Theme: Outsourcing E-Commerce is Becoming Popular
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PUBLISHER'S COMMENTS: AN EYE ON E-TRENDS
Prediction: Outsourcing E-Commerce is Becoming Popular
As of the third-quarter of the year, ECnow.com's number three top trend prediction for 1999 is mostly on target, namely that there will be a "movement of e-commerce to a service industry" and that "outsourcing of e-commerce functions will become very popular."
In this context, outsourcing of e-commerce means that a company can "rent" the use of an e-commerce application and access it via the Internet and Web either directly from the software vendor or through a new intermediary, the Application Service Provider (ASP). Small, medium and "dot.com" startup companies see the benefit of outsourcing e-commerce components that are not their core competencies. The large "click-and-mortar" companies, with legacy integration issues and large IT departments, appear to be lagging behind in this trend.
Outsourcing and leverage are two management trends that have been heavily discussed over the last couple of decades. It's important for companies to focus on what they do best and to outsource activities that are not their core competence. By outsourcing, companies can leverage the work, effort and experience of outside partners whose sole responsibility is to satisfy a particular business activity. One of our readers indicates that his company gains competitive advantage by outsourcing. "My company can take on the industrial giants through the outsourcing functions available today," writes reader A.F. of San Francisco, CA, USA. Although the industry is just at the beginning of this trend for e-commerce, there are already a tremendous number of e-commerce activities that are being provided online on a "rental" basis.
The ASP concept is growing dramatically as seen through the recent formation in May of an ASP Industry Consortium (ASPIC) <http://www.aspindustry.org>. According to the ASPIC, an ASP "manages and delivers application capabilities to multiple entities from a data center across a wide area network. ASPs offer a simple and cost-effective alternative to managing technology in-house and help customers precisely control the total cost of ownership." "What we are seeing in businesses today is that the reliance on computer technology within companies is exceeding their capabilities" according to Jaime Schwartzman, V.P. Marketing, at @ccelerate <http://www.accelerateNOW.com>, a start-up company which delivers Web-based communication and collaboration solutions for distributed and mobile workgroups.
The shortage of talented IT professionals and their ability to create integrated e-commerce enabled applications will continue to feed this trend. At this stage in the ASP evolution, there are two classifications of ASPs being bantered around in some circles: the eASP and the iASP.
In the eASP category, a number of the larger enterprise software companies have started initiatives targeted at providing their software via the Internet on a rental basis. Pandesic <http://www.pandesic.com> is a partnership between Intel <http://www.intel.com> and SAP <http://www.sap.com> whose charter is to deliver this type of solution to medium-sized companies. But success in the eASP market will not come quickly or easily due to legacy hardware, software and people infrastructure hurdles that must be overcome by prospective customers.
As to the prospects for the iASPs, the sky is the limit. Most of the traditional services and a host of new Internet-based services are currently available. Here are some examples:
For more examples, please check out either of these two Web pages:
As you can see, there are a number of companies providing e-commerce services and we are just at the beginning.
Let me leave you with a few of my favorite quotes from readers who responded to this month's survey:
A Special Note to our readers: Don't miss the upcoming ASP events in the US and Europe, sponsored by ASPIC http://www.aspindustry.org/events.html.
I hope you enjoy this newsletter.
See you in cyberspace,
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