Agilera: Making E-Business Agile

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A. Turner - July 31, 2000

Vendor Genesis

Agilera's heritage of hosting enterprise solutions goes back to the late 1990's when Ciber Enterprise Outsourcing, a wholly owned Ciber subsidiary, began to manage customer operations, maintenance and support of their ERP systems. Agilera was formed in March 2000 through a joint venture with Ciber, Verio and Centennial Funds. Agilera offers a combination of IT expertise, infrastructure, strategic counsel and e-business fulfillment services to emerging and middle-market companies.

Agilera utilizes Verio's Internet infrastructure, including their data and network control centers and business processing centers, featuring technology from HP, IBM, Compaq, Dell, Cisco, 3Com and Citrix. CIBER offers the resources of 6,000 professionals with successful implementation and integration experience of more than 3,500 enterprise solution projects.

In this joint venture, Verio has invested $30 million and owns 39 percent of the company. Centennial Ventures, a venture capital firm, has invested $15 million and owns 19 percent. CIBER contributed its ASP subsidiary, CIBER Enterprise Outsourcing, representing a 42 percent interest. Agilera is headquartered in Englewood, Colo., which is also home to both CIBER and Verio's worldwide operations.

Agilera has hosting partnerships with vendors of ERP, CRM and e-commerce software, including PeopleSoft/Vantive, Lawson Software, J.D.Edwards, BroadVision, Rightworks, Symix, Frontstep, Commerce One and Ariba. Agilera's knowledge base allows them to provide service solutions and proactive IT counsel. They offer services, such as a "personalized enterprise view" that aggregates in-house and Agilera's hosted applications. Agilera's solutions are delivered via the Internet or virtual private network (VPN). Additional value added services include e-business fulfillment services ranging from distribution and print services, to human resources administration and payroll processing.

The Enterprise View

Agilera offers a browser-based solution that provides a view of each user's applications including enterprise software and legacy systems. The Enterprise View allows users to monitor information within their scope of responsibilities. This browser-based tool (portal) allows users to view personalized data relating to enterprise applications and/or legacy data without launching the actual applications. Should they need to act on the information, they can launch the related application directly from the Enterprise View.

Platform Services

Agilera offers two hosting and application platform services. They are the Extended Enterprise (XE) and Extended Platform (XP) services.

1. Agilera's Extended Enterprise™ (XE)
   
   The Extended Enterprise product offers end-user organizations the ability to extend their current information technology (IT) systems via an ASP model. Customers have the option of sourcing Agilera's menu of enterprise applications along with their existing systems in an integrated interface known as the Enterprise View.
   
   
2. Agilera's Extended Platform™ (XP)
   
   Agilera's Extended Platform (XP) offers Independent Software Vendors (ISV), value added resellers (VARS), Internet Service Providers (ISPs) and technology service providers the ability to utilize Agilera's facilities, expertise and network to deliver their applications. The XP product is offered in an OEM, co-branded, and Agilera-branded methods.
   

Agilera solutions are categorized into four major areas:

1. Global Infrastructure - the core technology components including physical facilities, servers, storage devices.
   
   
2. Network Operations - the communications facilities, protocols, processes, and architecture to network both internal and external operations into a seamless computing environment.
   
   
3. Application Services - Application solutions such as B2B e-commerce, ERP, CRM, messaging, and other productivity services.
   
   
4. The Integration Hub - the Integration Hub provides integration between applications.

Global Infrastructure and Network Operations:

As a joint-venture partner with Verio, Agilera leverages Verio's global network to deliver its enterprise solutions. Verio provides a high capacity national backbone, 24-hour Network Operations Center (NOC) and support services.

Verio offers a Tier One Backbone with over 200 Points of Presence:

The National Network links Agilera's local points of presence to each other and to the key national exchange points - MAE West, MAE East, NY NAP and the Digital Internet Exchange, located in Palo Alto, California. The network features OC12, OC3, and DS3 links, as well as Cisco 12000 series gigabit switch router technology, and Juniper Networks M40 Internet Backbone routers that connect the national exchange points and Agilera access points. Regional networks and carrier class POP facilities connect to one of the access points located in metropolitan areas throughout the United States. Network capacity has been increased to OC12 and OC3 capabilities and additional access points are being added.

Application Hosting Services:

Agilera provides the processing and communication infrastructure required to host applications. This includes data center operations, WAN communications control centers, network operating systems support, hardware and software maintenance (program temporary fixes, bug fixes, release upgrades), and related technical personnel.

