USinternetworking Names New Chief Operating Officer

In an indication that the battered ASP market can still attract top management talent, USinternetworking Inc. has tapped IBM veteran and former Scient Inc. CEO Steve Mucchetti to fill its newly created position of chief operating officer.

USi officials say Mucchetti will assume some responsibilities previously handled by former senior VP for enterprise applications Mike Harper, who recently left the company, and Nick Magliato, senior VP for global technology. Magliato remains with USi.

As chief operating officer, Mucchetti says he'll focus on helping USi build a bigger footprint in hot growth markets such as business-process outsourcing. "In a tough economy, businesses need to focus more than ever on core competencies and outsource the rest," Mucchetti says. He cites human-resource management as a market in which he believes USi can become a larger player.

Mucchetti, whose past titles include chief operating officer of IBM Consulting, also says he'd like to see USi become a bigger provider of offshore outsourcing services. "Offshore is a fact of life, and it's an important aspect of what we're going to be doing," Mucchetti says.

Despite a Chapter 11 bankruptcy filing in 2002, USi appears to have survived a market that melted down with the rest of the dot-com industry and claimed a number of once high-flying vendors, including Razorfish and Scient, where Mucchetti served as CEO in 2002.

From a field that once counted as many as 1,600 participants, research firm Gartner now counts just a handful of players in the ASP market that it says are viable. They include Agiliti, Appshop, BlueStar Solutions, Corio, Salesforce.com, Surebridge, TriZetto, and USi.

Earlier this year, USi merged with Interpath Communications and signed new contracts with high-profile customers, including L'Oreal USA, Sunburst Hospitality, and Sunoco. It also acquired CoreHarbor, a managed-services provider that focused on hosting Ariba spend-management applications. During its most recent quarter, USi says it achieved positive cash flow. The company is backed by investment firm Bain Capital.