When The Building Depot committed to renting its software and IT infrastructure from the ANZ -owned Always There, no one imagined that the application service provider might be heading for oblivion.
As Always There’s first customer, the building retailer was a pioneer of the ASP model, in which customers rent applications by the month rather than buying a licence outright.
The Building Depot had been using the three-year-old Always There for a year when another major customer of the ASP, the wholesaler Rattrays, went into receivership in November 2002. This prompted ANZ, which owned Always There through its Eftpos NZ subsidiary, to pull the plug.
For the Building Depot, the news came during a company restructure so the timing was less than ideal, says Building Depot general manager Garry Stone.
“We had chosen Always There because we thought they had substance by being backed by the ANZ, they had expertise, they specialised in retail and the price was right.”
The 15-year-old Building Depot was privately owned until it was bought by Fletchers five years ago. Under Fletchers the company’s IT infrastructure was upgraded and the ASP model was seen as a cost-effective way of doing that, says Stone. It signed a three-year contract for a monthly service including its retail software, email and desktop applications such as Microsoft Office.
Stone says being Always There’s first customer meant there were some teething troubles and the AdvancedRetail software had never been used with Citrix before. After a pilot was carried out in August/September 2001 the wrinkles were eventually ironed out and by March of last year most of the 10 sites throughout the country were up and running.
The Building Depot was notified of the closure about a month before it happened, and the two companies went into “intense negotiations” about moving the provision and management of The Building Depot’s IT elsewhere.
Always There wanted to assign the contract to HDS, which had been housing the services in its data centre, but The Building Depot decided it would “row its own boat” from now on. “We negotiated directly with HDS, [Always There] and our network providers.”
The Building Depot bought the server it had been leasing and now talks directly with its providers – something which Always There had done.
Stone says the company probably now has a better fit in terms of how it how its IT provision is structured.
“There was the potential for Always There to add value, and without being unfair I think they did add some value. They acted as our IT manager which is the standard ASP model. Whether that function was worth the margin is a matter of debate.
“I think we can now survive without that. I have a background in IT so I am a bit more comfortable with talking to IT providers direct. Cost-wise, buying the hardware and dealing directly with HDS, Telecom and AdvancedRetail has put us in a better position.”
However, Stone says Always There was very valuable in setting up the service, managing releases of software and “holding our hand”.
“Once we were set up it became a lot easier to just continue. If they hadn’t done that we would have had to contract someone else to do it.”
Stone says despite initial reservations about the ASP model, he is now comfortable. “My main concern was about resilience and being vulnerable to a telephone line, but in 12 months we have had only one significant outage.”