Its a Good Call

WorldCom partners with KPMG, among others, for managed services push.

WorldCom is targeting hosting as one of its key growth markets and plans to enlist partners as sales agents and integrators.

The company, which suffered from slowing growth throughout 2000, last week unveiled alliances with four companies to help drive its hosting effort: EMC, KPMG, Lucent Technologies and Technology Solutions Co. (TSC). EMC and Lucent, although mainly product vendors, have professional services operations. KPMG and Chicago-based TSC, meanwhile, are traditional IT consultancies.

The partnerships come at a critical time, as WorldCom president and CEO Bernard J. Ebbers strives to move beyond the weakening long-distance market to target data services.

WorldCom projects that voice will drop to 26 percent of its full-year 2001 revenue from 30 percent of its Q3 2000 revenue. Revenue from data, dedicated Internet and international sources will increase to 74 percent of 2001 revenue, versus 70 percent in Q3 2000, the company says.

WorldCom hopes its partners will drive hosting business in its direction and provide integration services, once hosting deals are struck.

Ron McMurtrie, VP of e-services at WorldCom, says partners "help create another form of distribution" for the companys services. WorldCom executives say the company is talking to additional partnering prospects but declined to identify any potential candidates.

Under the alliances, WorldCom will serve as the "de facto e-business provider," says McMurtrie. With WorldCom acting as prime contractor, partners will "assist in driving a total solution" that includes pre-engineered hosted platforms and application integration, according to the company.

WorldCom is particularly interested in pushing managed hosting solutions, rather than co-location. The dot-com meltdown has slowed demand for co-location, WorldCom execs say.

The company envisions managed hosting centers on pre-engineered platforms—a mass-productization approach to hosting—as well as backup and restore capabilities, monitoring, and security. The strategy is similar to that of Exodus Communications.

WorldCom has 20 data centers either open or about to open in as many U.S. and Canadian cities, with 19 additional centers running or scheduled to open in Europe and the Asia/Pacific region. Gartner Groups Dataquest unit forecasts the U.S. hosting market to grow from $2.1 billion in 1999 to more than $9.3 billion in 2004.

WorldCom attributes its revenue growth goals to the success of Web hosting and two other key initiatives: Web customer-service centers and IP-based virtual private networks.

Brian Brewer, senior VP of marketing at WorldCom, calls those efforts "critical for meeting top-line objectives." But WorldCom execs would not discuss specific revenue targets for Web hosting and the other growth areas.

Either way, data is the new play.