It's called a reverse auction -- bidders vie for the right to sell their products instead of the right to buy them. And it could change the face of corporate telecommunications transactions.
The folks at Applied Research Technologies (ART) in downtown Salt Lake City say they've been able to save their customers millions of dollars for huge-ticket purchases of telecommunications products and systems.The auction software, part of a product called ARTools, is "the first time we've done something for ourselves. With it, we've invested capital in our own resources to generate economic benefits for our clients and ourselves," according to company co-founder and president Brad Buxton.
What it amounts to is a sophisticated way for clients to sort through the bids they receive when they send out requests for proposals (RFPs). The days of several staff members locked in a room poring over pages and pages of proposals are gone with ARTools. Instead, the software lets the client weigh what's important to him, whether it's low price, so-called "deal breakers," terms of the sale or the level of service to be provided with a contract.
Through a simple online point-and-click process, invited "bidders" can put together and submit a proposal in a very short time, compared to what used to be a complicated, rather hair-raising process. And the calculations are done immediately, so both client and bidder instantly know where they stand, allowing nearly instant adjustments to a bid that can result in a sale rather than a missed opportunity.
The RFP process is taken from weeks or months to less than seven days, if desired. And it's "a purely objective and fair bidding process with an audit trail," Buxton said.
We're not talking little bitty auctions, either. Some run into the hundreds of millions of dollars and, in such a sale, savings of $90 million are not unheard of. And because many of the ART's clients use several different carriers who all bill in different formats, the auction puts the information into a single format that is consistent and readable regardless of who provided the bill.
No more fruit salad. It's about comparing oranges to oranges and buying the best one.
Buxton believes ARTool's reverse auction is going to change how Fortune 500 companies like Quantum Corp., which recently signed on, buy and sell their telecommunications products and services. Savings in time, personnel resources and money will be both "dramatic" and "immediate," he said. And the company "guarantees the outcome against our fee."
ART makes its money on an annual subscription fee for use of the software and a one-time use fee each time a company runs a reverse auction.
It's a logical but innovative next step for the 15-year-old Applied Research Technologies. The privately owned business advises mostly Fortune 500 companies and high technology, Internet-focused clients on the purchase, design, implementation and audit of their telecommunications services.
"We're networkers," said Buxton, who has set up headquarters in the historic Felt Electric Building off 200 South, surrounded by brick walls, stained glass and classic paintings. "We've always done networking, although it was primarily telephones back then."
Technology has changed. The company's focus hasn't. ART is an "objective consulting company" that has never strayed from its job watching out for the needs of end users, where most other companies work with both buyers and sellers. And the clients are not just any end users, but some of the biggest names on the Fortune 500 list, with clients who are "most of the large household names," including Internet merchants, very large biotech companies and large financial institutions.
Even the definition of networking has changed in the past decade and a half. No longer confined to phones, their playground includes any systems that move voice or data, phone to e-mail, wired or wireless.
For "very, very good money," Buxton and company will analyze a company's networking needs, provide an economic analysis, do research and give the economic justification for a suggested network system, from cost to financial benefits, risk, how long it will last, performance gains and the impact on the company. After determining the company's needs, ART looks at traffic flow and decides what network configuration would best serve its client.
It's a big/little business with about 50 employees and millions of dollars at stake.
When ART licensed its ARTools software to Quantum, Quantum got the typical package, including the ability to automatically audit, track and manage every aspect of its telecommunications services, including the ability to use the reverse auction for its contracts for complex global voice and data networks. The software will read and interpret bills from major carriers like AT&T and MCI so clients can bypass many of the manual processes that used to be required for awarding contacts. The auction frees up workers to do other things while slashing the amount of time it takes.
Need a network system by the end of the month? It could happen.
You can reach Lois M. Collins by e-mail at lois@desnews.com