Qwest Communications International Inc upped its commitment to the application service provider (ASP) market yesterday by partnering with consultant and systems integration firm KPMG to set up a new company to offer outsourcing services. The new business, called Qwest Cyber.Solutions LLC, will be 51% owned by Qwest and 49% by KPMG and will kick off with $400m of already racked-up business and $120m in assets, the companies said. It will bring together the carrier’s broadband optical network infrastructure and seven data centers, or Cybercenters as Qwest calls them, with 450 of KMPG’s applications consultants.
Qwest first entered the ASP market in May, when it announced an alliance with Hewlett-Packard Co to use its servers as the platform for hosting and managing outsourced software, including SAP AG’s enterprise resource planning (ERP) R/3 application suite, Siebel Systems Inc front office, customer relationship management (CRM) offerings and Oracle Corp’s ERP applications. With KPMG now on board, Qwest Cyber.Solutions will also be able to leverage relationships the consulting firm has already struck up with numerous supply chain vendors, including i2 and Pivotal, and offer their software on an outsourced basis too.
Speaking during a packed press conference yesterday, Joseph Nacchio, Qwest’s chairman and CEO, described the relationship with KPMG as a terribly important strategic announcement for Qwest, and the capstone of our ASP strategy. A strategy which, he said, would enable the carrier to be a major player in the internet outsourcing and ASP market. According to IDC, the ASP market is going to be worth $2bn by 2003, while the application outsourcing market will grow to $21bn by 2001. Nacchio wouldn’t say when the new company would announce more relationships with other software vendors, other than that news would be forthcoming. He added that the company also intends to offer an integrated solution, tying together software from SAP and Siebel for example, as one outsourced offering. As part of the news, KPMG is also developing and implementing a billing and customer care service center, using off-the-shelf products, for the new venture, Nacchio added.
Former VP of Qwest’s business development organization, John Charters, will become CEO of Qwest Cyber.Solutions. Charters said the service was principally aimed at mid-market businesses, which he said were more adept at adopting new, IP-based technology as a way of managing their businesses and also suffering the most from the current lack of skilled IT professionals. But as the business progresses, we expect to move up into the high end and down into smaller business too, adding that the company had already received interest from some large organizations looking to outsource specific application modules within their IT systems. He said Qwest had chosen to partner with KPMG primarily for its skill set; the 450 consultants which Qwest sorely lacked, and also because it felt the firm would be an important marketing partner. Someone who preaches that the key to productivity is to webify your business.
Qwest Cyber.Solutions LLC will be headquartered in Denver and is expected to begin selling its services as of July 1. Phil Garland, head of KPMG’s applications outsourcing, will be COO and new staffing appointments will be announced in the next couple of weeks. Both companies refused to give projected revenues for Cyber.Solutions, but Nacchio said that he thought the company would very quickly become the number one ASP, dwarfing the likes of fellow ASPs US Internetworking, Corio, Enron and Exodus.
