When Unishippers set up a suite of applications to track billing and customer activity across its nearly 300 shipping offices nationwide, the Salt Lake City-based company never even considered hosting the software on its own. It just didn't have the human resources or the expertise needed to maintain these apps and the massive amounts of hardware they run on.
"We'd have to hire a whole new staff to work almost around the clock," says Kevin Lathrop, chief information officer at Unishippers, a 1,200-employee company that helps roughly 60,000 small and medium-size businesses ship packages around the globe. "We'd need network engineering support, system administration support, database support, a 24/7 help desk, and alert support, and those were things we really didn't want to deal with."
Rather than hire as many as five extra employees and pay them to work through the night, Unishippers outsourced the job to IBM Global Services. Big Blue hosts the company's application suite at a facility in Boulder, Colorado, handling most of the hardware and software maintenance.
In 2003, IBM racked up over a billion dollars in revenue hosting applications on behalf of its customers. It has partnerships with a wide range of popular software manufacturers, offering clients more than 50 common enterprise apps, including everything from large-scale CRM tools to relatively simple human resources software. And clients are free to choose among different types of outsourcing.
"IBM is uniquely positioned in the marketplace," says Bill McNee, founder and CEO of Saugatuck Technology, a Westport, Connecticut-based research firm. "They not only do old-fashioned application outsourcing, where you take title to a software license and the software runs on their servers, they also do on-demand access, where IBM holds the title to the license and provides access to many different companies at once."
One of IBM's more prominent software partners is Siebel, a leading CRM vendor. Unishippers chose Siebel to track activity across its many shipping offices.
IBM hosts Siebel in two different ways. One option, Siebel CRM OnDemand, lets you tap into a Siebel service running on a preconfigured pool of servers.
The Siebel on-demand service is particularly inexpensive and easy to set up. According to Mike Riegel, director of markets and strategy for IBM OnDemand, you can sign up and log on to the service within 10 minutes, paying $70 per seat per month — but it allows for only limited customization. Unishippers wanted complete freedom to tailor the application to its particular needs, so it chose the more traditional option, IBM Application Hosting for Siebel Systems.
IBM installed the software on redundant sets of servers in Boulder, and Unishippers customized it simply by sending IBM a series of Siebel Repository Files (SRFs) from Salt Lake City. IBM even agreed to host a billing application Unishippers had built to run in tandem with Siebel.
Unishippers employees access this suite of apps from any Web browser, and the company never has to worry about upkeep on any of the hardware or software outsourced to IBM. "If there's any hardware or operating system failure or any issue with Siebel, it's IBM's job to detect it and get on it right away," says Lathrop. "All we have to do is monitor our custom billing application."
One problem arose during the first few months after installation: IBM's monitoring wasn't as diligent as it could have been. "Oftentimes, our users detected system downtime that wasn't detected by IBM. It happened on 10 to 12 occasions, and that was a big problem for us," Lathrop reported. IBM did improve its monitoring diligence after Lathrop complained.
Lathrop and his team feel a similar sense of powerlessness when they want to make changes to the suite. "You can't just 'cowboy it.' You can't just jump in and change things," Lathrop adds. "IBM has a very rigorous, well-documented process you have to go through, and it can take a while."
Yet despite these drawbacks, he's never second-guessed the decision to outsource. IBM proved responsive to his feedback, and in the end, Lathrop feels that IBM's policy on software changes is a good thing, "If you want to make a small change and you know it's the right thing to do, that slow process can get in your way," he says. "But just as often, by going through this careful process, you'll realize a change is the wrong thing to do and you won't make it."
Unishippers won't say how much it's paying to outsource the suite, but according to IBM, a setup like this typically costs 20 to 30 percent less than installing and managing the apps in-house. "Due to economies of scale and economies of skill," says IBM's Riegel, "we can manage the software much more cost-effectively." And then there are the five extra IT employees Unishippers didn't have to hire. It's no wonder the company opted for outsourcing.
By Cade Metz
"We'd have to hire a whole new staff to work almost around the clock," says Kevin Lathrop, chief information officer at Unishippers, a 1,200-employee company that helps roughly 60,000 small and medium-size businesses ship packages around the globe. "We'd need network engineering support, system administration support, database support, a 24/7 help desk, and alert support, and those were things we really didn't want to deal with."
Rather than hire as many as five extra employees and pay them to work through the night, Unishippers outsourced the job to IBM Global Services. Big Blue hosts the company's application suite at a facility in Boulder, Colorado, handling most of the hardware and software maintenance.
In 2003, IBM racked up over a billion dollars in revenue hosting applications on behalf of its customers. It has partnerships with a wide range of popular software manufacturers, offering clients more than 50 common enterprise apps, including everything from large-scale CRM tools to relatively simple human resources software. And clients are free to choose among different types of outsourcing.
"IBM is uniquely positioned in the marketplace," says Bill McNee, founder and CEO of Saugatuck Technology, a Westport, Connecticut-based research firm. "They not only do old-fashioned application outsourcing, where you take title to a software license and the software runs on their servers, they also do on-demand access, where IBM holds the title to the license and provides access to many different companies at once."
One of IBM's more prominent software partners is Siebel, a leading CRM vendor. Unishippers chose Siebel to track activity across its many shipping offices.
IBM hosts Siebel in two different ways. One option, Siebel CRM OnDemand, lets you tap into a Siebel service running on a preconfigured pool of servers.
The Siebel on-demand service is particularly inexpensive and easy to set up. According to Mike Riegel, director of markets and strategy for IBM OnDemand, you can sign up and log on to the service within 10 minutes, paying $70 per seat per month — but it allows for only limited customization. Unishippers wanted complete freedom to tailor the application to its particular needs, so it chose the more traditional option, IBM Application Hosting for Siebel Systems.
IBM installed the software on redundant sets of servers in Boulder, and Unishippers customized it simply by sending IBM a series of Siebel Repository Files (SRFs) from Salt Lake City. IBM even agreed to host a billing application Unishippers had built to run in tandem with Siebel.
Unishippers employees access this suite of apps from any Web browser, and the company never has to worry about upkeep on any of the hardware or software outsourced to IBM. "If there's any hardware or operating system failure or any issue with Siebel, it's IBM's job to detect it and get on it right away," says Lathrop. "All we have to do is monitor our custom billing application."
One problem arose during the first few months after installation: IBM's monitoring wasn't as diligent as it could have been. "Oftentimes, our users detected system downtime that wasn't detected by IBM. It happened on 10 to 12 occasions, and that was a big problem for us," Lathrop reported. IBM did improve its monitoring diligence after Lathrop complained.
Lathrop and his team feel a similar sense of powerlessness when they want to make changes to the suite. "You can't just 'cowboy it.' You can't just jump in and change things," Lathrop adds. "IBM has a very rigorous, well-documented process you have to go through, and it can take a while."
Yet despite these drawbacks, he's never second-guessed the decision to outsource. IBM proved responsive to his feedback, and in the end, Lathrop feels that IBM's policy on software changes is a good thing, "If you want to make a small change and you know it's the right thing to do, that slow process can get in your way," he says. "But just as often, by going through this careful process, you'll realize a change is the wrong thing to do and you won't make it."
Unishippers won't say how much it's paying to outsource the suite, but according to IBM, a setup like this typically costs 20 to 30 percent less than installing and managing the apps in-house. "Due to economies of scale and economies of skill," says IBM's Riegel, "we can manage the software much more cost-effectively." And then there are the five extra IT employees Unishippers didn't have to hire. It's no wonder the company opted for outsourcing.
By Cade Metz
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