Finally, a new breed of tech consultants provide affordable, timely help to growing businesses
No computer comes worry free. Despite all the advances in computers, software, and networks, our wired universe, sadly, often becomes tangled. And since the pace of business has revved up to Internet speed, random crashes and network traffic jams are becoming more taxing than ever. Of course, if your budget has room for a full-time tech-support team, kinks like these are mere headaches. Pop an Advil and call the help desk. But what about the smaller and solo businesses that can't afford to devote precious resources to computer support? What about people like Andy Schilling?
Schilling, who is president of Tangent Fund Management LLC, also wears the hat of "technology decision maker" at the private-equity-fund -management firm in San Francisco. Since Schilling joined the 15-employee company 11 years ago, Tangent's computer arsenal has grown in much the same way that most other small companies' do -- one PC at a time, when a new employee is hired or a creaky computer dies. As Schilling bought new computers, he'd pass the old ones down the food chain.
Tangent chose its tech support, too, as most small companies do -- -by proximity. When the company decided to network its PCs, Tangent hired a local computer-consulting outfit, which installed, configured, and maintained the new network. When the business decided to add more PCs to the mix, though, it went to a local branch of a computer chain that provided basic maintenance for its machines. That worked fine -- until the branch went bankrupt.
So Schilling figured he'd devote more of his own time to the company's tech decisions. But since his expertise is in finance -- not in computers -- he found himself at a disadvantage. Back in 1990, Schilling had purchased what he thought would be adequate hardware and software to network the office. But as time went by and Tangent added more users, the network constantly crashed. So he brought in new consultants, who advised installing an Ethernet local area network along with more-powerful computers. "We had to rip the whole thing up to put in the Ethernet," says Schilling. Then he hired another local computer consultant just to wire the LAN, which added to the bill. "It would have been cheaper to install the Ethernet LAN from the beginning," he says.
For computer emergencies, Schilling depended on the same consulting company that had advised him to install the Ethernet network. Although he found its service useful, Schilling says he had to wait for the consultants to respond to his pages and then to travel to his site. Meanwhile, Tangent waited in limbo. "When they got here later in the day, the clock was ticking," he said. "I kept thinking, 'How many hundreds of dollars would it take to get our printers to print?' It gets expensive."
Sometimes very expensive, says Mark Margevicius, a senior research analyst at the GartnerGroup. The average large company spends between $8,000 and $10,000 a year just to install, maintain, and support one corporate PC. Those costs are even higher, he says, for small companies, which often can't afford an in-house tech staff. As a result, they suffer from significant downtime when faced with a computer glitch.
Schilling was hardly alone in his frustration; most small businesses have never had much in-house IT help. According to Eric Klein, a senior analyst at the Yankee Group, 53% of networked very small businesses -- those with between 2 and 19 employees -- don't have any full-time tech staff at all. Of networked companies with 20 to 99 employees, only 32% have a full-time IT staff. "The bottom line is that businesses are continuing to adapt to PCs and the Internet. The fact that they don't have a tech staff points to an obvious hole in their support system," Klein says. Moreover, because of the high hourly rates of most computer consultants (between $40 and $70 for those who offer both time and materials) and the time spent waiting on the phone for help from software and hardware vendors, many small companies don't seek outside IT help unless they have a major crisis on their hands.
Fortunately for companies like Tangent, a growing band of support warriors have spotted this hole and are rushing to fill it with affordable, timely help. By providing standard sets of PCs, software, and networking products -- and, in some cases, by requiring lengthy subscriptions -- these new businesses can keep their costs so low that even soloists and two- and three-employee companies can have full-service tech support at their beck and call. Some of these technology soldiers configure, install, and regularly monitor individual companies' systems in an effort to spot problems before they turn into crises. Just call it Fortune 500 service for mom-and-pop shops.
When CenterBeam Inc., a start-up based in Santa Clara, Calif., approached Schilling, last July, the Tangent president was grappling with yet another set of tough technology decisions. He was ready to set up an officewide E-mail system and scrap the multiple E-mail accounts that Tangent's employees had been using to communicate. And he was thinking about registering a domain name and putting up a company Web site.
