Since going live in June 2000, the business integration software vendor estimates it has saved 75% over the cost of installing and maintaining the same package in-house, says Brian Dudley, vice president of Information Services for Palo Alto, Calif.-based TIBCO. Because of this, the company plans to sign a new, three-year contract very soon, provided the costs of the new contract do not go up significantly.
"At the time the primary decision was driven by cost," says Dudley. "Because we didn't want to invest in the architecture or hardware or application support people. So, it's your traditional outsourced decision."
Being just the third customer of Peoplesoft's then new eCenter offering helped make the decision easier since they got a great deal, he says. Of course, the trade-off was going with a relatively untried solution.
Another benefit of opting for a hosting arrangement was the lack of customization available at the time. Because they decided to go with a simple, "vanilla" application it was easier to tell department managers and execs they had to take what they got. Customizing would have driven up costs and complexity to the point of negating the benefits of hosting, says Desiree Gutierrez, TIBCO's senior HR IS manager.
"That worked out to our advantage overall because we didn't have to accommodate the 8,000 requests that we get from other departments to customize the system," she says. "We had some legitimate reason to push it off on them."
The success of the Peoplesoft implementation has led TIBCO to utilize other hosted solutions providers, or application service providers (ASP). Salesforce.com provides the company with sales reporting functionality and Metatec in Columbus, Ohio, supplies TIBCO's customers with notifications of software updates, patches and upgrades. TIBCO could have written the same program in-house, but Metatec's software was simply better, Dudley says, adding that now he doesn't have to worry about maintaining it.
For the company's June 2001 Oracle ERP system implementation, however, TIBCO decided to bring it in-house. Not because the company was concerned about outsourcing, but because Oracle is a competitor and ASPs like AppShop, that offer Oracle solutions, weren't financially stable enough for Dudley to work with. Otherwise, he says he would have seriously considered going that route.
"Oracle's message is you don't need integration, by everything from me," says Dudley. "And what TIBCO does is tie legacy and disparate applications together with an integration layer. So, it's not that we compete with Oracle per se -- we compete with IBM in that space -- but...we preach best of breed. So what our products do is tie those things together."
Another consideration was complexity. Since Oracle ERP is multi-departmental application verses HR which primarily used by just one department, Dudley wanted some on-site expertise to keep things running smoothly.
To tie everything together, TIBCO's 25 worldwide offices either use T1 or T3 lines, depending on office size and location. The smallest offices access the Peoplesoft app. via a VPN.
On the down side (if it can even be called that), the only issues Dudley and Gutierrez deal with are having to contact Peoplesoft for specialty reports and other functionality that, with an in house deployment, would have been handle by TIBCO staffers. But even this really isn't a big deal, said Dudley.
"It's extra work but its not a negative," he said. "It's just a different type of work, right? I don't think there to be any negatives at all really, other than the complexities of supplier management, which we all deal with in different aspects anyway."