A Marriage Made in Heaven?

Companies unite services providers with clients.

When startup Interactive Plus One LLC first tried to find help in getting its business online, company officials started by searching the Web and cold-calling services companies.

The result was a four-month ordeal of analyzing providers, reviewing past projects and checking references before Interactive Plus One finally hired a professional services company. For their next project, officials at the New York health and fitness product vendor said they have found a better way.

Interactive Plus One has turned to Web-based matchmaker Intellexchange to help apply supply chain and procurement management principles to hiring a services company with specialized applications that facilitate communication between prequalified users and service providers.

"We couldnt spend six months doing analysis of every provider in the market," said Dan Royer, chief architect at Interactive Plus One. "We had a business plan and a window of time to build our products. This was a good way to get in the door and find the right contacts and right people in those organizations."

Intellexchange is not alone in facilitating services procurement. Both Vivant Corp. and SkillsVillage Inc. focus on it, but "they are more about doing real supply chain automation of the procurement," said Robert McCullough, an analyst at Hurwitz Group Inc., in Framingham, Mass. "They are not as focused on bringing the right parties together."

Another company, IQ4Hire Inc., does matchmaking, too, but its business model is different. "Once you commit to using their services, you have to do all your sourcing through their process. That may or may not fit the way you like doing business," said Leon Abucaram, chief technology officer of Intellexchange, in New York.

The Intellexchange application facilitates the initial search and communication of requirements and then gets out of the way.

"By staying at the surface, we dont get involved in the completion of the transaction or in the payment side. We just allow people to do business the way theyre used to," Abucaram said. At the same time, the focused communication platform eliminates phone tag and an unmanageable mess of e-mail.

Intellexchanges research has resulted in a list of prequalified providers in 25 categories focusing on critical areas such as application development, network architecture and wireless application development.

Intellexchanges screening efforts are crucial to members. "The fear is, youve never heard of these companies, but youre counting on them to deliver something, and you have to get it right the first time," Royer said. "They do screening interviews, background checks and talk to [the companies] prior customers. That gave us some comfort."

To date, some 70 providers have joined the service. The startup plans to create up to 50 categories. Each will limit the number of prequalified providers to 10.

Members, who use the system for free, initiate a search by filling out a project brief that describes the outsourcing or subcontracting requirements and uses questions, checklist items and drop-down menus to help lead customers through detailed descriptions.

"Their system made us get our thoughts together," Royer said. "They have forms that need to be filled in to provide as much information as possible so the providers understand what the project is and its scope. A lot of that can be included in attachments."

The briefs go to the heads of new- business development or sales at the appropriate provider organizations.

The application also provides a mechanism for members and providers to communicate about the briefs. The mechanism is secure and is available to members and providers over the Internet. Each side can be notified via e-mail when new correspondence about a project has arrived.

Providers must respond to member requests within three business days and are required to provide feedback on the briefs for quality and accountability. Members are also encouraged to provide feedback on the briefs, as well as their experiences with the providers during the engagement.

Qualification works both ways. Members must be in charge of outsourcing for their companies or at least have a strong hand in decision making.

Although Hurwitzs McCullough said he believes the exchange is best-suited for midsize businesses, at least one provider hopes to see business from Fortune 1000 companies.

"I think even Fortune 1000 customers are interested in expanding the resources that they tap into from time to time," said Louis Peter, client partner director with Cambridge Technology Partners Inc. "I expect that some of those companies will be participating."

The Boston-based professional services and consulting company is a new member that is taking a wait-and-see attitude with the exchange. But Peter sees some potential for improving efficiency in the sales process. "It is a potentially efficient mechanism for bringing RFPs [requests for proposals] to market. Any time our marketing and sales folks dont have to actively search out a client whos actively seeking services makes the process more efficient," he said.

Providers pay a subscription fee that ranges from $2,500 to $5,000 per month, and they are limited to three-month contracts. They are asked to continue to participate or not depending on client feedback.

The real promise of the exchange will come with time and a full complement of providers and members.

"You need critical mass with an exchange like that," Royer said. "As a member searching for someone to do business with, I need a range of companies who are out there."

Still, Royer, an early participant in the exchange, was pleased with the limited number of providers available in the startup phase. "We had good luck with all of the companies we were able to touch base with," he said.