CenterBeam not only offered him E-mail and Internet access but also promised new PCs with 128MB of memory and 17-inch monitors. The company would also provide printers, a wireless LAN, a local server, a software suite that included Microsoft Office 2000, a professionally managed firewall, nightly data backup, and 24-hour tech support. All this would cost Schilling only about $165 a month per user. Because CenterBeam bills its customers on a subscription basis, those costs would be fixed for three years -- the life of the contract -- no matter how much tech support Tangent might need each month.
Some of these new businesses can keep theirs costs so low that even soloists and two- and three-employee companies can have full-service tech support at their beck and call. Just call it Fortune 500 service for mom-and-pop shops.
Schilling scribbled out a back-of-the-envelope cost comparison between CenterBeam's tech services and the system he had pieced together himself. CenterBeam was only slightly less expensive. However, Schilling found the notion of going with a service like CenterBeam attractive because of its consistency. "Now I know what the budget is," he explains. "Before, it would go in cycles. I'd have some big problem and would have to get new software or buy new PCs. This is a lot more predictable."
CenterBeam cofounder Sheldon Laube hopes his service's predictability and reliability will speak to small-business owners. "The whole idea is to not ever worry again about this stuff," he says. As chief technology officer at Novell Inc. and cofounder and CTO of USWeb Corp. (now USWeb/CKS), a San Francisco-based E-commerce consulting business, Laube spent much of his career worrying about technology. And he's still a worrywart: he and the CenterBeam staff regularly fuss over the health of their customers' PCs.
Laube's employees use the Internet to peek into the inner workings of their customers' computers across the country. They hunt remotely for potential problems -- and, using the Internet, they upgrade customers' software without leaving their desks.
But even the folks at CenterBeam can't solve every problem, like the mystery glitch that murdered a PC in Tangent's accounting department. "One PC just died," Schilling remembers. No bother. Schilling opened the storage closet and grabbed his "emergency PC," an extra machine that had come with the CenterBeam package. Schilling called CenterBeam's office and had all the old computer's files transferred to the new machine. Because CenterBeam had backed up Tangent's data nightly, transferring the information was a breeze. "The new computer was up and running in 45 minutes," Schilling says. "Things like this were a real headache before." Now headache free, Schilling liked the service so much that at press time he gave CenterBeam a ringing endorsement: his company invested an undisclosed sum in the computer start-up's second round of financing.
CenterBeam isn't the only full-service, subscription-based tech provider vying for the small-business market. Everdream Corp., based in Mountain View, Calif., is aiming at soloists and small and midsize companies that would normally purchase inexpensive, so-called white-box computers from local resellers. Everdream manufactures and brands its own PCs before shipping them off to customers, who end up paying about $150 a month per computer.
Everdream, like CenterBeam, provides software, hardware, and networking components, as well as Internet access, Web hosting, nightly backup, and round-the-clock online and telephone IT support. In addition, Everdream builds into its machines a simple, commonsense security feature: it divides the hard drives into two parts in an attempt to safeguard business applications from viruses brought in over the Web. One part of the hard drive houses business applications, and the other plays home to programs and games that users download.
It would seem that tech-savvy companies -- especially new dot-coms -- would hardly need outside tech support. Not so, says the Everdream team, which is betting that many high-tech start-ups would rather develop their own technology than worry about day-to-day glitches.
Such is the case of Tom Jones. As CEO of Stratasource Inc., a start-up based in Menlo Park, Calif., that provides automated systems management, Jones wanted his software engineers to spend all their time creating Stratasource products. Sure, the engineers could troubleshoot their own PCs. But the rest of the staff would still need occasional help.
Last October, Jones signed up as a beta tester for one of Everdream's PCs before committing his support staff to the system. This January he became a paying customer. While testing the gear, he hadn't needed much support, but when he did need support, he got it right away. "I was working in Microsoft Word and just got hung up," Jones recalls. When he called Everdream, a technician "entered" his computer remotely -- so that both Jones and the technician were looking at Jones's screen -- and quickly showed the CEO how to solve the problem.
