Firm banks on Salesforce.com, Jamcracker, other ASPs

Putnam Lovell had an exciting problem on its hands by the end of the first quarter of 2000. The San Francisco-based investment bank with offices in London and New York was growing so fast that it was doubling the number of employees nearly every year. But the IT requirements for this once-small boutique bank were becoming unwieldy.

Rodric O'Connor, the bank's vice president of technology, and his IT department mulled hiring additional staff to build a big infrastructure? That would be costly, but so would lack of IT support.

So what was the simplest, most cost-efficient way to ramp up the infrastructure? "We decided to try and move everything we could to an outsourced Internet model," he says.

About year later, roughly 80 percent of Putnam Lovell's standard applications--from enterprise to HR to CRM--now come from an ASP, and the company has very few complaints.

Because Putnam Lovell was a small company that grew quickly, it had little legacy equipment to consider. That's one reason many larger, more established companies have shunned the ASP model. "They don't want to have to rip out all the Oracle or other ERP applications and start from scratch moving it out of house," O'Connor says. "They've already put all this money into it to get that added functionality so they don't want to move it over."

Putnam Lovell only had a few employees in its IT department and a generic Microsoft environment with some Windows NT servers. Within this environment it uses only Exchange e-mail and a couple of SQL Server databases. Also making the decision to move to an ASP model easier was the fact that the only legacy application it had to replace was the general-ledger system, Sage Software's Platinum for Windows.

Today, ASPs are serving a whole suite of applications: Salesforce.com for CRM; Jamcracker for HR; and WebEx for conferencing, training, and compliance. O'Connor and his team also use an Oracle E-Business Suite ERP system provided by Appshop and hosted by Exodus. Within that system, they get general ledger, expense reporting, and other accounting services via the Internet. (See the complete product and service index.)

The company also streamlined distribution of its investment research by using ASP BlueMatrix to automate the time-consuming formatting required by First Call and Multex to publish research notes.

Putnam Lovell's only remaining in-house applications, says O'Connor, are e-mail and knowledge management. "I imagine we'll soon migrate those over as well," he says.

All these ASPs, says O'Connor, have provided returns on investment unmatched by in-house deployment. More importantly, they have allowed the small bank to keep pace in an industry full of huge players with billion-dollar IT budgets.

O'Connor's motto, like that of many ASP advocates, is that with an ASP you get 80 percent of the functionality for 20 percent of the cost. "In most cases you don't even need the other 20 percent of the functionality," he says. "Customers certainly wouldn't notice any deficiencies, and in this market cost savings are critical."

For Putnam Lovell, with its 150 employees, building out an entire in-house infrastructure with a much larger IT department to achieve that additional 20 percent in functionality seemed like a losing proposition. "The outsource model has allowed us to appear much larger than we are," says O'Connor.

In banking, he says, that's crucial. Having customer information at the ready can mean the difference between getting the customer's money or not. For instance, Putnam Lovell brokers can see customers' trading history from a handheld device. Salesforce.com allows the bank to provide this CRM functionality without having to spend a huge sum of money. As a result, the company's sales force feels like it can compete with Morgan Stanley Dean Witter and Goldman Sachs, O'Connor says.

There are, of course, some potential downsides. For one, using Internet applications means you rely on a public network to access information on an off-site data center. If your Internet connection goes down, you lose access to all the applications.

To prevent this, Putnam Lovell has implemented comprehensive redundancy for its Internet access. The San Francisco office has a T1 line provided by UUnet and a 10Mbps Ethernet connection for backup from Yipes. If both fail, the company has a private network out to the New York and London offices that allows San Francisco to piggyback on another office's Internet connection. "With all these options we haven't gone down," O'Connor says.

Putnam Lovell's forward-thinking model of outsourcing applications has become a reliable, cost-effective means of serving up applications.

David Lipschultz is a freelance writer based in Aspen, Colo.