October 4, 2005 5:52 pm

Hooked on the ASP model

James Metzger is chief finance officer at the Tele-Management Forum, a trade body representing 465 members around the world. With 50 staff and an international scope, TMF is a small organisation with a big reach.

Keeping track of the accounts from TMF’s New Jersey headquarters means working with a multitude of currencies and financial systems. Mr Metzger has recruited a handful of online software rental products to cope with TMF’s fiscal administration, and in the process has saved his operation upwards of $300,000.

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TMF’s financials exist on distant servers at a trio of suppliers who focus on vertical slices of professional accounting activity.

Basic accounts are fed down the line to Intacct.com; travel and expenses are dealt with by Expensewatch.com; and fixed assets are managed by Bnasoftware.com. It is important to note that TMF has not outsourced its accounting.

Mr Metzger still controls that entire function, but the work is now conducted online, so only the supplier needs to be concerned with aspects of server provision.

Appropriately for the business function in question and his job title, Mr Metzger has all the numbers to hand.

“The Intacct service comes at $500 a month for three users. Expensewatch is a huge help with cost-control, and it gives a full audit trail, which matters enormously in the new environment of transparency and regulatory compliance. That costs $12,000 a year, with inventory tracking from Bnasoft billed at $3,000 a year.”

His first point about the whole move to third-party hosting, often known as the application service provider (ASP) model, is that it saves the user from having to employ IT staff.

“At TMF we have just three IT staff. These systems allow us to run a much leaner staff. Everything is on the supplier’s servers.” Mr Metzger has no doubts about how prohibitively expensive the conventional software route would be. “To buy three packages like this we would be spending $150,000, plus paying for more IT people to support it.”

Mr Metzger’s previous career included a long stint at Ernst & Young, and his enthusiasm for the ASP option is limited by the fact that it works best in a small business.

“For us, this is an excellent idea. But I wouldn’t duplicate this inhouse if I was the CFO at a large outfit such as Ernst & Young.” Opting for the economical software rental route means relinquishing the service levels and customer clout that come with spending six figure sums.

“There is a certain amount of queuing to get your program processed, and when we submit a request for a change or enhancement to the software it might be two or three weeks before something happens.”

Yet he is in no doubt that using a leading conventional software house would be overkill in the technical sense and a huge waste of TMF’s funds.

TMF is hooked on the ASP model.

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