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Telecom and GDC terminate agreement

Posted on: Sunday, 18 January 2004, 06:00 CST

Telecom and listed contractor GDC have terminated an agreement under which GDC had rented out business software hosted on its own computers to Telecom customers over the Internet.

Telecom agreed in November 2002 to market GDC's iVASP software rental service to its customers.

IVasp customers paid a monthly fee for software licences and IT support, server hosting and network infrastructure provided at a central site by GDC.

The arrangement was expected to run for two years, but had a clause allowing early termination and is now effectively over, GDC chief executive Geoff Lawrie said.

GDC originally hoped the relationship with Telecom would bring in $10 million in revenues in 2003, but both companies said the partnership failed to meet expectations.

Telecom signed up only a handful of customers to GDC's iVASP service, Telecom Advanced Solutions commerce services business manager, Hugh McKellar said.

The telco has growing faith in the potential of the rental software or application service provider (ASP) market and McKellar said Telecom is planning to launch its own ASP service.

It will host software in its own data centres and forge relationships with software suppliers, bringing tasks previously performed by GDC in- house.

Details of Telecom's ASP offering, called Officeware, will be announced within the next two months. Like iVASP, Officeware is expected to provide a full suite of business software for mid-sized firms, including desktop productivity tools.

Lawrie said he did not expect parting ways with Telecom to have a material effect on GDC's business.

Its iVASP rental software division generated revenues of $1.7 million from non-Telecom clients in 2002 and Lawrie said direct business doubled last year.

Telecom's plans for selling rented software will grow the ASP market, he said.

"We regard Telecom's decision to develop its own ASP service as a vote of confidence in the validity of the ASP service model."

Demand for ASP services was growing steadily, he said.

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