Canadian firm brokers outsourcing

A Toronto-based company is attempting to help enterprises find the right vendor for their outsourced services with what one industry observer called a “not-so-new, yet revolutionary, model.”

CanXCentral acts as an independent agent to help companies compare offerings and services from various vendors and providers in order to find the solution that best meets their needs. The firm focuses on sourcing collocation, bandwidth and managed hosting services, but will also oversee the implementation of equipment and data, monitoring and technical auditing and performance testing.

The company begins by assessing its clients’ telecommunications, collocation and Internet costs, and is then makes recommendations on what needs to be added, removed or adjusted. According to the company’s president, Christopher Ridabock Jr., CanXCentral is then able to find various companies that will fit the customer’s bill of requirements, and is even able to help negotiate a contract on the customer’s behalf.

“We’re trying to redefine how people think of acquiring services,” he said.

All of this is done at no cost to the customer because CanXCentral gets paid commission from the supplier once a contract has been signed.

The model that the company is based upon is nothing new, but it is revolutionary given its application within the telecom industry, according to one industry analyst. Jason Bremner, senior analyst, outsourcing services at IDC Canada in Toronto, said that CanXCentral’s role could be likened to that of a mortgage broker. If looking to purchase a home, a client would go to a mortgage broker, who would be able to offer a slight discount off the prime mortgage rate. The broker would set that up through the bank on the client’s behalf.

“Who pays the mortgage broker? Do you pay the mortgage broker? No, because they take a cut off the mortgage rate that they get you. So it’s essentially the same kind of model.”

Despite the company’s commission-based structure, Ridabock stressed the company’s dedication to vendor neutrality and said the company maintains a “strict fiduciary duty to our clients.”

The fact that CanXCentral gets paid based on the contacts it orchestrates would not affect its vendor neutrality, according to Bremner.

“I think it’s entirely probable, if not plausible, that they are going to keep their impartiality because they’re representing the client,” he said.

Again using his mortgage-broker example:

“Do you think your mortgage broker is somewhat independent? Yeah, they’re going to keep their impartiality. They have to,” Bremner noted. “Part of the way they keep their impartiality is they get the same kind of pay from each different company. So if for some reason someone wants to give them more money…potentially they could lose their impartiality, but I don’t think that’s the business model that CanXCentral is looking to do.”

The Greater Toronto Marketing Alliance (GTMA) in Toronto heard about CanXCentral and thought it might benefit from its expertise. The GTMA is a not-for-profit company with six employees. Last year the firm decided to switch from dial-up to high-speed Internet access, but was unsure of where to begin. Tony Romano, the company’s director of corporate affairs, said the GTMA was getting a lot of advice about what to go with, but that just made the situation all the more confusing. On top of that, money was of definite concern.

“We receive money from both our public- and private-sector partners, municipalities, the regions, federal and provincial government, a whole broad section of private sector companies, from financial institutions to accounting firms, legal firms, et cetera,” Romano explained. “So we’re always under a microscope when we’re looking at spending our dollars.”

Romano said he heard about CanXCentral through some partners. Once on board Ridabock came in and spoke with the employees.

“He did an outside sort of survey, talked to staff, asked them what their needs are, what some of their challenges were, what worked, what didn’t. So he did a fairly thorough assessment in terms of what we needed and also reviewed it within out budget parameters,” Romano said. “And then he went out there and sourced and during that whole process kept in touch with us and making sure that our needs didn’t change, and where he was going with our request.”

Romano was thoroughly impressed with Ridabock, and said he continues to work with him.

“I found the relationship to be very rewarding. You get a sense as to whether people are doing it as just another invoice, or another sort of part of their business. But I think he understands what we need, and I think that helped to go a long way in terms of finding the right package at the right price for us.”

And while it might be the only one in the market right now, Bremner said that CanXCentral could find similar companies cropping up in Canada – once the market increases.

“The overall systems infrastructure, the hosting services marketplace, has to take off before [other companies] start to get involved,” he explained.

CanXCentral’s is also targeting U.S.-based businesses, offering Canadian-based hosting with a discount due to our low dollar.

While headquartered in Toronto, CanXCentral has sales offices in Vancouver and Calgary.