New ASP Launch

Deloitte Consulting Outsourcing and TelstraSaturn have formed an alliance to deliver tier-one ERP software applications using the ASP model.
TelstraSaturn will provide the technology outsourcing (application hosting and connectivity) to complement Deloitte’s application management.
Management spoke to the two principal partners Don Guthrie, ebusiness development manager for TelstraSaturn, and John McKenzie, director Deloitte Consulting Outsourcing.

The target market
Guthrie: We see two main target areas – those existing customers of tier-one ERP products. Tier one refers to the size of the organisation. It tends to be the very large companies. I think there’s probably few hundred existing tier-one sites in New Zealand today.
So the target areas are those that currently have tier-one ERP and are looking for ways to reduce total cost of ownership, improve the service level of that application, improve the reliability, the performance, robustness, the availability of it.
Secondly, because we have business model that’s more efficient we believe we can now offer access to tier-one ERP products to companies that wouldn’t previously be able to consider it.
There’s lot of pre-configuration or efficiency in the model we have. So companies that might have previously done cost study on this and decided they couldn’t afford it, now we can say we have proposition that gives them world-class applications at price perhaps they previously would have looked at tier-two products for.
McKenzie: What we have is model that can be leveraged in just about every way you can imagine, through one consistent hardware suite, one consistent data base, one consistent configuration suite, which is easy to maintain because it’s not different from one client to another.
So you end up with economies of scale that don’t exist if you take these products yourself, buy the licence and implement them yourself – it’s not rocket science, it’s just leveraging old-fashioned economies of scale.
Guthrie: It’s true there have been few doubts about the ASPs – who it would benefit, and when and how?
We don’t see this as just cost exercise, of course it’s an opportunity for businesses to reduce costs, but there are more strategic reasons why this is good thing. We always avoid the use of the term ASP because I find that it means different things to different people, and there’s great deal of potential for people’s previous experiences or views of ASPs to colour this.

Will IT lose control?
Guthrie: Many IT organisations are already reliant on external vendors and suppliers delivering on service agreements. This really doesn’t change that model.
But the amount of technology that has to be applied in business today has grown enormously.
I think lot of organisations today, rather than trying to keep everything close and in-house, are looking for ways they can be more efficient with less input from senior time.
McKenzie: This isn’t one-shoe-fits-all-approach.
There will still be organisations that will want ERP products in the traditional paradigm and want to manage them through their own IT department, and it’s not our role to be disparaging because it makes sense in their situation.
But equally there’s client base who don’t want to get into managing ERP products. They still have IT products because they have web development and desk tops to manage, etc, but they don’t want to get into the complexity of managing ERP products.
Will organisations feel like they’re losing control?
I think it’s our challenge to make them comfortable that they’re not losing control. We should say this isn’t one-to-many model.
The configuration we provide is the customer’s configuration. It’s peculiar to their business. The template has an 80 percent template solution to begin with, with an allowance of 20 percent to build on your own peculiar business needs. So it isn’t as if we’re foisting some generic template on anyone. So from that point of view they don’t necessarily lose control.

Guthrie: This first product we’re announcing is an SAP-based application. We are the first and only certified hosting provider of SAP applications in New Zealand.
As one of the dominant players in the ERP area, SAP carried out an audit process, going through our business plan, our training, our infrastructure, to ensure that SAP customers are well serviced through this.
We should also be clear that both TelstraSaturn and Deloitte Consulting Outsourcing are New Zealand businesses that are New Zealand managed and resourced.
We’ve thought about what New Zealand businesses need. And we have good understanding from both our organisations as to what we think is required and we’ve designed the solution so that it works and is supported and managed and owned by our alliance.
McKenzie: It’s New Zealand product conceived in N ew Zealand for the New Zealand market place and managed by New Zealand resources.

Forming an alliance
McKenzie: We started as an entity in 1997 providing application maintenance services to our client base predominantly around tier-one ERP products. We now have over 50 percent market share in the ERP product space.
We saw the opportunity to come together with TelstraSaturn when we were looking for more than just commodity relationship to provide hardware hosting and hardware scenario.
We looked around in the market and decided TelstraSaturn, for all kinds of reasons was absolutely synergistic with our aims going forward.
Guthrie: Deloitte recognised the opportunity for these services, we recognised there’d be need for business to have infrastructure to run applications externally to their business. So we had understanding of the market need from different perspective and recognised this joint opportunity.


To Own or to Rent?

That’s the question Kiwi organisations are now facing. Whether it’s more effective to rent the software you need rather than owning it upfront and outright.
This is the idea behind Application Software Providers (ASPs).
ASPs rent software instead of selling it. And they provide that software over the Internet.
Think of it as the difference between building your own home and hiring contractor to manage the carpenters, electricians, bricklayers, plumbers and painters, etc.
The ASP is the contractor who will rent and deliver to you online, range of software from spreadsheets, word processors, databases, accounting programmes, CRM, or HR applications.

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