High Marks

Wharton's ASP offering passes rivals' test

The Wharton School of the University of Pennsylvania wages an ongoing battle with Harvard University, the Massachusetts Institute of Technology, Stanford University and the nations other top business schools for the best and brightest students and professors.

But over the last four years, Wharton has also managed to transform its rivals into paying customers.

The school has achieved this feat by developing an application service provider offering that the other schools have decided they cant do without. In the process, Wharton is showing the ASP community at large how to secure a captive client base.

Whartons ASP offering began in 1997 as an internal project to provide the schools faculty and senior students with Web-based access to financial data from such providers as Dow Jones & Co., Standard & Poors and Thomson Financial Services. Typically, a university will pay the data vendors an annual fee — often ranging from $15,000 to $25,000 — for the financial data. It usually arrives on a tape, and the schools information systems (IS) department must load the tape onto a mainframe computer, where it can be queried.

Gerry McCartney, Whartons chief information officer, says that process was cumbersome because business faculty had to wait until IS staff had time to load the data onto the mainframe and, once it was there, faculty usually needed training in how to run queries against the data.

When other schools, most notably Stanford and the University of California, learned of Whartons success in developing a Web interface to the data, they asked if they could pay to have access to the system. Reuven Lehavy, a professor of accounting at the School of Business at the University of California at Berkeley, says it made a lot more sense than reinventing the wheel.

"There are huge economies of scale to be gained here," Lehavy says. "Maintaining these databases requires a huge amount of time and skill. Without the ASP service, we would have to hire a full-time programmer, not to mention the cost of purchasing and maintaining the hardware." He adds that finding and keeping programmers to maintain the database, particularly when the San Francisco-area economy was red hot, was a nightmare.

Wharton launched the Wharton Research Data Service (WRDS) ASP with just two clients three years ago. McCartney thought that, at best, the school might be able to bring on 30 clients over five years. Today, it claims 55 clients — including 21 of the top 25 ranked business schools — and has even started working with international clients. The Koç University Graduate School of Business in Ankara, Turkey; the London Business Schools Institute of Financing and Accounting; and the University of South Wales in Sydney, Australia, are among the international additions.

McCartney says that Wharton charges each business school about $25,000 for Web-based access to the financial data. The schools must also pay each data provider the usual license fees. A few data providers, including Standard & Poors, offer Web-based access to their data, but McCartney says most schools want access to half-a-dozen data providers, making the Wharton system more appealing. Also, Whartons consulting staff will answer theoretical questions and advise on ways to run queries against the database.

McCartney has had to add 10 people to his staff to run the service and maintain the 1.2-terabyte database housing the WRDS. And while the service has turned into a considerable revenue generator, it is not viewed as a profit center. McCartney says his goal is to provide Whartons faculty and students with access to more data sources. That goal is being achieved, with more than 30 vendors offering access via the hosted service.

"If we tried to turn this into a profit center, it would change the relationship we have with the vendors," McCartney says. "This way, weve been able to gain their full cooperation."