A.
Turner - May 8, 2000
Vendor
Genesis
The Taylor Group of Bedford, New Hampshire, recently changed its name
to ManagedOps.com and secured $50 million in first-round financing. The
investment will help accelerate the expansion of the company as it pursues
an Application Service Provider business model.
Dan
Taylor started The Taylor Group in 1987 after he purchased a copy of Insight,
(a popular accounting package at the time) taught himself how to use it,
and set out to work with computer retailers, providing consultant and
training services to companies that purchased Insight.
He
brought on partner Steve Ferranti in 1988, and began selling and installing
Great Plains accounting software in 1989. By 1993, the company employed
six people.
With
the growing acceptance of client/server software in mid-sized businesses,
Dan saw an opportunity to expand the company. Reinvesting company profits,
The Taylor Group added technical support, systems engineering, and development
staff to complement their applications consulting and training practices.
As
a solutions integrator of Great Plains and Siebel Systems products on
the Microsoft platform, the company has helped more than 600 companies
in the Northeast automate their operations.
After
13 years of profitability under The Taylor Group moniker, Dan recently
(March, 2000) changed the company name to ManagedOps.com, Inc. to reflect
the services the company provides.
Currently
located in Bedford, New Hampshire, ManagedOps.com is embarking on a new
era of business as it embraces the Application Service Provider business
model and leverages its application and integration support experience.
Vendor
Strategy and Trajectory
ManagedOps.com has developed an Application Service Provider (ASP) model
geared to the needs of companies ranging in size from $10 million to $250
million in revenues. The company helps customers to establish electronic
connections with trading partners and supply chains, and to integrate
this information with their core financial systems and business processes.
ManagedOps.com provides customers dedicated computing services, integration
expertise, help desk support and through its partners, local implementation
and business consulting services.
To establish the ASP model, ManagedOps.com has:
- Signed
agreements with more than 60 solutions integration firms across the
U.S. and is pursuing partners to implement services in local geographical
and vertical markets.
- Formed
alliances with AT&T, Cisco Systems, Citrix, Compaq, Great Plains,
Microsoft, and Siebel Systems.
- Plans
to add 200 new employees to the current 160 member team.
- Will
open a 93,000 square foot data center in Bedford, New Hampshire on
June 9, 2000.
By
leveraging an established relationship with Great Plains, ManagedOps.com
is offering its ASP services through the Great Plains sales channel. Delivering
Great Plains, Microsoft and Siebel solutions on a strictly Microsoft platform
allows ManagedOps the benefit of an extended sales network while limiting
the scope of supported platforms. The relationship is mutually beneficial
to the resellers as they can offer ManagedOps.com's services to customers
interested in a remotely hosted solution.
ManagedOps.com
is interested in tapping into Great Plains recent success. Their immediate
goals are to add employees and grow the market awareness of the company.
The company expects to be established globally within the next three years,
but they are quick to point out the challenges associated with pricing,
connectivity, and maintaining support operations on a global level.
Vendor
Strengths
Partnerships: ManagedOps.com, has over 13 years experience installing,
integrating, and supporting ERP and CRM applications. They have formed
strategic relationships with Microsoft, Great Plains, Siebel Systems,
Cisco, and Compaq. In addition, ManagedOps.com maintains agreements with
60 of Great Plains resellers. These strategic relationships help ManagedOps.com
deliver, support, and maintain their suite of products.
Defined
Business Model: ManagedOps.com is focused on delivering Great Plains
and Siebel Systems solutions on the Microsoft platform. They have designed
a service offering and data center that promotes only these solutions.
Their plans to leverage Great Plains existing reseller channel with cooperative
marketing and support programs is a sound plan. The recent infusion of
$50 million in capital will complement their initiatives.
Leverage "High-Touch" Reseller Channel: Unlike a "pure-play" Application
Service Provider, ManagedOps.com has the benefit of leveraging an existing
reseller network. By partnering with Great Plains sales network the ASP
has the opportunity to position itself where the customer and sales people
meet. ManagedOps.com is depending on the "High Touch" or personal relationships
the resellers maintain to promote their solution.
