Outsourcing ERP and Banning the Banners and More

In last week's interview with PC Week ("Web push won't alter SAP focus," Page 1), SAP's CEO, Hasso Plattner, threw a wet blanket on the idea of outsourcing R/3. According to Plattner, the ERP product is too complicated and customer requirements are too diverse for it to work in the one-size-fits-all model of outsourcing.

In last week's interview with PC Week ("Web push won't alter SAP focus," Page 1), SAP's CEO, Hasso Plattner, threw a wet blanket on the idea of outsourcing R/3. According to Plattner, the ERP product is too complicated and customer requirements are too diverse for it to work in the one-size-fits-all model of outsourcing.

I don't buy it.

This is a channel strategy statement. If anything should be outsourced, it's ERP applications. After all, where else can you spend millions of dollars in the blind hope that something good will happen at theother end?

If the vendors and consultants selling this stuff really believed in it, they would build applications at lower cost with the strategy of recovering the development costs on a per-user, per-month charge. Outsourcing applications is about offloading the expense of self-hosting and maintenance; it's not about customization.

These Prices Are Insane

Makers of free virtual desktop and virtual office products have been subsidizing their services with advertising in the hopes of creating a sticky experience for users and getting them to trade up to pay for service. One of those free virtual desktop services, StoragePoint.com, bucked that trend recently by banning banner advertisements. The cynic in me asked, "Banned or was unable to sell?"

The play here is what one would expect: Lure more customers in the hopes they will see the value and buy the premium service. Will Joe User notice the ads have suddenly disappeared?

That is a distinct possibility, but the strategy is more likely to backfire. With most of these services, the benefit of buying a premium service is as much getting away from the annoyance and performance hit of advertising as it is getting improved features or services. Taking away annoying ads takes away an incentive to upgrade.

This points to a market that is due for the type of consolidation and alliances that happened in the bookstore/CD store/auction e-commerce space this spring. Virtual office space should be something that comes with or can be purchased a la carte with a bigger service. Some hosted presentation services that focus on collaborative meeting rooms are a natural fit for this type of marriage.

Signs, Signs, Everywhere a Sign

PC-to-host connectivity giant Attachmate is showing that the post-PC era is upon us with its new service designed to get mainframe data to Palm- and CE-based devices. The PalmFrame consulting service is a clever,but pricey, idea. Spending $55,000 will deliver just 10 screens to the Palm for viewing data. Adding the ability to input and synchronize data from one of these devices requires considerable investment.

I believe that the Palm and similar devices can be extended to work well for applications such as field force auto mation, but it has to be done cheaply and in a way that every device from the PDA to the PC sees the same data. I think $55,000 is a lot to spend just to see proof of concept. How ever, migrating mainframe data to these devices through other means will probably run about as much.

Mea Culpa: My Aug. 23 column on VeriSign's Go Secure stated that the service handles administration for an Exchange site. Administration is still handled by the buyer—and rightly so.

When hiring consultants, what are the top five things you look for and look to avoid? Write me at michael_caton@zd.com.


Contracts Won

Brazilian Postal Service

Service provider: Unisys Corp.

Length of contract: More than a year

Size: $55 million

Scope: IT integration of post office's 1,400 branches, including networking and support services

Saint Barnabas Health Care System

Service provider: Inacom Corp.

Length of contract: Not specified

Size: $3.7 million

Scope: Y2K remediation, asset and desktop management for New Jersey's leading health careprovider

State of Arizona

Service provider: MicroAge Technology Services

Length of contract: Three years

Size: $150 million

Scope: Hardware, software, asset management, help desk, consulting, project management, training, repair and leasing

Cable and Wireless PLC.

Service provider: Compaq Computer Corp.

Length of contract: Three years

Size: $75 million

Scope: Provide Compaq desktops and notebooks along with configuration, service and support

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