That said, there are a few drawbacks to CenterBeam and Everdream's services. Both companies are subscription based and require long-term contracts. Everdream's customers are obligated for 30 months -- a subscription only slightly shorter than CenterBeam's aforementioned three-year deal.
And then there's the issue of privacy. Both companies tout nightly data-backup services and the ability to enter any subscribed PC through the Internet with permission.
Schilling says that although allowing an outsider full access to his files is troubling, the trade-offs are worth it. "We have more up-to-date methods of communication," he says. "And it's clear to me that CenterBeam can provide us with much better firewalls than what we were going to be able to afford on our own."
Finally, these kinds of standard services may not fill the needs of small-business owners who require custom configurations or who are devoted to particular brands of computers not offered by the service provider. And they certainly don't erase the need for customers to ask for written "service-level agreements," which describe the time frames in which consultants answer service calls, deliver hardware and software, upgrade equipment, and solve problems.
More to Come
CenterBeam and Everdream both call California home and at press time had only just begun to expand nationally. By the time these pioneers provide services nationwide, they could be facing fierce competition from large computer companies like Micron Technology Inc., which already offers a subscription service for small businesses. Meanwhile, a potential rival, Dell Computer, recently invested in CenterBeam's second round of financing, and CenterBeam has an agreement with Dell to supply its customers with the computer manufacturer's PCs.
Competition, of course, usually brings lower prices and better-quality service, which is good news for small companies that until now were unable to afford the kinds of services that their larger counterparts benefited from.
For people like Andy Schilling, Tangent's formerly frustrated president, these new services couldn't have arrived on the scene soon enough.
Anne Marie Borrego is a reporter at Inc.
Company: CenterBeam Inc.
Location: Santa Clara, Calif.
Founders: Sheldon Laube, CEO, former CTO of USWeb/CKS; Glenn Ricart, CTO, former CTO of Novell; Marc Epstein, executive vice-president of product management and development, former CTO of Quarterdeck; Thomas Twietmeyer, CFO, former Autodesk executive
Funding: $55 million in equity financing from Crosspoint Venture Partners, Accel Partners, Microsoft Corp., USWeb/CKS, New Enterprise Associates, Intel Corp., Dell Computer Corp., Impact Venture Partners, and Tangent Fund Management LLC
Buzz: $165 a month per user gets you Dell PCs, printers, high-speed Internet access, E-mail, a wireless LAN, Microsoft Office 2000, regular software upgrades, firewall protection, and 24-hour tech support. Dell recently announced an investment in the company, complementing a deal to supply CenterBeam customers with its own PCs.
Fine print: You have to make a three-year commitment to the service. If you're a hot dot-com, three years probably feels like a lifetime. Also, the CenterBeam monthly cost per user of $165 only applies to companies that need 10 or more machines. Prices are higher for companies with fewer users. Finally, you have to feel comfortable letting other eyes peer into your hard drives.
Company: Everdream Corp.
Location: Mountain View, Calif.
Founders: Russell Rive, CTO, and Lyndon Rive, vice-president of partnership development. The brothers Rive hail from the Republic of South Africa, where Lyndon established a successful catalog business when he was 17. Before founding Everdream with Lyndon, Russell picked up computer and sales experience at Zip2 Corp., an online city guide that Compaq Computer Corp. snapped up last year for about $341 million.
Funding: $18 million from Canaan Partners, Draper Fisher Jurvetson, Ricoh Silicon Valley, and others. Investors include Jack Kuehler, former president and vice-chairman of IBM; and Stanford University.
Buzz: Like CenterBeam, Everdream operates on a subscription basis. Customers pay about $150 a month for their Everdream-branded computer, 24-hour IT support, a choice of dial-up or DSL Internet and E-mail service, business applications like Microsoft Office, nightly backup, online training courses, and virus protection. Everdream splits the hard drive into two parts -- one "locked down" part that handles the business-critical applications and another that's open to Internet downloads.
Fine print: As with CenterBeam, Everdream's technicians will have access, albeit limited, to your hard drives. You have to sign up for a 30-month contract -- that is, if you can get one. The company hasn't rolled out nationally just yet but plans to offer service outside California by the second quarter of 2000.