Single platform solution: ManagedOps.com supports Great Plains
and Siebel Systems on Microsoft's operating platform only. This allows
the company to focus on one platform and its related technology. By standardizing
the datacenter on Compaq hardware, the solution is easier to administer,
reduces operating costs and offers faster response times.
Vendor
Challenges
Selling Against Internally Hosted Applications: ManagedOps.com's
biggest challenge is selling into organizations with existing resources
to host the applications internally. While they offer buy, lease, or rental
solutions and related support options, they have difficulty winning sales
when the prospects are predisposed to a traditional hosting model.
Brand
Establishment: With a new name and a new business model ManagedOps.com
must promote brand awareness. The small company in New Hampshire must
actively pursue cooperative marketing programs, media coverage and a strong
public relations campaign.
New Customers: At point of writing, ManagedOps.com had only 8 customers
occupying space in their data center slated to open on June 9, 2000. While
the company has only recently embraced the Application Service Provider
model, they will need to populate the servers in short order.
Global Expansion: With plans to be a global service provider within
3 years, ManagedOps.com has its work cut out for it. Not only are there
language, staffing, and resource challenges, the infrastructure requirements
are daunting. Telecom, network availability and technology adoption through
Europe and Asia will affect their abilities to deliver a global solution.
An equally important issue is the challenge of globalized pricing.
BOTTOM
LINE
Vendor Predictions
We predict ManagedOps.com will enjoy a sustained period of growth. As
the ASP initiative gains momentum, ManagedOps stands to benefit. By providing
solutions in a buy, lease, or rent format; leveraging "high touch" or
"personalized" customer/reseller relationships and offering a strong support
mechanism, they come out ahead of pure-play ASPs. This is significant
in relation to a new ASP attempting to nurture, or organically grow, a
channel network.
ManagedOps.com
is worth revisiting in a year to monitor their progress. In that time,
we expect they will have 55 % of their data center capacity filled. Strategic
Partnerships should merit increased sales prospects and introduce new
geographic territories. The "one platform" mantra should remain intact,
however, the possible consideration of alternative operating platforms
such as Linux may be on the horizon. The marketing department should be
"reeling" from the work they have accomplished and what is scheduled for
the coming year. New customers will require an expedited consideration
of global needs and lead to an initial foray into select countries.
Vendor
Recommendations
ManagedOps.com is entering the ASP market at an opportune time. With analyst
estimates sizing the ASP market from 8 to 20 Billion by 2003, there is
plenty of room for providers. In order to be successful, ManagedOps will
need to:
- Increase
Marketing: Improve their brand awareness. $50 million will help kick
start the efforts.
- Maximize
the Channel: To be successful ManagedOps will need to identify, support
and continually interact with the sales channel.
- Maintain
Strategic Relationships: Continually evaluate strategic and mutually
beneficial partnerships.
- Provide
Outstanding Service: Becoming a resource for both the customer and
the reseller will help prospective clients accept an outsourced model.
This will propel the success of the company.
- Approach
Globalization Carefully: Recognize the state of technology, limitations
of time, languages and resources. We suggest ManagedOps.com consider
partnerships or acquisitions to help introduce the solution and offer
a support network outside the United States.
- Manage
Internal Growth: Doubling the size of the company will dramatically
affect the culture and operations. Due diligence will maximize employee
potential, growth, and impact.
User
Recommendations
If you are considering a mid-market ERP and/or CRM Solution it does not
hurt to comparison shop. Above all, it is essential to know which hosting
method suits your need. Organizations with adequate resources may benefit
from comparing the ManagedOps.com solution in conjunction with their existing
operational expenses. It may prove an interesting measure.
Another
option to consider is the license versus rent issue. Surprisingly, of
the 160 clients ManagedOps.com has worked with, only two have chosen to
rent the applications. While this may indicate initial reluctance to completely
outsource applications, ManagedOps.com provides a strong mix of license
and hosting options with guaranteed support for each.
As Internet connectivity, web enabled applications, and security methods
continue to improve, outsourced application hosting becomes more attractive.
With current innovations and an industry rush to provide business critical
applications over the web, the Total Cost of Ownership (TCO) of these
applications are changing. Application features, hosting alternatives,
support, and TCO should all be on your list to consider.