the solution for the Web. Now fund managers just have to log on to the BSP’s Web site and update their forms.
Adding the Human Touch
The outsourcer’s computer monitors the database. When it doesn’t receive a response from a fund manager with a preset amount of time, it sends a friendly email to the manager, reminding him or her to log on and complete the form. If a few emails don’t get the message done, the site sends a fax to the fund manager. If a fax isn’t forthcoming, the computer generates a report. Then a human gets involved and makes a phone call from the outsourcer’s office.
Potente says his company specializes in complex solutions. “It’s layers of getting things done,” he explains. He points out his company is a true BSP because it has staff on hand to activate these layers, like making the phone calls for Standard and Poor’s. “We have people behind the scenes, constantly following up,” he notes.
The president says CyberData specializes in back office tools. Before the Net, its arsenal included fax machines, interactive voice response and modems (remember them?). While the Internet has made his job easier, he views it as no panacea. “It’s just made our job easier,” he explains.
Potente, who was an architect before he started CyberData, approaches every outsourcing challenge as a design problem. “We go for the right solution, not necessarily the high tech solution,” he explains. In most cases, the solutions CyberData crafts are a hybrid, which keeps the buyer’s cost down. “We look at what the client really needs because we are in this for the long haul,” he says.
Potente says he believes outsourcing is “mandatory” in today’s world. Staffing shortages have become the major obstacle. Outsourcing’s key advantage is the buyer no longer has to recruit and retain the people.
He says a BSP can share its expertise over many clients, which yields “tremendous savings.” Companies who hire that expertise in-house are not maximizing the benefit of that expensive addition to the payroll, in his opinion. “Network engineers are very expensive people. You can’t afford to have them!” he exclaims.
An Unusual New Line of Work
The company became an insurance ASP in an unusual way. The company has a 401 (k) retirement plan for its employees. The Net savvy staff was frustrated that it didn’t have ready access to the composition and investment totals for the funds in which they had invested over the Web. That was because the third party administrator (TPA) was not equipped to handle these requests.
At a staff meeting CyberData employees, in a pout, said, “This is ridiculous.” So they built an interface allowing staffers to access their 401 (k) accounts over the Net. Then Potente showed it to his TPA, who grew excited.
Now CyberData markets this interface around the country as an ASP. “We provide the interface and send the TPA a bill every month,” he notes. In this case, CyberData has no interest in having its employees be involved with any of the accounts. Becoming a BSP is not in the cards, here.
Lessons from the Outsourcing Primer:
- High tech solutions aren’t always the answer. Sometimes a hybrid solution, including low tech technologies like fax machines, may be a more elegant and cost effective answer.
- Outsourcing allows companies to solve complicated problems. BSPs are skilled at crafting total solutions.
- Outsourcing saves money because companies don’t have to hire experienced, expensive employees.