ManagedOps.com – 13 Years and 93,000 Square Feet

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:

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:

1. Increase Marketing: Improve their brand awareness. $50 million will help kick start the efforts.
   
   
2. Maximize the Channel: To be successful ManagedOps will need to identify, support and continually interact with the sales channel.
   
   
3. Maintain Strategic Relationships: Continually evaluate strategic and mutually beneficial partnerships.
   
   
4. 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.
   
   
5. 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.
   
   
6. 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.