Telecom restructures e-commerce business

By ADAM GIFFORD

Telecom has folded its loss-making esolutions operation into its Advanced Solutions Group, dropping manager Sue McCarty by the wayside.

Chief operating officer Simon Moutter said Telecom would renegotiate the terms of its alliance with its esolution partners, Microsoft and EDS, to take the change into account.

It would not have financial implications, because esolutions revenue had always gone through Telecom.

"If you buy an esolutions product, you buy it from Telecom, and we pay the partners their share," Moutter said.

Esolutions was launched in February 2000 as a vehicle for the three companies to enter what was seen as a potentially huge application service provider (ASP) market selling software over the internet.

When it was clear there was little interest in renting applications such as Microsoft Office over the net, esolutions reorganised itself as an e-commerce infrastructure provider, selling services including web hosting, secure networking and online storefronts.

It made a loss last year on revenue of just over $10 million. Moutter said it had grown strongly in the current year, which ends in June.

He said the Advanced Solutions Group was focused on managing information technology and telecommunications networks for large customers, while esolutions had concentrated on e-commerce products.

"We are firing it up by piling in more resources. It will ... work on the whole solution suite rather than a segment."

Advanced Solutions has more than 300 staff. Esolutions has about 50.

Moutter said it was too early to say if there would be redundancies.

He said Advanced Solutions general manager Chris Quin would head the new group, and he was talking with McCarty about her future.

McCarty, who was employed at the start of esolutions in a marketing role and took over the top job when Jane Freeman took maternity leave, said she would not be staying in Telecom.

"I will do personal things. In my spare time ... I write business plans, so I will try to do some of them," McCarty said.

The terms of her departure "are still being discussed", but she would stay on to help with the transition. She called the restructure "a really smart move".

McCarty said esolutions was expected to lose money for its first three years and move into profit in the fourth.

Moutter said forming a new business unit was in line with a review by McKinsey & Co that predicted growth would come from value-added IT&T services delivered to business customers.