However, neither the details of the project nor Bandt's arrangement were written down. There was no schedule for deliverables or project progress, nor any outline of responsibilities. And little was budgeted for consultants' fees, which in large implementations like this one typically pile up to four times the cost of the software.
"That was a mistake," Louie says today. "Our commitment was the money, which was all of our profit for the year. His [Bandt's] was to come here from Texas, take a $40,000 salary, and drive the project. That was enough on both sides." As for a contract, says Louie, "we figured we'd eventually get around to it. We were all good people, and we had worked together before. He had been our client, and there was a level of trust. Something that seems so obvious and important became a secondary priority."
In July 1997, Bandt joined Market Insights as chief technology officer. Over the next few months the three began purchasing the data warehouse's components--all top-shelf. They chose Informix Corp.'s Red Brick Warehouse database for its ability to juggle the voluminous amounts of data Market Insights used. Bandt advised using a sophisticated software called an on-line analytical processing tool, or OLAP. This added a new dimension to Agent 24-7: unlike a cheaper processing tool, such as the Java programming language, OLAP permitted users not only to pluck static data from the database but also to analyze it, factoring in variables and producing a tailored set of information. Agent 24-7's number-crunching ability would set it apart in the marketplace. Of course, the sophistication came at a price. The Information Advantage Inc. DecisionSuite that Bandt recommended cost at least 10 times as much as a Java application. But given the advantages it promised, even the usually thrifty Louie agreed it was worth it.
The upscale theme continued with the operating system and the hardware. The data warehouse's horsepower demanded the robust and complex Unix operating system, not to mention reliable hardware to run it on. In December, Louie and Milano authorized the $350,000 purchase of the dual-processor Digital AlphaServer 4100 running Unix. They financed much of the cost in a lease-to-own deal with Digital that they secured personally. In addition, they shelled out $140,000 for licenses for the DecisionSuite software and another $90,000 for the Red Brick data warehouse. They paid for the software with a combination of cash and bank loans. Total damage: $580,000. And that was just the beginning of the project's costs.
The arrival of the new equipment at Market Insights' Brannan Street office in January 1998 was cause for celebration. But the party was quickly over. By February, it was clear that the project's manpower requirements had been drastically underestimated, but because of the warehouse's high costs, there was no cash available with which to remedy the problem.
A much deeper wrinkle developed in March, when key software supplier Information Advantage approached Louie and Milano: in exchange for helping Information Advantage create new software applications, the vendor would provide consulting services to Market Insights so that it could complete the data-warehouse project. Then, at the end of three years, Information Advantage would acquire Market Insights.
It wasn't that Louie and Milano hadn't thought about selling their company before. They had--lots of times. "Rick and I felt the money was out there for the taking," says Milano. "The question was, what do you have to give up to get it, and what do you get besides the money?" The answers had always been "too much" and "not enough."
The offer was tantalizing but for all the wrong reasons: if they were going to sell Market Insights, they wanted it to be a strategic move to grow the business that they had nurtured for so long. They didn't want it to be because they needed cash. To make matters worse, Bandt was in favor of the deal, and that bothered Louie and Milano. "It was a strange dynamic," Louie says. "From Marc's point of view, it was a no-brainer. But we felt misled. We brought him in with all this money and the understanding that the sweat equity could make it a success. Now he was telling us that we had to sell off part of our company to make it [happen]." He and Milano were willing to consider Information Advantage's offer, Louie recalls, "but it was hard to stomach."
Bandt says the Information Advantage buyout "seemed like it might be an OK idea." Louie and Milano were open to all sorts of funding options, from buyouts to venture-capital investors, he notes. "I wasn't dragging them kicking and screaming."
Louie and Milano decided against the offer, resolving to complete the data-warehouse project on their own and get the company back on its feet. In April they allocated their only staff developer to the project full-time. Louie and Milano, too, began devoting additional hours to the data warehouse and to the key task of designing how the data was to be loaded into it.
But by the fall Market Insights was falling further behind. Milano widens his eyes when he recalls the gulf between expectations and reality. "He [Bandt] said we'd have something up in a month, and here it is like nine months down the road and we don't have anything. You know what I mean? It was amazing."
Bandt, who says that six, not nine, months had passed, defends the project's progress in light of the newness of health-care data warehouses. "There are core requirements that you think you have to have, and when you start digging in, it's more difficult than you thought. When I arrived, there were no Internet connections, no Unix network, no machinery. We got it in January and had the first connections to the database in June." The development could have gone a lot worse, he adds. "There are organizations many times larger than Market Insights that made the same platforms decisions we did, and they were six months behind us."
