Sprint Takes ASP Route, Too

Posted: 12/1999

Sprint Takes ASP Route, Too
By Ken Branson

Like its competitors–namely Qwest Communications International Inc., Denver–Sprint
Corp. soon will become an applications service provider (ASP). It has formed an alliance
with Deloitte Consulting, New York, to offer applications hosting services to corporate
customers. The "alliance" stops short of a joint venture, but may not stop short
for long, according to Marc Schwarz, general partner at Deloitte Consulting, a subsidiary
of Deloitte Touche Tomahtsu, New York.

"Given the situation pending between Sprint and MCI WorldCom Inc., it made sense
to form a strong alliance now and look at other possibilities after the merger,"
Schwarz says.

Sprint and MCI WorldCom have agreed to merge, and the merger is expected to close in
the next 12 to 18 months.

Specifically, the alliance will offer large corporate customers outsourcing of
e-commerce applications, including enterprise resource planning, customer relationship
management, supply chain optimization systems and data warehousing. Schwarz says the
alliance will offer these services with an end-to-end service level agreement (SLA), and
all on one bill.

The division of labor is the expected one: Deloitte provides applications,
implementation, integration, maintenance and training; Sprint provides the pipe.

"First and foremost, we have assets and expertise in place," Schwarz says.
"Customers needing global coverage will have it."

The division of labor and the claim of unparalleled expertise are both mirrored in
similar arrangements made by other carriers, most notably Qwest and KPMG LLP, New York.
Qwest Cyber.Solutions LLC was formed in June.

"We have the network infrastructure to begin with, and the ability to deliver the
software, the functionality around that software and business advisory services as
well," says Ben Shelton, senior vice president-marketing for Qwest Cyber.Solutions
LLC. "It’s gone quite well. We actually have been delivering to customers. We’re an
up-and-running company, a full-service ASP."

John Haworth, the joint venture’s vice president-business development and corporate
strategy, thinks his company has an advantage over the Sprint/Deloitte alliance because it
is a company, and not an alliance. "Who owns the customer relationship?"
he asks, rhetorically. "Who makes sure the customer is served well?"

Schwarz points to the alliance’s promise to offer its clients one contract–"the
contract is with the alliance"–and one bill. He also points out that the
Sprint/Deloitte alliance will offer an SLA.

Haworth says his company has landed clients ranging "from startups with no
infrastructure to Fortune 100 companies with lots of it." Schwarz says the
Sprint/Deloitte alliance will take the heavy end of that continuum, thank you very much.
"Our targets are Fortune 1,000 companies, our (Deloitte’s) major clients of
today. They’re faced with handling legacy systems, enterprise resource planning and now,
e-commerce. Typically, they don’t have the expertise and talent in-house to do all
that."

Sprint and Qwest are not the only long distance carriers to figure out that even large
companies are willing to pay them to manage some of their complex functions so those
companies "can concentrate on what they do best." AT&T Corp. and MCI
WorldCom, in whose embrace Sprint is about to rest, have considerable experience in
outsourcing business applications. However, neither has struck a deal with a consulting
firm, and so they manage mainly communications functions for their clients.