InformationWeek

August 30, 1999

Front-Office Play

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Before turning to USinternetworking, Intraware had a home-grown customer-relationship management system that wasn't meeting its needs. "Our IT resources are limited, so we couldn't have an IT person devoted to the sales department, and that caused the appli- cation to suffer," Pensky says. Intraware evaluated packaged applications from all the major CRM players before deciding on hosted Siebel apps, he says. Intraware is also considering contracting with USinternetworking for back-office apps such as financials, he says.

Integrated Benefits
Some companies are already reaping the benefits of integrated front- and back-office hosted applications. Authentica Inc., a maker of Internet security products, was attracted to Corio's services because of the combination of PeopleSoft and Siebel applications, says president and CEO Lance Urbas. The Waltham, Mass., company had been running ERP applications from Great Plains Software Inc., but Urbas says they didn't offer all the functionality he wanted.

"We started to look at packaged applications for CRM and ERP, but couldn't find one vendor that offered everything we wanted," says Urbas. "Without Corio, I would've had to buy packaged applications from several vendors and then hire an integrator to integrate them." That process, he says, would have been extremely costly. Corio has begun the implementation of the PeopleSoft-Siebel package, and Authentica hopes to save about $250,000 this year by going with a hosted model.

Having one vendor provide a complete offering was the main reason ConvergeNet Technologies Inc. turned to Oracle's ASP division, Oracle Business Online, for front-office applications. The storage-management company, Oracle Business Online's first CRM customer, enlisted the ASP to begin implementation this week. The apps will be integrated with the Oracle ERP apps ConvergeNet recently began using from Oracle Business Online. "We want our CRM and ERP applications to interface with each other, and we wanted one vendor who could offer us both," says Hans Hartmann, VP of operations at ConvergeNet, in San Jose, Calif.

Like Intraware, ConvergeNet has a way out if it's dissatisfied with the service. After the expiration of its three-year contract, ConvergeNet can opt to bring its Oracle applications in-house. Hartmann advises every company looking to an ASP to have a "disaster scenario" built into its contract that provides the option to take back control of the applications.

To help quell fears and increase confidence in hosted services, ASPs have been partnering with systems integrators and network infrastructure providers to boost their security and bandwidth capabilities. Corio this week will become one of the first customers of Concentric Network Corp.'s new managed "app-frastructure" services. Concentric will provide the underlying server, network, data center, and operations infrastructure to support all of Corio's hosted applications. This will let Corio focus solely on managing applications and customer relationships. "Our strategy isn't to build our own networks," says George Kadifa, Corio's newly appointed CEO. "This agreement provides us with a value-added network that can offer customers consistent, reliable, and scalable connections."

Bolstered Back Office
Also, eOnline is partnering with SAP and several SAP systems integrators to ensure businesses it can handle their back-office applications. This is exactly the strategy that application service providers should pursue, says Dataquest's May. "Eventually, customers won't just want to add applications such as CRM," she says. "They'll want to integrate CRM with their back-office applications, both of which require a strong professional services arm and a complete end-to-end offering by the ASP."

That's what Corio is hoping to accomplish with its PeopleSoft-Siebel combination. Corio had signed a CRM agreement with Octane Software not long ago but has quietly killed the deal in the hope that a more feature-rich combination from Siebel and PeopleSoft will lure customers.

In other developments, USinternetworking this week will partner with Microsoft to jointly develop and market applications based on Microsoft products. The ASP's new enterprise messaging and collaboration business unit will provide Microsoft Exchange messaging services. USinternetworking says it's considering adding Windows NT and SQL Server to its list of hosted offerings.

But what about the issue of securing customer data? Sunny Vanderbeck, CEO of Data Return Corp., an ASP, says application hosts can actually provide tighter security than some companies can on their own. Still, Vanderbeck admits that Data Return has some customers of its applications that are direct competitors. This could be a potential cause of concern for some companies. Inevitably, he says, "there's some trust involved."

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