What Do You Do When Your Applications Support Provider Goes Under? | Article

outsourcing nightmareThe National Multiple Sclerosis Society (NMSS) faced a major problem in financial reporting and accounting from its 62 branches when the applications support provider for its back-office software filed for bankruptcy. The solution proved to be outsourcing to the company that had manufactured the software — Epicor. Via its managed service provider (MSP) offering, Epicor enabled NMSS to not miss a beat under trying circumstances.

Between a Rock and Hard Place

Founded in 1946 to engage in the battle against multiple sclerosis, NMSS is headquartered in New York, New York and Denver, Colorado. In August 2001, NMSS learned its applications service provider had filed for bankruptcy.

The timing and circumstances could not have been worse, according to David Lee, senior director, information technology for NMSS. “We found out in mid-September 2001 that they would be shutting down on October 15. Our year-end is September 30, so all our accountants were trying to run reports in the system.”

The urgency of the NMSS situation mandated an immediate solution in minimal time. Who better to provide the remedy than the software manufacturer, via its application services provider (ASP) hosting model offering MSP services? NMSS had been using the Epicor eBackOffice accounting software. Epicor, headquartered in Irvine, California and founded in 1984, provides integrated enterprise, eBusiness and collaborative commerce software. “over the last three years, there has been a wave to move to our hosted solution, eCentre,” relates Jeff George, director of eCentre hosting for Epicor.

“We had initial conversations with Epicor and had to move forward. It was a daunting challenge,” recalls Lee. “We outsourced on September 30 and immediately began a data move, which was accomplished in 11 days. Epicor orchestrated it, and we did not lose one iota of data even without being able to test it. Thanks to the care that we had from Epicor, the move was successful.”

The Benefits of Outsourcing to an MSP

With the MSP offering, NMSS can now obtain enhanced financial reporting in a more timely fashion from disparate systems. Epicor assimilates data from a wide array of systems for NMSS, reports George. The Society runs 90 different databases because of the legacy systems of its branches. Epicor gathers all the data as soon as it is input from the branches, enabling real-time visibility into the accounting through reports.

Lee reports that NMSS has witnessed a tremendous benefit in the ease and timeliness of the delivery of financial information and reporting. He says centralizing and streamlining operations have shortened the monthly closing process by 10 days, “which is quite significant for us.” In the past, branches faxed their data to the home office, and the data then had to be entered into another system. “That whole process is gone now,” he says.

Additional benefits come from using the software vendor as an MSP. It eliminates finger-pointing as to the source of a software problem. “The main advantage is accountability. We have one-stop shopping when the application support provider is also the host. You go to one point of contact when there are issues,” says Lee.

George adds that hosted solutions “simplify an organization’s involvement with software, hardware, implementation and maintenance, and allow them to focus on their strategic values to more rapidly achieve their ultimate goals.” Another outsourcing advantage: “If we make mistakes, we have to pay for it,” says George.

Colleen Niven, vice president of IT operations research for AMR Research of Boston, Massachusetts, concurs. “Who better to manage your application than the people who developed it? They obviously know what the issues are,” she says.

Growing Market Acceptance for MSPs

The marketplace now recognizes ASP solutions as a business advantage. A July 2002 research report by AMR indicates an 18 percent compound growth rate for hosted ASPs for the five-year period ending in 2006.

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Today, Niven suggests buyers should look at their software vendors to see if their outsourcing solutions will provide more services and opportunities. She says organizations typically spent a great deal of time selecting their applications but don’t follow through with achieving greater value by looking for better ways to manage the applications. “By going to someone who knows how the application should be running, buyers get a lot better support,” she says.

Lee concurs. “Outsourcing to Epicor enables our NMSS chapters to focus on what they do best — which is delivering service, instead of dealing with back-office issues. By going to one source, we get proactive administration. We were not in a position to give that accountability back to our users internally.”

Niven cites the benefits of an expanded role with a trusted service provider. Over time, buyers develop trust with their service providers. Eventually, buyers feel comfortable enough to hand over more responsibility to the service provider, freeing their key staff to work on strategic initiatives.

Lee also likes the simplicity of being able to budget for the cost of IT services. “We budget IT and that’s it,” he says. Having a fixed cost with the level of support he receives “is definitely a win/win. ” And not needing heavy technical expertise onsite has helped with payroll costs, he adds. “It would be difficult to build internal support comparable to the support that Epicor provides through eCentre.” according to Lee.

Originally, the applications service provider’s bankruptcy caused great consternation for NMSS. But the end result was an outsourcing solution that achieves far more value. “It helped us focus on doing our job more effectively,” says Lee.

Lessons from the Outsourcing Journal:

  • Outsourcing to an MSP enhances back-office IT performance and accountability. Who knows an application better than the company that produces it?
  • If your IT services provider goes bankrupt, check to see if your applications provider offers a hosted outsourcing solution.
  • The market is beginning to accept the MSP solution. AMR Research estimates an 18 percent five-year gain, at a time when other software solutions are only growing at single-digit rates.


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