On May 17, 2000 Agilera announced the opening of a new, Eastern Operations Center in Columbia, South Carolina. Agilera has plans to open two additional operations centers within the next twelve months. The newest center has direct connectivity to the Verio data centers, allowing Agilera to monitor the service delivery from the application infrastructure across the network into the data center.

Agilera's operations centers combine data center, co-location, network operations, BPO and customer care.

Application Hosting Categories:

• Business-to-Business e-Commerce(B2B)
  
  
• Business-to-Consumer e-Commerce (B2C)
  
  
• Enterprise Resource Planning (ERP)
  
  
• Supply Chain Management (SCM)
  
  
• Customer Relationship Management (CRM)
  
  
• Messaging / E-Mail
  
  
• Productivity

The Integration Hub:

Agilera has designed its Integration Hub to provide flexibility for client operations. The Hub allows the integration of legacy systems and applications from other vendors. Using the Hub, combined with client customized scripts, an Agilera solution is delivered as an interface on a client's desktop, showing critical views into systems operation. It provides clients with one "clickable" view of the business, based on an individual viewer's job responsibilities.

Figure 1.

Fee Structure:

Agilera provides clients access to applications and support on a per user monthly fee basis. All ASP services are backed by service-level agreements (SLA) with guaranteed up time, redundancy and peering points.

Vendor Strategy and Trajectory

Backed by the resources of a large enterprise software implementer, Agilera is working to build a record of large-scale systems implementations. Agilera's model is highly leveragable because of its relationship with Ciber. The company's focus is on emerging and middle market enterprises with specific interest in Retail, Manufacturing and Financial Services.

Agilera competes with other Application Service Providers, such as USinternetworking, Corio, Qwest CyberSolutions, JDe.sourcing, Oracle Business OnLine and PeopleSoft eCenter. Within the consulting arena, the "Big 5" organizations do not represent an immediate threat, however Agilera is concerned about their entry into the ASP market as they bring immediate brand/name recognition and breadth/depth of expertise.

According to Agilera's research, the current dollar size of the market is between $600 and $900 million and is growing at a CAGR of 90%. . While figures cannot be disclosed, Agilera is funding an aggressive marketing program. The initiative includes direct mailing, advertising and industry sponsorship activities. With a sales force of 25+ Agilera is pursuing opportunities within its defined vertical markets and leveraging its channel partners including Ciber and Verio. While existing customers have requested global support, the company is concentrating its sales and marketing efforts on the domestic North American market.

Vendor Strengths

Business Model: Agilera's business model allows them to focus on the application and service delivery while Verio attends to the network infrastructure and Ciber focuses on packaged enterprise software. This arrangement goes beyond the regular commercial arrangements that other ASPs have. Ciber and Verio are financially invested in Agilera, therefore their service delivery impacts Agilera's. They have incentives to provide top quality service.

Hosting Relationship: Verio provides locally based sales and engineering support for Internet services in 41 of the top 50 metropolitan statistical areas in the U.S. and provides Web hosting services to customers in over 170 countries. In the first quarter of 2000, Verio had served over 200,000 customer accounts, including over 395,000 hosted Web sites. With a 39 percent stake in Agilera, Verio's resources and architecture is a natural benefit to the Application Service Provider.

ERP Implementation Consulting: CIBER combines its array business and technical expertise to create solutions that solve an enterprise's complex requirements linking to customers, suppliers and partners, satisfying end-user demand and entering new markets. CIBER delivers services designed to enable e.Business: strategic management and IT consulting, enterprise applications, enterprise and network integration, application hosting, and custom business solutions.

More than 2,000 customers utilize CIBER's expertise. Based in Englewood, Colo., their consultants serve client businesses from 35 CIBER offices, 15 DigiTerra offices and four Interactive Papyrus / Waterstone (now named NeoVation) offices in the U.S., Canada and Europe. CIBER maintains a 42 percent stake in Agilera.

Partnerships: Agilera has certified partnerships with vendors of ERP, CRM and e-commerce software including PeopleSoft, Lawson Software, J.D. Edwards, Commerce One, BroadVision, Symix/Frontstep and Ariba. These partnerships allow Agilera to provide the related solutions and offer proactive IT counsel.

Combined Sales Efforts: Agilera's 25+ person sales team is leveraging the business connections of Verio and CIBER along with vendor partnerships to establish their client base. Tapping the resources of CIBER's new and existing client base and those of Verio, coupled with referrals from their software partners will provide considerable exposure.

