Applications /

Excite@Home with ASPs

By Denise Pappalardo
Network World, 12/04/00

Corralling acquired companies onto a common IT infrastructure is an age-old challenge traditionally tackled by in-house staff. Today, some network executives are turning to application service providers for help.

The lessons learned by one such company - including the critical issue of application customization - is the subject of this second of a three-part series profiling ASP customers.

Excite and @Home merged in May 1999. One month after the union, Mary Ruiz, director of human resources technology and operations, joined Excite@Home with the goal of developing a common process to combine and support the separate financial and human resources operations of the joined company.

Turning to an ASP was an easier choice for Ruiz and her team because Excite was already working with ASP Corio, but that doesn't mean it was a slam-dunk. The company also explored using Oracle financials in-house.

The company does not expect to save a bundle through using ASPs; Ruiz is actually not counting on any cost savings. The decision has more to do with risk management than saving money.

"We are operating under the premise that we are reducing risk by shifting it to an ASP that's tied to a stringent contract," she says. "We would rather have total cost of ownership tied to a contract that we know we cannot deliver internally."

Corio guarantees 99% application availability, which would have been difficult to support internally, especially when Excite@Home first merged.

Instead of focusing on buying hardware, maintaining multiple application servers and hiring staff to get a companywide PeopleSoft financials package up and running, Ruiz focused on how to make that application work best for Excite@Home.

Corio had a leg up on landing the five-year contract with Excite@Home because the two companies share a few venture capitalist board members, Ruiz says. Despite that influence, Ruiz says the relationship would have ended if the Corio service was not up to par.

"We didn't have to stay," she says. "Corio's performance has been great, and we had a lot of out clauses that we could have used if we weren't satisfied."

And satisfied Excite@Home is. Since inking its PeopleSoft financials deal, Excite@Home has signed a separate three-year deal with Corio for a PeopleSoft human resources application. More than 150 employees access the applications through a local dedicated T-1 line from the company's headquarters directly to Corio's data center.

Excite@Home is also working with Icarian and Kadira, two vertical-market ASPs that address special niches within the company, Ruiz says.

Icarian offers a workforce planning and management application, and Kadira offers applications that augment the company's transaction engine, she says. Both applications are accessed through a second dedicated local T-1.

While outsourcing some of its most cumbersome applications let Excite@Home's IT staff focus on internal transitions, the company hit some bumps in the road as it was bringing the Corio applications online.

"If we could go back and start over again, we would go in with someone [from Excite@Home] dedicated to business continuity," Ruiz says. "We assumed that Corio would have business expertise and process expertise in-house, and what they came in with at that time were vanilla apps."

Excite@Home quickly realized that out-of-the-box PeopleSoft was not going to work, and started outlining software customization that would be required. "We needed [customization] desperately," Ruiz says. "We are still recovering from not doing that right as a company, although we're now getting better."

Arthur Andersen was hired to customize the financial application, while Excite@Home's internal experts tailored the human resources application.

The company is contemplating signing another deal with Corio for its Siebel customer resource management application hosting service. If that happens, Ruiz says Excite@Home will start with Siebel software consultants from Day 1.

When the ASP market began heating up more than a year ago, most providers touted standard applications with little or no customization. Today, more ASPs are allowing customization because it's what large businesses need and demand. But ensuring the application will meet a user's needs is only one step, Ruiz says; knowing that the application is securely stored and managed is also important.

Before users sign on the dotted line, Ruiz says they should know what's going on at their ASP's data center. The data center adds another level of complexity where latency and other performance issues can crop up, she says.

"We knew we did not want to team with an ASP that owned its own data centers, because we wanted the ASP to be nimble enough to negotiate the best contracts," she says.

Corio buys collocation space from Web hosting service providers XO Communications' Concentric Network and Exodus Communications.

"We also wanted to know what type of contracts our ASP had with its partners, so we requested to see those documents," Ruiz says, adding that the request met with initial resistance. "But we told [Corio] that it's a condition of our business."

Users also need to keep an eye out for hidden costs, Ruiz says. Excite@Home is paying for its services based on the number of users who access the application. But there are often setup fees, consulting fees if customization is needed, and change fees, she says. Some ASPs charge customers each time they need to update a customer's application server.

"Working with ASPs is part of our DNA," Ruiz says. "I've negotiated three ASP deals since being on board and worked through three different implementations. We've learned a lot of lessons during that time."

Next week see how start-up Intraware got its salesforce up and running quickly by going with an ASP (click here).