Esolutions shifts emphasis after ASP indifference

As it nears the end of its second financial year esolutions has changed tack and is no longer chasing the application service provider market.

As it nears the end of its second financial year esolutions has changed tack and is no longer chasing the application service provider market.

The Telecom-EDS-Microsoft alliance has ceased development of new ASP services. To date it has had little success with its online offerings of Microsoft Office and NettPay. By far the bulk of its business has come from its SafeCom security offering, web hosting and fax hosting service, efax.

Esolutions is now pitching itself as a provider of e-commerce infrastructure, on top of which systems integrators and resellers build solutions for their customers. Telecom provides the network, EDS the data centre and Microsoft the systems and applications. Esolutions pulls these together and has built duplicatable components, all of which comprise the framework, which it says make it capable of being an infrastructure provider. This framework comprises the data centre, an XML messaging hub that will be available commercially in the next few months, hosted applications, customer access and network services, customer care and billing and application and infrastructure management.

Channel manager Sue McCarty says esolutions has always had the operational framework but it wasn’t integrated or operating in an efficient and scalable way. The framework will be available to other service providers who will be able to brand the framework as their own and offer services on top.

With the framework close to readiness, esolutions is boosting its channel effort, the role of which is to build services on top, says McCarty.

It sells direct through its parents Telecom Advanced Solutions and EDS, and indirectly through distributors Tech Pacific and Iprolink, and systems integrators Axon, Computerland, Datacom, gen-i and Infinity Group. It’s about to kick off a reseller training and education programme and has launched an online ordering system on its extranet to make it easier for resellers to place orders.

“We’ve also had to address some key channel issues such as billing and contractual relationships,” says McCarty.

“With esolutions, resellers make a monthly commission based on customer usage of the services. This is something they’re not used to. They’re having to go from a box selling model to a subscription-based service and solution mentality.”

The completion of its infrastructure framework and its reseller focus signifies a new phase for esolutions, which ends its financial year on June 30.

McCarty won’t reveal revenue figures but says business is “on track”.

“If you scale back revenue in line with what has happened in the market we’re on target, and on track to become profitable in the third year of operation, which has always been our business case.”

The alliance’s performance also got a good report from Telecom’s internal auditors and, according to its own research, has 12% market penetration (with any one of its services) in its target market of organisations with 20 desktops or more.

It has about 70 staff, 80% of whom are from Telecom, with most of the rest from EDS, and Microsoft contributing a handful. Telecom has made the greatest investment and will realise the greatest returns, says McCarty. The returns, once they start coming, will be mainly wholesale for EDS and Microsoft.

Paul Muckleston, who represents Microsoft’s interests in the alliance, says the software company is “pretty happy” with esolutions. “We’ve learned a lot about what customers want and where the market’s at. Everybody including the analysts such as Giga Group and Gartner Group overestimated the market.

“For us it’s an investment in the web services environment and it will take several years before that environment becomes clear, but it means that at least one of the large players will be building on Microsoft technology.”

Sue McCarty takes over as acting general manager of esolutions shortly, while Jane Freeman takes maternity leave. McCarty was seconded to esolutions from Telecom in 1999, where she was marketing manager for online and professional services. She has done a stint with EDS, working for the services firm in the UK for five years in business analysis, project management and communications outsourcing positions. She worked for Telecom-subsidiary Netway on returning to New Zealand in 1992. Freeman will return next year.

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