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Learning from the Past

The Rise of Progressive Sourcing

Keller Williams^® Realty, an international residential real estate franchise company, has tripled in size since 2000. Back then the company had just 100 offices and 8,000 agents; today there are over 300 offices and 24,000 agents in the United States and Canada. A key factor in this growth plan is technology, which the real estate company uses to recruit, train, and empower its agents. It relies on its intranet, a private network for accessing, organizing, and managing documents and information over the Web through a browser. Jack Miller, development manager for Keller Williams, says the intranet "has created a whole channel of communications that we didn't have previously."

What's more, the savings have been "dramatic." Miller says outsourcing to Intranets.com, an application service provider (ASP), is costing 10% of the price of creating and hosting the site in-house. "It would have been a $1 million-a-year endeavor to pay for the hardware plus the staffing required for support, development, and administration," he calculates. Miller says the outsourcing fee includes the supplier's customization services.

Bridging the Generation Gap

Cost, though a major consideration, is not the only reason outsourcing contributed to the real estate firm's enviable growth. Technology also closed the generation gap. According to Keller Williams, the average age for homebuyers is in the early thirties, yet the average age for Realtors nationally is 55, according to the National Association of Realtors. Keller Williams^® recognized the need to attract younger Realtors who prefer digital business practices. Miller reports the intranet "has become a recruiting tool to this age group. Providing technology is a real differentiator." Now the average age at Keller Williams^® is 42.

An Unsuccessful Attempt at Doing It Themselves

When the real estate company realized an intranet was a crucial part of its growth strategy, it attempted to build its own in 2000. The firm brought in consultants and developers to create a company-wide intranet. But Miller reports the utilization was low because there was not enough local information and too little functionality. "There wasn't much on it that people needed in their day-to-day business," Miller recalls.

Keller Williams^® looked into purchasing intranet software systems but decided against it. "It would involve a large capital expenditure and add more infrastructure. We would also have to add staff to tailor the system. We would essentially become an ISP, which didn't look like our core business at all," Miller says.

Many mid-market businesses are facing this same challenge. "Companies need solutions to run their business more efficiently and effectively. With package software, some companies go into a black hole because they need all types of services to get it up and running and manage it day-to-day. If it is not core, it does not logically make sense to take on all that hassle and personnel investment," says Laurie McCabe vice president/practice director Summit Strategies, a research/analyst group based in Boston, Massachusetts.

Listing the Benefits of an ASP

Keller Williams^® solved it dilemma after hearing from a few of its local offices who told headquarters "they were using Intranets.com as a great communications and online office organizational tool and that it is a great value at a very low cost."

With the proof of concept essentially done, in July 2002 Keller Williams^® signed on with Intranets.com, a software company that had changed to a hosted service in 1999. The three month roll-out involved customizing the modules and interface to supplement the applications that include a database manager, calendar tool, document manager, contact directory, task manager, expense reporting, discussion forums, and announcements.

The applications can leverage the data from a variety of desktop tools. "Any data-sensitive application like Access or Excel can be put into our database. Once it is there, the Realtors can share the data on the Web. Users can then do their own views and reports," explains Rick Faulk, CEO of Intranets.com.

Miller says the service provider has added significant capabilities to the organization. Real estate transactions require a lot of paperwork; now offices can manage their documents easily. Busy Realtors appreciate the contact manager and on-line calendaring system that syncs with Outlook or a hand-held device.

In addition, Keller Williams^® developed an in-house training announcement program that the executives wanted to incorporate into the intranet. This involved integrating two systems. Miller was very pleased with the process. "Doing an IT project with two different teams in two different locations can be a nightmare. They were easy for us to work with. The project went very smoothly even though we are a Java shop and they use Microsoft.Net," Miller says.

Glenn Sinclair, director of business development for Intranets.com, explains why the integration was so easy. "The nice thing about Web Services is the open architecture. Everything moves via XML." Users can access Web Services applications through any browser over the Internet without client/server software and it enables applications written in it to share data easily.

Outsourcing's Advantages

McCabe of Summit says outsourcing a company intranet "makes a lot of sense. Outsourcing gets people up and running much faster. It eliminates a lot of hassles."

McCabe addresses the financial considerations. "People like to have a predictable expense. With a new solution, why do you want to carry that burden and make the up-front investment? The providers are leveraging a volume model, so the cost of infrastructure goes down along with the cost of experts to keep everything up. It streamlines the process financially with a lot of flexibility," she explains.

These advantages are indicated in the September 2003 report by Summit Strategies, The Survey Says: Applications Hosting and Management Adoption.

McCabe says there is "a lot of pressure from the business side to find better ways of doing things." Outsourcing is a good way to do that.

Lessons from the Outsourcing Journal:

• Outsourcing an IT function can produce significant savings. One Realtor reduced costs by 90% when it outsourced its intranet.
• Outsourcing gave a real estate broker new technology favored by younger agents. Its new intranet gave it a leg up in hiring younger employees.
• Outsourcing an intranet helped a residential real estate company manage growth successfully by allowing its Realtors to do their jobs more effectively with new tools.

Publish Date: March 2004

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Copyright © 2004 - Everest Partners, L.P.

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