Consider it a threat or consider it an opportunity, but the emerging application service provider (ASP) market is quietly but quickly gathering steam.
Last week, Microsoft almost secretly announced it would trial a program to enable a limited number of ISPs in the US to begin leasing out its BackOffice software suite.
One of the pioneering ISPs will be FutureLink Distribution Group, which will offer Microsoft SQL Server, Exchange and Windows NT Server on a Subscription Access License (SAL).
Microsoft Australia, not surprisingly, downplayed the landmark offering as just a US trial.
FutureLink's CEO, Cameron Chell, claimed it was "a pivotal development in the licensing of software in the ASP arena".
However, he is far from the only one who believes that the ASP model will fundamentally change the way software is sold and licensed. A group of 25 heavy-hitting vendors and service providers - including AT&T, Cisco, Sun, and MCI WorldCom's UUNET - have established the ASP Industry Consortium.
The Australian representatives, which include local pioneer Solution 6, will hold their first briefing session this week.
Solution 6 also announced last week what could be the first ASP trial in Australia, with a deal that will see it donate an ASP SAP solution to Unicef.
While companies like Solution 6 see the ASP market as a golden opportunity, some analysts and observers believe it could spell trouble for many in the channel if it replaces the traditional way that software has been sold and distributed.
Nick Fish, managing director of software developer FishTech, said he saw the ASP market as a way of "driving costs out of the process".
"This may present some risk to the channel if the channel is seen as a cost," he said.
However, he was largely optimistic about the concept.
"It makes applications that are otherwise out of reach of SMEs in terms of cost more accessible - making the market bigger. Outside of the top 500 companies, who can afford a $5 million accounting system?
"So what you can do is make that accounting system available as a service."
Fish expressed some concern about the combination of ISP skills relating to hardware and security with information and applications.
"I think there is more homework that needs to be done on back-end integration with front-end systems, but it gives ISPs a real value add by being able to provide access to an application securely," he said.
Stephen Jones, managing director of network integrator Coefficiency, was sceptical that the ASP model will take off.
"It's not a new idea, and I'd be interested to know why users went away from the old 'timesharing model' [of 20 years ago] and why they'd now go back to it. The business issues are much the same, even though the technology is different," Jones said.
Members of ASP Industry Consortium
AT&T Exodus Communications SaskTel
AristaSoft FutureLink Sharp Electronics
Boundless Technologies GTE Sun MicrosystemsCitrix Systems Great Plains Software TelecomputingCisco Systems IBM Corporation UUNETCompaq Computer Solution 6 Australia VerioCylex Systems Marimba Wyse TechnologyErnst & Young LLP Onyx Software