The reasons for outsourcing IT functions to an application service provider are as varied as the companies who use them, but customers all say the same thing: it’s a lot better than what they had.
Ian McCleary, the financial controller of PPS Industries, speaks like a man who has been set free — from the burdens of IT, that is.
PPS is a Penrose-based suppler to the metal finishing industry. It runs four branches in Nelson, Palmerston North, Christchurch and Hamilton. The medium-sized company has 35 staff and an annual turnover of less than $10 million.
PPS was using Sage financial and inventory software running on DOS and wanted to upgrade to Windows. McCleary was looking into it when Sage put him on to GDC’s then-fledgling ASP service, iVASP.
“We had had years of problems with IT administration — plagued with slow service and lack of skilled people,” says McCleary. “By moving our software and hardware to an outside service provider we solved that. The software and the server are leased as one.”
PPS has a 16-user licence with iVASP which provides financials, inventory, Microsoft Office and SQL, and email.
“The greatest challenge is that you’re moving everything. The difference is that you don’t have to administer anything yourself. You remove every facet of IT and the associated problems.”
McCleary says using an ASP saves money, once you factor in the capital cost of IT systems and manpower. “Our core business is the products we specialise in, not IT.”
The company has lost service three or four times in the 18 months they’ve had it. Once, a truck driver hit a pole and took down the overhead cables. “We have a five year contract for 99.7% up-time — 25 hours a day. We had some minor problems to start with but the service is far, far better than what we had internally.”
An unexpected benefit was not having to worry about software licensing.
“It was very splintered, or not consistent. Every time there was an upgrade we had to go out and buy it ourselves. With this it’s all provided for you. You don’t have to get into licensing, support or training.”
Stable legal representation
Julian Long reckons he gets a more stable computing environment from his ASP than he had at a much larger legal firm with its own in-house IT staff.
Long set up with two partners in January to form Auckland law firm Lee Salmon Long. The trio knew they couldn’t afford a lot of capital up front. An ex-colleague from Russell McVeagh, where Long used to work, had gone to work for Computerland-owned ASP AppServ and was comparing quotes that Long had got for setting up the IT infrastructure for the new business.
“When we started we were the smallest operation they were servicing,” says Long.
Lee Salmon Long, which now has six staff, uses Microsoft Office and MYOB for accounting and accesses its IT via a fibre-optic connection from UnitedNetworks.
Long says the service has been seamless since day one. The network has gone down once, and there has been some difficulty getting MYOB to run, but he feels that’s more of an issue with MYOB.
It took a morning to set Lee Salmon Long up, as an AppServ technician had to load a Citrix thin client on the PCs.
A way to expand overseas
For software supplier Alistair Chater, using an ASP to rent out his helpdesk application is a way of accessing overseas markets.
Chater’s web-based software product, Helplink, is hosted by Auckland ASP Greenwood Technology at the TelstraClear data centre on Auckland’s North Shore. Helplink is rented by GPS (global positioning system) equipment manufacturer Navman, the winner of this year’s Tradenz exporter of the year award. Navman, which employs more than 200 people and has an expected revenue this year of $100 million, uses Helplink to provide technical support for the North American market. Last year it opened an office on the East Coast of the US selling marine and personal GPS products.
“The guy who heads up the service centre there wanted some software for users’ queries on different products,” says Navman business development manager Shane McMahon. “We looked around for a helpdesk package and found that a lot of them were quite expensive and we had to purchase the licences outright. We came across Helplink, which is rented out via an ASP.” He likes the fact that it’s a web-based application so the end user and the US office can access the database over the internet.
The US implementation, which is a testbed for the UK and New Zealand, went live with Helplink a couple of weeks ago and feedback has been positive. US staff and customers log on with dial up connections.
“It’s 98% HTML with minimal amounts of Java because we didn’t want to use a lot of bandwidth,” says Chater. Although Helplink is also available as a packaged product which can be loaded on the user’s own server, 70% of potential customers are now interested in the hosted option, he says.
“I really believe that in the last couple of months people have become much more attuned to using applications online. I think the ASP model is finally starting to take off and I see it as being a way to expand into the global market.”
Bedding in
Three months ago, 20-year-old artificial turf maker Astrograss had no strategic approach to IT. Astrograss, based in Onehunga, Auckland, makes artificial grass for local and export markets and has a turnover of $15 million per year. It plans to start a subsidiary in Australia.
From time to time it had put PCs in ad hoc. Its computer systems lacked functionality and speed, and were often hit by viruses, says financial controller Michael Quay.
“A decision was made after I’d done some investigation to outsource. A guy who worked for us on a contract basis recommended iVASP.” Speed and performance were issues for Astrograss when it was deciding whether or not to use the ASP.
For a month iVASP has been hosting Astrograss’s MS Office applications, CBA accounting package and email for 16 users. “It suits our needs because we don’t want to invest too much in constantly upgrading our IT,” says Quay.
It leases a dedicated leased line from Telecom and has an assurance of 99.7% up-time.
“It’s working well. Initially there were a few hiccups but they have an 0800 support line. We’ve found the service to be good and it takes away the burden of worrying about backup and viruses.”
Step-by-step process
Mobile phone reseller Telecom Retail Holdings is the result of a merger between Cellphone City, Business Directions and Ben Rumble. It rents Microsoft Office, its point of sale system and Global 3000 financials through AppServ. The applications are used by 175 users across 34 locations from Whangarei to Invercargill. Stores connect with Telecom leased lines at either 64kbit/s or 128kbit/s.
Bruce Pye, finance manager of Telecom Retail Holdings, says service has only gone down once or twice a year for one store, for no more than four hours.
“[Outages are] pretty rare and service is good. One of the good things about it is that for training purposes we can shadow users at the other end of the country. So if we have new users of our POS we can take them through it step by step.”
Another major benefit Pye sees is not having to do backup.