Cap Gemini Spins Off ASP, Systems Integration Unit

Computerworld - Just months after Paris-based consulting firm Cap Gemini Group SA purchased Ernst & Young Consulting Services, the combined firm, Cap Gemini Ernst & Young U.S. LLC, last week spun off its systems integration and application service provider (ASP) business as an independent company.
Dave Boulanger, a research director at Boston-based AMR Research Inc., said independence would let the company move more nimbly to expand its ASP business than if it were tied to a larger consulting firm. By leveraging its relationship with Cap Gemini Ernst & Young, it could target enterprise ASP customers, he added.
Jim Hunt, president and CEO of EYT, the new name for the spun-off unit (formerly Ernst & Young Technologies), said that the parent company's decision was a financial one. As Chantilly, Va.-based EYT tries to expand its ASP business, it will likely face losses in the near term that would have dragged down revenue at Cap Gemini Ernst & Young. Also, as an independent, it's more likely to attract investment from outside, Hunt said.
Under its arrangement with its former parent, EYT will serve Cap Gemini Ernst & Young customers that have less than $1 billion in revenue that want to buy ASP services for applications from Lawson Software in St. Paul, Minn., and Great Plains Software Inc. in Fargo, N.D., said Craig Johnson, director of ASP solutions at Cap Gemini Ernst & Young.
EYT's relationship with Lawson, as well as with Cap Gemini Ernst & Young, makes it more attractive as a provider of ASP services than other candidates, according to Patrick O'Neill, e-commerce marketing manager at Web-based water-systems vendor H20products.com Inc.
H20products.com is a subsidiary of Blake Equipment Co. in Bloomfield, Conn., which uses Lawson's financial applications and back-office systems.
Although his company has no immediate plans to hire an ASP, O'Neill said, it would more likely choose an ASP that has a relationship with a reputable consulting firm.
EYT's partnership with its former parent company would enable it to host the more complex, customized applications large companies demand, said Julie Giera, an analyst at Giga Information Group Inc. in Cambridge, Mass.
EYT has attracted more than $50 million in capital from investors. It had revenue of $77 million last year.