ASPs take off

ASPs take off

The ASP pheno-menon continues to invade Australian shores after Com Tech Communications and reseller Professional Advantage last week announced the formation of a new company called Managed IT to play in a market GartnerGroup estimates will be worth $US22 billion by 2003.

The ongoing rise of Australian ASPs, such as the launch of Solution 6's ASP business Centrum at the end of October, has raised questions about the future relationships between ASPs and ISPs.

In Com Tech's case, it will establish data centres in Sydney and Melbourne, as well as provide the infrastructure support, hardware, network operating system, e-mail and Internet access the new company will need to operate as an ASP.

Professional Advantage, one of the first three companies to join the Australian ASP industry consortium, will contribute to the new company's business application software and services and customer support.

`Professional Advantage is a leading provider of business application software and services. Com Tech has a wealth of experience in managing the technical infrastructure. Together our two organisations are a perfect fit for a very successful move into the ASP market,' said Guy Jacobson, GM of enterprise management services at Com Tech.

However, the future ASP model will not necessarily take the form of this partnership, with some analysts expecting ISPs to gain a foothold in the market and others predicting software vendors will go it alone, using ISPs only as delivery mechanisms.

Nick Earle, head of Hewlett-Packard's enterprise computing solutions division, added fuel to the discussion, observing at the ISP Con Fall 99 show that ISPs will be overcome by the ASP model of Internet and service delivery.

`Simple access will no longer be viable in an economy increasingly reliant on applications,' he said.

`It's not about the battle for eyeballs [Web site hits] or about a [site design] beauty show,' he said. `It's about end-to-end transactions,' because businesses are seeking instant, brokered sales, orders and decision-making.

With the advent of this service and solution environment, the future of ISPs as we know them is questionable. It is unlikely that the growing number of ASPs will be responsible for providing pure access as well. But if ISPs are shut out of the lucrative application provider market and reduced to merely being the deliverers of someone else's applications there will be a marked change in the ISP landscape.

Darron Hutchison, marketing and product manager of e-commerce solutions developer, expects there to be a consolidation of the ISP industry in the near future with ISPs being forced to move into vertical and horizontal niche markets.

Damien Brady, chief executive officer of ISP Eisa, says he has witnessed a `shrinkage of the top ISPs' of which he claims membership will soon be restricted to only three or four companies: Eisa, Telstra, OzEmail and Optus.

And according to Tony Richardson, marketing manager of application provider Progress Software, ISPs will exist to provide `basic access services'.

However, Richardson concedes that ISPs are fighting to move up the value chain and are not willing to play the role of mere access providers. Instead they are developing additional services needed to attract new customers and maintain old ones.

Brady contends that the ISP will be the most agile in moving into the ASP space because of existing infrastructure and the ability to value-add with such things as content and e-commerce applications and services.

HP's Earle agrees that ISPs will have to shift perspective and offer more complete business solutions. Businesses wanting to enter the e-business fray will turn to ISPs that offer them the best way to adapt, he said. For ISPs, the message is clear: adapt or die. `There are still a lot of people who don't get it,' he said.

Inevitably, software vendors take the opposite approach and relegate ISPs to access providers taking the more service- driven role as their own beat.

`Software companies are probably more attuned [to becoming ASPs] but they still need the help of telecommunications providers to do it,' said Rushenka Perera, Solution 6 marketing manager.

According to Web hoster NetRegistry's CEO Larry Black, ASPs will grow out of Web hosting companies, rather than software or ISP businesses. `Outside of Australia the companies that are successful at this are companies that have an existing client base. Web hosting companies are in the best position to capitalise because they are already hosting a Web site, which you can view as an application. I don't think software developers are really in a position to provide the necessary networking and infrastructure,' he said.

His view was that ISPs would continue to be in the `mass subscriber business', focusing on consumers, whereas software developers would rely on them to deliver the applications they created to the business community.

Com Tech's Jacobson leans towards a partnership model for the establishment of ASPs but obviously sees the role of the integrator replacing that of the ISP.

`Typically, organisations wanting to become ASPs have expertise within their application areas but don't necessarily have the on-hand resources or depth and breadth of personnel to manage a heterogeneous environment.'

Yet in Australia there is not the sense of urgency about the proliferation of ASPs as there appears to be in the US, with Solution 6's marketing manager Rushenka Perera predicting that ASPs will only really take off in three to five years. Similarly, NetRegistry's Black is not expecting any significant uptake of the ASP model in the near future. `In Australia we are restricted by the penetration of high-bandwidth services,' he said.

MultiEmedia's Hutchison sees several challenges to overcome before the ASP concept is truly prolific.

Firstly, there is the problem of creating software that is `lean enough' to transport over the Internet. Secondly, there's the issue epitomised by the recent outages auction house eBay experienced - the need for failsafe technology to deliver the applications over the Internet. `It is not good enough to have 95 per cent uptime. You need to have 100 per cent guarantees,' said Hutchison.

And lastly is the need to establish `synergies' between the application developer and the access provider, that is the ASP and the ISP. `Internet access as we know it will become a utility like water,' said Hutchison.

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