Review

Tenrox Preaches Freedom Of Choice In Services Automation Market
by Ian Jacobs: ian.jacobs@the451.com, Thursday, June 20, 2002

As The451 predicted, the crowded market for automating project-based services organizations has begun to contract. Tenrox plans to ride out the consolidation with a message of manageable modularity and vertical knowledge. The private company was most recently ranked on Software Magazine's top 500 software companies in the world.

Impact assessment

The message

Tenrox wants to be known for the freedom of choice it offers customers. A modular suite allows companies to start small and have the services automation system grow as they do.

Competitive landscape

The number of small, pure plays has shrunk recently, but there are still plenty of firms angling for the same customers. Larger players such as Lawson and PeopleSoft are already making their presence felt, and SAP, Oracle and Siebel may all soon dip in as well.

The451 assessment

Tenrox, for a small company in a very crowded space, is saying the right things. It is targeting divisions of larger companies as well as using project work to get its foot in the door. The company also has a strong vision of selling to IT departments of the largest companies.

Context

The professional services automation industry has been under the threat of major consolidation for some time. Too many small players with various economic instabilities, combined with the looming threat of incursions by the major applications vendors, made it clear that something had to give. Vendors such as Lawson and PeopleSoft have begun to make their presence felt, and SAP, Oracle and Siebel are all eyeing the space. Last week, two of the small services automation vendors were scooped up by larger companies on the same day. Novient, with a product set fairly similar to Tenrox's, was acquired by the Australian firm Solution 6, while virtually bankrupt Portera was bought by Exigen.

While still one of the smallest of the services automation pure plays, Tenrox has several features that distinguish it from its competition. The privately held company has no debt and no external financing. It claims to have posted 60% annual growth for the entire seven years of its existence. Still, these features could go a long way in making Tenrox one of the survivors in the market. The company is also plugging the right message for a smaller firm – it uses project work to make its way into large accounts, and it has focused much of its efforts on selling to divisions of huge companies.

Tenrox currently boasts over 800 customers in 50 countries. While that number may be large, the deals have still been fairly small. The largest customer implementation to date is about 4,000 seats, but the average deal is closer to 200 seats. The company's biggest successes have been in the IT, engineering and pharmaceuticals industries, as well as in the government sector. It sells about 20% of its products in its home base of Canada, about 60% in the US and the remaining 20% overseas, mainly in the UK and Australia.

Products

When pitching to potential customers, Tenrox harps on the message of freedom of choice. Unlike some of the larger vendors that essentially offer a single, monolithic product, Tenrox has been designed for modular and incremental implementations. Customers can therefore choose where to start their PSA process and slowly work their way up to a full, enterprise wide deployment. This level of flexibility extends to allowing customers to choose whatever database they like to form the backbone of the system. Tenrox also claims that because it was initially designed for small and medium-sized organizations, it was built with a basic level of intuitiveness. That simplicity was not lost as the company scaled the product up, and the result is a product with fewer places requiring professional services help. Finally, unlike other vendors that offer either a packaged or a hosted solution, Tenrox offers either or both depending on a customer's needs. Although the company touts this as a major benefit, it will willingly admit that most enterprise customers prefer to keep their own sensitive data in-house, and that its ASP business is therefore still undersized.

Tenrox’s suite covers many of the financial angles of running project-oriented organizations. The modules of the company's core suite include tools for optimizing business processes, expense reports submission and approval, project-oriented timesheet management, customizable workflows and a requisitioning and purchase order system. Pricing for the modules runs from $100-300 per user, but many of the company's 800 customers have opted for the more economical suite pricing.

Notably lacking from this list of tools are project management and scheduling. Despite the fact that Microsoft Project and Primavera Systems between them have much of the project management business locked up, other PSA vendors have tried to build such tools into their systems. These vendors argue that the existing project management tools are not designed to easily share their information, that they aren't designed to be integrated into the overall workflow of a services company and that they lack enough vertical specialization. Tenrox, conversely, argues that these companies have done well because their products have met most of the needs of their customers and that to try to build its own project management system would be as redundant as building another J.Lo fan website. So Tenrox instead focuses on working well with these incumbent applications and providing much of the vertical expertise, with regulatory compliance in specific industries such as healthcare, for example.

To plug one hole in its product set, business intelligence tools, the company has signed an OEM deal with Business Objects. This lets Tenrox ‘s customers slice and dice their data, as well as create ad hoc reports – all crucial to providing measurable ROI, still the key measure for whether customers will lay out money for new applications.

The only requirement to run the Tenrox suite is a single Windows NT Server where the application resides. The clients are pure HTML, allowing users to use HTTP to access their data from any Web browser. In addition, Tenrox has built an email access system – users can send information to the system's central database and request information via email – mostly for use in remote locations around the world where the Web can be painfully slow.

Although the company tries to position its products as needing minimal services, customers do want to integrate their PSA system with ERP, project management and payroll systems. Without any integration partners, Tenrox must do all that services work itself. If Tenrox truly hopes to grow substantially, it will need to figure out a way to partner with systems integrators.

SWOT analysis