Qwest Cyber.Solutions

Learning on the Job

Qwest Cyber.Solutions hosts, manages and integrates big hard-to-handle software packages from vendors including Oracle, SAP, and Siebel.

QCS lost $65 million from July 1999, when it was founded, to December 2000, and executives don't expect the company to be profitable before next year.

But parent company Qwest Communications International likes the revenue driven to its networking and hosting businesses. "We are unequivocally committed to the ASP industry and to QCS," says Lew Wilks, Qwest's chief strategy officer and executive vice president for Internet development.

QCS co-founder KPMG Consulting wrote off its 49% stake, taking a $63.3 million charge, when divesting non-core businesses earlier this year. Neither KPMG nor QCS will say why KPMG didn't find a buyer for its half of the business. Customers were alarmed but not panicked by the pullout, which left QCS with much experienced former KPMG talent.

Customers seem satisfied with QCS' service. The company says 42% of those customers significantly increased their initial contracts. One caveat: the young company did seem underprepared for basic project planning, says David Whitton, director of IT at Mitsubishi Silicon America. "We had to guide them more than expected," he says.

Lars Rabbe, CIO of Redback Networks, worries that QCS may not have a broad enough skillset to handle some additional projects. And he also says tight management is required. "We rotated almost 50% of the people out on the initial job, even when good people were hard to find," says Rabbe. "That's one reason it took six months instead of four."

1899 Wynkoop St., Denver, CO 80202 (303) 291-6400 www.qwestcybersolutions.com

Shareholder: Qwest Communications International, 100% Cyber.Solutions: Employs 650, plus Qwest data center personnel and sales force. Qwest, as a Whole, Has: 66,000 employees

John C. Charters CEO/President, Qwest Cyber.Solutions Before he was named CEO, Charters served as vice president of business development of Qwest Communications. He previously held a number of positions at U S West including VP of Internet services and application development. He holds a B.S. and an M.B.A. from Gonzaga University in Spokane, Wash. Rick Fresia EVP/CFO Denzil Samuels SVP/Marketing and business development A.V. (Sandy) Hamilton III SVP/Sales Marty Snella SVP/Operations Marty Barrack SVP/General counsel

Cyber.Solutions Revenue

The company says it's larger than the largest public ASP, USinternetworking, which had revenues of $134 million for the trailing 12 months

Services

Application management and hosting (QCS Ultimate Free-dom); management of hardware, security administration, disaster recovery (QCS Free- dom for Hosted Applications); installation and configuration of applications, database administration and customer care (QCS Freedom for Managed Applica-tions); an offering that includes ADP's payroll services, Cap-tura's expense reimbursement software and PeopleSoft's human resources offerings (QCS Complete Employee)

Competitors

USinternetworking, Corio, BlueStar Solutions (formerly eOnline), Agilera, Oracle.com, PeopleSoft e-Center

Reference Checks

NATIONAL SEMICONDUCTOR Ulrich J. Seif CIO/SVP (408) 721-5000 Project: Host SAP HR and financials for chipmaker EXPANETS Joe Bologna Director of IT infrastructure and services (303) 300-6300 Project: Host and manage Oracle ERP, Siebel CRM for this provider of networked communications services to small- and medium-sized businesses REDBACK NETWORKS Lars Rabbe CIO (408) 571-5000 Project: Host and manage Oracle ERP. This is the core enterprise software of this $300 million (sales) networking systems company HMSHOST (formerly Host Marriott Services) Martyn Holland CIO E-mail: martyn.holland@hmshost.com Project: Host and manage PeopleSoft HR and payroll services. Added a new process-scheduling tool to original contract earlier this year at largest food, beverage and retail service for travel industry DAIMLER CHRYSLER CAPITAL SERVICES Clarence Bastarache CIO (203) 750-7100 Project: Host and manage SAP ERP system, SAP Business Ware-housing for the financing unit of the global automaker ROCHESTER INSTITUTE OF TECHNOLOGY Jim Fisher Assistant VP for finance and administration (716) 475-6020 Project: Host and manage Oracle ERP including finan- cial and human resources systems MITSUBISHI SILICON AMERICA David Whitton IT director (503) 315-6058 Project: Host and manage SAP ERP software from QCS

Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in Baseline.