   
|
FEATURE ARTICLE Theme:
ASPs Expand Their Offerings and Customer Base | ||||
|
The Evolving
ASP's: The Right Track in the "Internet-time" Environment
The e-commerce entrepreneur operates in a business environment that would seem like science fiction to business leaders just a generation or two ago. "Warp speed" barely begins to describe the level of responsiveness and expectations levied on the enterprise by customers and investors. "Friction" is considered a four-letter word. The enterprise is forced to deploy rapidly and robustly, offer seamless integration, and provide superior customer service and reliability -- lest it vanish into the black hole of would-be e-ventures E -businesses have a very real dilemma. To position themselves strategically, they need to focus on their core competencies. However, they now must also execute flawlessly and provide superior support, which they can only do with strong application capabilities and a sound IT infrastructure. For an enterprise to develop these critical capabilities in-house, it must pay hefty software license fees, attract and retain hard-to-find IT professionals to install and maintain the software, and build and maintain the IT infrastructure. This all requires a lot of time -- arguably the scarcest resource of all. The sad truth is that the demanding capital, HR and time-to-market requirements put these critical capabilities fiscally out of reach for many e-businesses, particularly small and mid-sized enterprises. It's a classic Catch-22: the company can't afford to make the investment, but also can't afford not to. So what is an e-business to do? The solution of choice for many companies has been to hire application service providers (ASPs) for their software application needs, and other highly evolved ASP categories such as management service providers (MSPs) for their IT infrastructure management needs. The ASP Industry Consortium defines an ASP as an organization that "manages and delivers application capabilities to multiple entities from a data center across a wide area network (WAN)." Basically, an ASP manages and delivers software and/or services in an efficient and scalable model in which companies essentially rent access to software over the Internet or a WAN for a monthly or "pay-as-you-go" fee. The ASP owns the software license and leases access to the application to its customers. Most ASPs offer packaged software applications, systems implementation and integration, data centers and connectivity, and application monitoring and support. Compared to in-house solutions, the ASP approach has lower front-end investment requirements and more predictable costs, making these services viable for small and mid-size businesses. Some ASPs provide these services completely online, bringing the costs even lower. If leading market research proves to be correct, the ASP business model will continue to grow at a tremendous rate. Forrester Research projects the market for application hosting will reach $11.3 billion in 2003. Still other forecasts predict the ASP market will reach $20 billion in 2003. Undoubtedly this kind of growth will further spur the evolution of the ASP. But it's already evolving. One of the latest trends to emerge in the ASP market is the management service provider, or MSP. The MSP is based on the ASP model, but goes a step further by taking on the added responsibility of actually managing an enterprise's IT systems. This is critical to e-businesses, which must constantly know the status and performance level of their information resources -- everything from identifying Web site problems before their customers do, to ensuring that company vendors are performing up to their service-level agreements. If they fail to stay on top of their information systems, the costs can be staggering. The October 1999 issue of this publication estimated that enterprise customer downtime costs e-businesses a whopping $13,000 per minute, on average. This figure underscores just how critical it is for e-businesses to be able to instantly identify when they have IT problems, and to subsequently troubleshoot, isolate and fix those problems with minimal disruption to service. An e-venture gets few chances to prove its reliability to customers before it completely loses its competitive edge. Once again, the Catch-22 of developing infrastructure capabilities in-house applies. But businesses are discovering that having an MSP take over responsibility for monitoring, measuring and reporting on the company's servers, networks and applications can allow the business to fully focus on its core competencies, while still maintaining control at the wheel. According to Gartner Group analyst Stephen Elliot, who coined the term "MSP", this is a good strategy for companies that want to gain control of their internal IT infrastructures. Benefits that MSPs offer their customer companies include comprehensive reporting on IT resources and quick isolation of problems that arise. This ensures optimal availability of IT resources within the company and externally to its customers. MSPs also provide companies with the advantages and stability of an ongoing, long-term relationship, married with a fresh, outside perspective Stephen Elliot predicts the reliance on MSPs will continue to increase, driving the MSP market to reach $2 billion by 2003. As outsourcing of applications and IT systems management through ASPs/MSPs increases, the affordable access these solutions offer will increasingly provide e-ventures with a competitive capability, regardless of enterprise size. But as in any business, not all ASPs and MSPs are created alike, and it pays to do your research. Here are some things to consider when selecting an ASP or MSP for your e-business:
The MSP is probably your future. Look inside your company and ask yourself, are we a technology company making technology work inside and out side our company. Or are we a business focusing on our core competencies and allowing someone else to focus on technology: their core competence. *Paras Gupta is CEO and co-founder of @Manage (www.atmanage.com), a management service provider headquartered in Sunnyvale, California. Gupta, a former senior analyst with Exodus Communications, was also co-founder and CEO of the highly successful Unify Consulting Group.
Back
to the main ECMgt.com Page (http://ECMgt.com)
| ||||
Home
| Express Your View | eZine
Signup | About ECMgt.com | |||||
|
ECMgt.com is produced by ECnow.com (http://ecnow.com) |
