USi Puts New Spin On Services

This month, the ASP augmented its PeopleSoft management staff with 13 payroll and payroll tax experts.

What separates USi's payroll tax offering from that of, say, Automatic Data Processing, an independent computing services firm, is that USi's payroll tax offering is integrated with PeopleSoft, said Bret Hunter, ERP and CRM product executive at USi. "Other payroll providers process the information and send it back to you to manually [enter] into the ERP system."

The new strategy may prove to be a smart move for USi, which has been on an interesting ride in its five-year history.

The Annapolis-based company survived a bankruptcy, recently completed a merger with competitor Interpath and remains one of the few ASPs that jumped into the game early and is still standing.

USi, which bucked the downward trend faced by ASPs and refused to give up its strategy of owning and managing its own data center, plans to introduce BPO offerings for its other applications over time, Hunter said. It now supports apps from Ariba, BEA Systems, BroadVision, J.D. Edwards, Lawson Software, Microsoft, Oracle, PeopleSoft, SAP, Siebel Systems and Vignette.

"This definitely reflects a change in strategy with [USi] now expanding their service offering a little more strategically," said Christopher Ambrose, research director at Gartner Dataquest. "They're now offering the value proposition of BPO and cost savings, which, of course, is a hot topic these days."

In a case study featuring an unnamed Fortune 500 company, USi claims it reduced the total cost of ownership of a human resources management system by $4 million over five years by handling the implementation, hosting and ongoing management.

Although the ASP market is far from its high-flying days of yore, Hunter said USi's model has some solid backers, such as Oracle and IBM.

"When someone like Larry Ellison says that 50 percent of [Oracle's] revenue over the next three years will come from the service model delivery of its software, that really resonates within the industry," Hunter said.

Gartner predicts that the overall ASP market will experience a compound annual growth rate of 26 percent between 2001 and 2006, Ambrose said.