By Stephen Phillips
Computer services company Ciber Inc and internet systems integration and web hosting company Verio Inc unveiled a letter of intent yesterday to strike up an applications service provider joint venture they say will offer the first single source for all components of applications outsourcing.
The venture, which pending board approval from both companies will be sealed in a definitive agreement by April 2000, will straddle business software applications, network services, hosting platforms and data centers. The two companies, neighbors in Englewood, Colorado, said the end-to-end nature of the offering would enable the joint venture to steal precious competitive advantage in the burgeoning ASP market. Because we own and manage all the infrastructure and applications we can guarantee service levels to customers, [whereas companies involving] other vendors have less control over services, Matt Bell, Verso’s director of corporate communications told ComputerWire. The companies hope the joint venture will be a vehicle to snatch business in the ASP market, which is tipped by industry watcher, Dataquest, to be worth $23bn by 2003. Services will be pitched at small to mid-sized businesses, which lacking the budget of their larger Fortune 1000 counterparts for in-house IT systems are seen as the natural customers for ASPs offering remotely-hosted applications for rent.
The core of the planned joint venture will be Ciber’s 1000- strong, wholly-owned subsidiary, Ciber Enterprise Outsourcing, which provides remotely-hosted enterprise resource planing applications and related services. The unit will take a 42% stake in the venture. Verio will sink $30m into the venture for a 39% stake. It will contribute its global datacenter network, web hosting platform and telecommunications circuits for internet connectivity. Local high-technology venture capital firm Centennial Ventures, a co-founder of Verio, will invest $15m in the new company for a 19% stake.
Verio said the applications portfolio the venture would offer added up to the broadest range ever. The venture plans to offer ERP and customer relationship management software plus additional business applications from JD Edwards, Lawson, PeopleSoft and Siebel. Verio’s Bell said the offering would also encompass Microsoft’s office applications later next year. The venture will be touted to Verio and Ciber’s existing customer bases, which currently span more than 100 companies, as well as new customers. It will also be a platform to cross-sell the two companies’ separate services. The new company will be named after a definitive agreement has been signed, the spokesperson for Verio said.
