CXO Co-founder Sees Need To Automate Outsourcing

As more and more solution providers move to add outsourcing and related managed services offerings to their business models, effectively managing those services is becoming an increasingly more difficult challenge. One company that has come up with a set of tools to help solution providers manage their portfolio of managed services and related outsourcing relationships is CXO Systems, which counts Cisco Systems among its investors and has released a version of its dashboard applications specifically for outsourcers that need to put some teeth behind service level agreements. In an interview with Editor in Chief Michael Vizard, company co-founder CEO Malcolm Frank explains why CXO's Web services-based approach to this problem finally gives solution providers a much needed business-intelligence application.

CRN: Why do solution providers need your offering? FRANK: Outsourcing is enormously fraught with peril. It's what we call the "outsourcing morning-after problem," and it's a problem that is universal in that more than 50 percent of outsourcing contracts get nuked within the first three years. Most people try to capture the cost savings associated with outsourcing, but the morning-after syndrome is that you realize you have given up control, quality and stability. We restore that to our customers by giving them a window into everything that's going on for an outsourcing perspective.

CRN: So this is an application that could be used by CIOs or solution providers trying to manage outsourcing arrangements?

FRANK: A number of our customers are outsourcers. The problem they have is that they've got customer-satisfaction issues. If the network goes down, they need to show that to the customer within the context of their service-level agreement--and all the associated penalties with that--in real time. Where most outsourcers make money is not in year one of a contract. They always make it in year two, three and four. So if you can just stop some of that customer churn by showing customers this level of control and visibility, then it will pay for itself in spades. And remember, around key parts of the business there may have three or four outsourcers helping to manage that. So they want to get a view of all that to see what's going on.

CRN: How many of your customers are CIOs vs. solution providers?

id
unit-1659132512259
type
Sponsored post

FRANK: For the outsourcing dashboard, it's about half and half in terms of what we're seeing in the marketplace right now. Every company has an outsourcing relationship or multiple outsourcing relationships. You need software to automate it.

CRN: How does this work?

FRANK: Our platform creates composite applications so it doesn't matter where that data resides. It can reside in multiple departments or in multiple companies. This is why we're unique in solving this problem. Where we are unique in that we have a Web services system that can pull all that information together and virtually integrate it. If you were to do this through other technologies, you'd kill yourself with EAI. The economics wouldn't work to support all of that. And it would be impossible to take a classic business-intelligence approach where you'd have to create a data warehouse and start plugging all this data into a warehouse.

CRN: What's the key underlying technology under the application?

FRANK: We've filed for a number of patents. We have an engine called our Visibility Server. Through this, we can create composite application running in real time that is connected to disparate back-end systems. That's a big breakthrough. The second piece of secret sauce is that we have a metric manager, and that has all of the key metrics by which you would manage your outsourcing relationships. Through our dashboards, you can show exactly where the relationship is because in our metrics manager you can just, for example, lay in the contracts. In real time, you can see how you are performing against the contract--what are the penalties, what are the service-level agreements. Outsource service providers recognize that it's a small investment to make. If they can just retain one customer for the next year, it will pay for the software.

CRN: How much does it cost to deploy your software vs. build your own dashboard?

FRANK: Our dashboard can be in place within an eight-week window, and typically, first installation is $200,000. If you were to take the custom approach or cobble together some of the other tools, you've got to integrate the data, you've got to grab it, and you have to then turn it into consumable information. There are a number of major steps that need to occur. With CSO, you get that in one platform from us. Before us, you would have to go to three or four different vendors to do all of those steps. There's an order of magnitude difference in terms of cost.

CRN: So at the end of the day, you're also putting some teeth behind the service-level agreement--which, in many instances, are not worth the paper they are written on.

FRANK: Those relationships boil down to one of trust, and so when it comes back to a scenario where the network went down for 17 minutes, how do you know if it really was 17 minutes? When you have that gray area where it is just a question mark, then the whole relationship comes into question.