In mid-January, Cable & Wireless plc was given the go-ahead to acquire certain assets of Exodus Communications by the United States Bankruptcy Court for the District of Delaware. This declaration does not extend to Cable & Wireless’ proposed acquisition of Exodus’s operations and data centres in London, Frankfurt and Tokyo, which are the subject of separate agreements. Despite this wait for final clarification Cable & Wireless has been selective in which assets it is set to purchase, namely Exodus’ contracts in the US, US employees and 30 of its 48 data centres. Namely it is skimming off the cream. Twenty-six data centres in the US will be acquired, namely the most heavily utilised and migrate present users to them, and to complement those C&W already has in the US. It is difficult enough for Cable & Wireless to integrate new businesses without having to fill excess capacity, so it has adopted a selective and complimentary approach. The acquisition also includes the Exodus brand.

The acquisition is seen as an enhancement of Cable & Wireless’ ability to deliver value added services to customers. It is also part of the company’s strategy to take advantage of strong growth in the managed hosting and web services market. However, Cable & Wireless has been under some pressure to spend its cash cow or give it back to investors. The ability of Cable & Wireless to deliver integrated solutions over its IP network and IP VPN solutions is very much dependent on its capacity to integrate them, not only for Exodus but also for Digital Island. It is not clear how Exodus’ assets will be incorporated into Cable & Wireless. The cross-sell of IP solutions to Exodus customers may be possible, but how good will the integration between the two companies, and that of Digital Island? This includes back-end infrastructure and support. In order to cross sell, fulfilment must be enabled through whichever company, Cable & Wireless, Exodus or Digital Island. The overall strategy will rely on pulling together not only internal processes and applications such as CRM, workflow and support but also on creating an effective package for enterprise solutions. In effect customer fulfilment, engagement and support is enabled though some form of Virtualised Company, and branded depending on who has the relationship with the customer. Cable & Wireless and Exodus already constitute two of Cisco’s top fifty service provider customers and will therefore be in a position to provide advice and possible migration strategies.

Despite Cable & Wireless’ financial strength, scale and IP infrastructure, without effectively pulling together its acquisitions and business processes it will be unable to provide customers with guaranteed continuity and stability of service. It is not the quality of the service or applications that are normally berated by unhappy customers; it is usually the lack of customer service and support that are the real killers. If Cable & Wireless tunes-in its customer service then everything else should fall into place. The only other challenges are keeping hold of valued personnel and where there is interaction and integration between personnel, from acquired assets, that it is smooth and uncomplicated.

TekPlus believes clients should consider carefully what is in the new packages C&W offers before buying into the one stop solution provider message. Caution is a Key word in this particular case.

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Ref: TP0058A02V01