For Knoll Pharmaceuticals Co. sales-force automation is an essential ingredient for maintaining a competitive advantage. And the 1,300-employee Mt. Olive, N.J., firm, a division of BASF Corp., has embraced the technology in a big way. It uses Siebel Sales to manage the intricacies of selling products across numerous channels. Yet, if you wander into Knoll's offices you won't find any servers or software. Everything resides 230 miles away at USinternetworking Inc.'s Annapolis, Md., facilities. "With the scarcity of IT personnel and rapid pace of technological change, it made sense to turn to an application service provider [ASP]," explains Ed Finney, director of sales operations. In this case Knoll chose USinternetworking (USi). The system has allowed Knoll to leapfrog from a creaky DOS-based system to state-of-the-art software quickly and painlessly. Nearly three years ago, when the pharmaceutical-marketing scenario changed as HMOs began making more drug decisions, Knoll recognized that it had to begin selling products differently. "We knew that we needed technology that could address widely varying marketing and distribution channels," says Rick Ofeldt, director of information services. Although it considered licensing the software and relying on its internal hardware and staff, an internal cross-functional team decided that outsourcing to an ASP made sense. Knoll interviewed several companies and inspected various data centers, taking a close look at whether different application service providers had the right capabilities, facilities, and project templates to ensure success. In the end, Knoll opted for USi. The ASP began configuring the product in September 1998 and Knoll went live with Siebel Sales in April 1999. Actual implementation took only 45 days. Not surprisingly, Knoll faced some formidable challenges along the way. Mapping and moving data from the old system to the new was a mammoth task. In fact, it required a constant reevaluation of processing capabilities to ensure that the final system would operate at maximum efficiency. Although Knoll handled the data mapping, USi performed the task of actually slotting everything into an Oracle database. In addition, Knoll had to ensure that the data would be available for other applications that remained in-house, including business intelligence tools and reporting systems. For example, one particularly vexing area centers on government requirements that mandate that pharmaceutical firms track samples. "We had to make sure that we could feed data from the sales-force automation system to an outside company that validates that samples have been properly handled and delivered," says Finney. Today more than 800 Knoll representatives in the field use Siebel Sales to interact with a diverse range of customers. The fact that an application service provider manages the system is completely transparent. Every day reps access information through their notebook computers, enter data as they complete sales visits, and then upload files directly to the USi server in Annapolis. A T1 line connects the data center at USi with Knoll's computers in New Jersey. Ofeldt says that the system has worked nearly flawlessly and that response time has been excellent. It also has proven to be highly secure. USi uses a firewall to separate Knoll's data from other firms using the data center. That makes the chance of an intrusion almost nil. "Security was a major issue," admits Ofeldt. "We were deeply concerned about the possibility that others could gain access to our data. But after we inspected and evaluated USi it was apparent that adequate safeguards were in place." Much of Knoll's success can be attributed to upfront planning. Early on it negotiated a strict service-level agreement with USi. If the ASP fails to maintain agreed-upon service levels, the pharmaceutical company can receive compensation. So far, Knoll hasn't had a single event that has triggered a penalty clause, says Ofeldt. When a few minor glitches have occurred, the ASP has quickly fixed the problem. "We feel that we have clearly made the right decision," adds Finney. Cost wasn't a primary consideration in the decision to outsource. In fact, Knoll decided early on that it was acceptable to pay a premium, if necessary, to ensure that the entire system functioned seamlessly. Ultimately, "It was all about sidestepping IT labor issues, reducing the risk of obsolete technology, and diminishing the complexity of the implementation. In the end, it was a strategic business decision rather than an initiative based on ROI," notes Ofeldt. Nevertheless, Knoll Pharmaceuticals has pocketed some savings as a result of using an ASP. It also has realized an unanticipated benefit. With the additional resources of an application service provider, it is now possible to temporarily expand network capacity and create duplicate computing environments to test new applications and perform upgrades. "There's no way we could otherwise justify creating a full-scale environment for a couple of months," explains Ofeldt. At this point, the company is looking to add additional ASP systems in the months ahead. Says Finney: "No environment is perfect and there are always tradeoffs, but the ASP business model works. It has helped us evolve quickly without taxing our internal resources."