The initial engagement, worth A$250,000 (US$188,000) a year, will see Applaud IT deliver first-level POS application support and to a lesser extent, ISP support to 350 franchised Video Ezy stores.
"The deal is not a huge amount of money for us, but the initial commitment based on 350 franchised stores could easily double and the potential value to us will increase exponentially," said Applaud IT director Ricci Danieletto.
"There will also be an opportunity for us to provide value-added services to these franchisees, if they don't have other partnerships in place. So we were looking at a strategic partnership not only with the owners of Video Ezy corporate, but with the franchisees as well, because the franchise business model is a very different beast from a corporate engagement," he said.
Video Ezy developed its own POS application in-house and until now has had its own internal support organization from first- to third-level.
The company's general manager of IT, Julian Lamb, said he realized that he could not provide what was necessary to keep personnel in second- and third-level support.
"We're not an IT company, we're a content and entertainment company. We had a high level of turnover because our office wasn't big enough for starters, and we couldn't really offer a career path. So the high cost of recruitment and training prompted us to find a partner like Applaud," he said.
Although Video Ezy's IT department has shrunk from 20 people to 8, Lamb expects that to grow again. Liberated from the support roles, the IT department will be able to focus on expanding the capabilities that it can deliver back to the stores, he said.
"We are at the moment an entertainment and content company but we are redefining ourselves to be a service company," he said.
"As a franchised organization, we can be accused of not providing the level of service that is expected. With the capabilities of Applaud's team, we can provide support to a larger number of systems and a larger number of customers than we have been able to."
Lamb said he talked to a number of companies, all of which he'd done business with in the past, except Applaud IT.
"We got some great offers, and I'm sure a lot of them would have delivered, but we just felt Applaud were the people we could work with," he said.
"In my opinion the only way to make outsourced partnerships work is to have a very close relationship. That means we get together on a regular basis. My staff go to the Applaud offices weekly and we know all the people there so there are no communication issues. In fact, communication is better now that we have outsourced than it was when we were all in-house," he said.
Video Ezy has nearly 1100 stores across nine countries with 550 of those in Australia.
Video Ezy joins other high profile Applaud customers like Panthers Entertainment and Virgin Mobile to give a real boost to a company that just over one year ago looked all but finished.
Applauds' former parent company, Cybernet was a successful value-add reseller with more than 1000 staff worldwide including a helpdesk presence in Sydney.
The company was seized by the FBI and the IRS in late 2004 under allegations of fraud by some of the executive team. Not long afterwards, the global company collapsed and went into receivership and the CEO committed suicide. Receivers closed the operation in Australia (which already had a handful of clients) within two weeks.
"We found ourselves a week before Christmas without a company, without a job, without an office, without furniture or anything, so my two business partners and I decided to go out and talk to our customers and see if we could resuscitate our company," Danieletto said.
After about six weeks spent renegotiating leases and investing savings into a re-iteration of the previous company, Applaud IT was operational from mid January 2005. The company has grown from 15 employees to 32 today.
"We had to localize support; we had to have our own 24x7 support system here rather than using the follow-the-sun approach of Cybernet. We had to establish the helpdesk infrastructure and hire additional team members, but since then we've gone from strength to strength," he said.