Pandesic users still in dark

Shuttered e-commerce ASP mum on fate

Pandesic LLC handed out pink slips to many of its employees last week, fueling concern among its users who are anxious to learn of their own fate with the e-commerce application service provider.

On Aug. 8, an ad hoc group of "dozens and dozens" of its 100-plus customers sent an e-mail with 10 questions to acting CEO Catherine Yetts. But she has yet to respond, according to Brent Cohen, chief operating officer and co-founder of eHobbies.com Inc. in Santa Monica, Calif. Yetts couldn't be reached for comment and company representatives declined comment.

Cohen said "most Pandesic customers" have begun using conference call facilities every Tuesday to exchange information and quell rumors. Most important, he said, "we are able to speak with one voice."

So far, the conversation has been one-way. Official information from Pandesic, which is wholly owned by Intel Corp. and SAP America Inc., has been slow in coming, users said. They hope the frosty response thaws before the winter buying season hits.

"We are all focused on the holiday season coming up," said Tony Parziale, chief technology officer at Atlanta-based Folded Edge Inc., an online fashion retailer. "It's not the time for an unplanned infrastructure transition."

For example, Parziale said Folded Edge's contract doesn't specify the format the company's proprietary data will be returned in. "If it just comes in a comma de-limited format, it won't do me much good," he said.

Jim Boeckman, an attorney at Vinson & Elkins LLP in Austin, Texas, said large companies will find themselves increasingly at risk as they drive down costs and outsource ongoing operations or use application service providers (ASP) for quick tactical projects.

"More data gets put at risk," he said. According to Boeckman, it's vital for information technology managers to be thorough in their due diligence of potential ASPs, even to go as far as to look at the service providers' financial statements.

"And you have to be prepared to move quickly with contingency plans," he said.

EHobbies.com had already created a detailed transition plan for itself, according to Cohen. The company had always planned to move operations in-house and had intended to part ways with Pandesic this summer, well before the holiday shopping season. But the stock market tumble in April hurt eHobbies.com's valuation and led the company to "put that plan on hold," he said. So Cohen signed another contract with the ASP.

The transition plans, however, are done, and Cohen says he feels confident.

"We've already taken components out from Pandesic," Cohen said.

At Folded Edge the news isn't so good. Parziale said that the start-up's second round of investors backed away once the news about Pandesic's closure became known to them.

"This could not have come at a worse time," he said. However, the company does have the money to make it through the holiday season, he added.

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