Corio, Inc. was a PeopleSoft pioneer. Now it is expanding its product line to become a full service ASP provider. “We want to provide everything a business could need,” says Chris Casanega, senior director of marketing for the San Carlos, California ASP.
Corio’s decision mirrors how companies work with ASPs. Typically, they start with one process to test the waters. Once they feel comfortable with the outsourcing system and the supplier, they are more willing to give the supplier more responsibilities.
The two-year-old company, which has 600 employees servicing 100 customers, now also offers SAP to its client base. Casanega says these two enterprise resource planning (ERP) applications don’t actually compete since they specialize in different areas. PeopleSoft’s specialty is human resources while SAP is the favorite of manufacturers. Corio decided it needed to offer both applications “because some of our customers preferred one brand over the other.”
The ASP felt a good way to grow was to sell more products to its existing customers. The marketing pitch became, “We’re hosting your financials. Can we do your CRM, too?” Currently customers use three different applications from Corio. “But that number is increasing,” says Casanega.
This change in direction indicates a continuing change in the fluid ASP market as the big providers determine the best way to service their customers and grow their revenues.
Email Opens the Door
Corio selects tier one applications so its customers never have to upgrade to a better application. “We want to bring them in at the top,” Casanega says. Corio’s current offerings include Siebel for customer relationship management (CRM), Commerce One for eprocurement, and BroadVision for ebusiness.
The ASP’s newest offering is email using Microsoft Exchange. Corio was able to add this application through a joint venture with Microsoft and Critical Path. Casanega says messaging has been a good door opener for the ASP. “The first application most companies will agree to let a supplier host off site is email,” he says. In the past, “getting companies to trust us with their mission critical data was a hurdle.” Now, most forward thinking companies have adopted an ASP solution of some sort.
The company adds value to these applications by integrating them into one seamless offering. That way if a customer makes a sale and enters it in its Siebel application, the information automatically flows into SAP’s manufacturing and financial programs, too.
Some of the tier one applications are now offering their own ASP services. Casanega doesn’t feel competition from the software companies will impact Corio significantly. “Writing code is very different from managing data centers and applications. The competencies are not the same,” he explains. Moreover, these companies can only offer one application, their own. Casanega is betting the marketplace will prefer one stop shopping from a trusted supplier.
The traditional reason to outsource – to cut costs and save cash – is now driving companies into the arms of the ASPs. Casanega says Corio can tell a prospect exactly how much money it will save by outsourcing applications to it. The average savings is between 30 and 50 percent, he reports. Much of that money comes from removing hard to find IT personnel from the buyer’s payroll.
High Growth Companies Choose ASP Solution
ASPs are a good choice for companies experiencing a high growth rate because they need scalable software that can grow with them, the Corio executive continues. Outsourcing to an ASP cuts risk because it is very difficult for these high flyers to predict next year’s growth rate. “They would have to buy hardware on guesses,” says Casanega. It’s difficult to plan perfectly. Either they underestimate their needs and have to buy equipment at the last minute or they overestimate their growth and end up having their hardware sitting idle. Neither is a pretty picture. Outsourcing to an ASP means they simply have to pay as they go; their growth estimates become irrelevant.
Outsourcing allows CEOs and CIOs to focus on their strategic issues and not fret over the operational details. “Managing applications is a large headache,” says the Corio executive. In addition, outsourcing to an ASP like Corio removes the pain of integration. Companies now don’t have to spend months and dollars hiring an outside firm to make their various applications talk to each other. “We can do an implementation in under eight weeks,” boasts Casanega.
Corio operates with service level agreements (SLA) that include an uptime guarantee of 99.5 percent. The penalty for failure to meet an SLA is a cash reimbursement to the buyer. Casanega says Corio assigns a client service team dedicated to one account which always includes a Corio executive; their job is to address problems as soon as they arise.
In addition, an independent department constantly conducts surveys “to make sure our service levels are satisfactory,” notes Casanega. The ASP felt multiple feedback loops were the best way to find out if a customer was unhappy.
Casanega suggests that prospective ASP buyers “look into the future and think about the strategic decisions they will be faced with down the road.” He suggests a three to five year time frame. The answers should help buyers narrow their supplier lists.
Check the Supplier’s References
Then, the Corio executives believes prospects must ask a lot of questions about customer service. Asking pointed questions of the ASP’s current customers is a must.
Corio’s client list reads like the Who’s Who in technology. Clients include Eriksson, Excite @Home and Lycos. They provide a valuable source of references for hesitant new clients.
Lessons from the Outsourcing Primer:
- Selecting a tier one application at the outset means a company doesn’t have to change applications as its grows.
- Fast growing companies like the ASP solution because they don’t have to worry about accurately predicting their growth.
- ASPs with more than one application provide the integration between the applications, removing a headache for the buyer who, in the past, has had to do this itself.
- Prospective buyers should call the supplier’s current customers and ask questions before signing an outsourcing contract.