Enterprise View and The Hub: Agilera's Enterprise View allows users to access applications through their desktops via a "clickable" desktop. This "rule based" value added service connects various applications and legacy data to improve business efficiencies. Few Application Service Providers offer a similar service.

Vendor Challenges

Expertise in Vertical Markets: Agilera's challenge lies in the developing deep expertise in vertical markets. The ability to develop end-to-end solutions by vertical industry and selecting the best alliance partners is a must that Agilera cannot fail to execute on.

Brand Recognition: With competitors such as USinternetworking and Corio establishing market share, Agilera is challenged with creating a brand recognized presence.

Enterprise View/The Hub & API's: While the Enterprise View is listed as a strength, it also represents a challenge. The Hub and Enterprise View is dependent on API's (Application Program Interface scripts) to connect and exchange data. In order to "connect" the tool, the API's must be programmed and tested. This requires customized programming. Additionally, most enterprise environments consist of multiple systems and disparate data sources. As each system may be different, implementations of the Hub and Enterprise View may require significant time to connect.

Emerging ASP's: With industry analysts predicting the ASP market to be $20 - $40 billion by 2003, there are many new Application Service Providers emerging. Not only should Agilera be concerned about competition from pure play ASP's, but global organizations such as IBM and Ernst & Young have expressed interest in pursuing ASP initiatives. Additionally, telecommunication providers (AT&T, MCI, Lucent, Nortel) have launched infrastructure support for ASP's. Finally, even the software vendors themselves (i.e., PeopleSoft, Lawson, Oracle, SAP, etc) are creating Application Service Provider business practices. The resulting challenge is Agilera must establish partnerships and a sizable implementation/support track record before the market outpaces its efforts.

BOTTOM LINE

Vendor Predictions

Agilera has the opportunity to create a sizable market share and presence if it executes quickly. It is critical to establish a track record of implementations and support within the vertical industries described. Once established, the company will become a more attractive partner to software companies who deliver, and anticipate delivering, ASP applications. With the current infrastructure and resources we anticipate the company will enjoy a 70% degree of success.

To be successful, Agilera will need to execute on marketing and sales efforts, maintain strong communication among business elements and deliver & support functional solutions on time and within budget.

In the long term, Agilera and other ASP's must be cognizant of the tremendous growth occurring within the Application Service Provider marketplace. Eventually, the market will attain saturation and suffer an inevitable "shake-out." Agilera stands to survive this evolution by maintaining strong relationships with its customers, delivering superior support, continually refining partnerships and improving the scope of its offerings.

In respect to the Application Service Provider market, we anticipate the creation of "mega-ASP's." The market will witness merger/acquisition and alliance activities resulting in large clearinghouses offering a full scope of outsourced software applications. At this time, we are unable to predict if Agilera will be a Mega-ASP or a major contributor, however these considerations should be included in their long-term business strategies.

NTT/Verio Purchase: At the time of writing, the acquisition of Verio by NTT Communications Corporation (a subsidiary of Nippon Telegraph and Telephone Corporation) has not been approved. The implications and impact of this purchase for Agilera remain to be determined. In general the outlook is positive, as the purchase will extend Agilera's reach to foreign markets.

Vendor Recommendations

We recommend Agilera:

1. Execute a strong Marketing and PR program.
   
   
2. Strive to deliver solutions within the verticals described.
   
   
3. Leverage partnerships and contracts with existing and new software providers.
   
   
4. Consider alliance(s) to extend Agilera's services on a global level
   
   
5. Explore and implement new technology where and when applicable. (i.e., Wireless access)

User Recommendations

Customers selecting outsourced applications have many choices. Agilera's scope of products, consulting, and hosting services is impressive. Agilera's mix of ERP, CRM and the recent addition of Ariba's e-commerce offerings represent a strong mix to companies considering one, or a full suite, of applications.

We recommend understanding the needs of your organization first. If the outsourced software model suits your needs, we recommend comparing the application costs, contract duration, implementation costs and on-going expenses relating to your needs. With many Application Service Providers emerging, comparison shopping has become easier.

If you choose to implement Agilera's Extended Enterprise we suggest you inquire about the connectivity process. If your network is host to different applications, on disparate platforms in multiple locations ask about the availability of the necessary API's and tools. API's may be available, however performance may be affected. As a result, delays in performance may be amplified over a network served by the Internet.

Understanding the geography and requirements of your network will help Agilera and others to establish a solution that best suits your needs.

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