Net provider sold on ASP model

Network service provider Expanets has been growing fast, acquiring more than 25 businesses, including a division of Lucent, during the past three years. Given that uniting these operations would be no easy task, Expanets decided to go the application service provider route for its integration needs.

What resulted is one of the biggest ASP contracts to date - a five-year, $22 million deal with Qwest Cyber.Solutions (QCS). Under the agreement, Expanets' Oracle enterprise resource planning and Siebel customer relationship management applications are being hosted on dedicated Sun servers in Qwest's Denver data center, just minutes from Expanets' headquarters.

Joe Bologna, director of IT infrastructure and services for Expanets, says it wasn't tough to make the decision to turn application management concerns over to an ASP. He says he can now get his applications up within one month - rather than six to nine - and the upfront cost is reduced considerably.

Bologna says his staff can go from a "tactical mode to a strategic mode," focusing on the direction of the company and its technology, instead of on handling mundane application-related issues. In addition, Bologna doesn't have to bring on the extra staff he would have needed to handle applications internally.

"If your systems aren't optimized or constantly watched or in a scalable mode, you run the risk of having the application shut down or become unavailable, which could cost several million dollars a day," Bologna says. "So we take that headache we would have internally and pass it on to the ASP, and they manage it for us. We feel very comfortable with them doing this for us. They've done it before."

Expanets began looking for an ASP in November and signed the contract with QCS in February. Location was a big reason for choosing QCS, but that wasn't the only one. Expanets looked at four ASPs, including Winstar, before settling on QCS because of its people and its ability to meet aggressive deadlines, Bologna says. QCS's access to parent company Qwest's data centers and network backbone was also a big plus.

"They pretty much had me when I walked in the door at the [data center]," he says. "The facility they took us through was top notch. . . . You can tell a lot about the commitment a company makes when you see their centers."

Bologna was also impressed with the service-level agreement offered by QCS, and the ASP's willingness to negotiate an SLA to meet Expanets' needs. Expanets' SLA calls for 99.7% uptime in a fully clustered environment.

QCS plans to have a development environment up and about two dozen users online this month. The rest of the users will be added during the next year, with 3,500 employees ultimately accessing the hosted Oracle and Siebel apps.

Arthur Andersen worked with Expanets to design and implement the new applications. Bologna says Expanets had to install a DS-3 line and a router to connect to the QCS network. "QCS is supplying everything else for us," he says.

As Expanets prepares to convert all data from the different companies it has gobbled up into an integrated environment, Bologna says he will probably outsource storage duties to QCS as well.

"A lot of companies think about control in terms of when you give up something like this," Bologna says. "What really worked well for us is the ASP can implement and manage the infrastructure. That is the most critical piece."

Contact Senior Writer Jennifer Mears