Tequinox, an ASP specialising in the utilities vertical, has attracted a long-term outsourcing contract from Tarong Energy, a Government-owned power company in Queensland.
In a deal worth $4 million over three years, Tequinox will provide financial applications such as accounts and purchasing, as well as desktop support for the utility. Tarong Energy is joining an extensive list of energy, mining, transport, manufacturing and Government firms outsourcing their IT.
Tequinox, a subsidiary of services operation Mincom, has an extensive history in outsourcing, and in the last three years has moved in on the ASP space to capture a larger market share of the five verticals its divisions specialise in.
CEO and managing director Christopher Poelma believes that the ASP model can work in these large verticals, providing the contract is set at a fixed price and there is sufficient support for the client.
"Utilities are coming to us because we bill our contracts on a recurring rate, fixed for the life of the contract," he said. "This means the client can manage their IT cost."
"You need to have the facilities and people to support their business," he said, "because clients don't want to be tied to one continent or area for support services."
Poelma believes that there are many players in the market labelling themselves as ASP's, who are not outsourcing companies at heart. These firms are finding it hard to satisfy all the elements of an ASP arrangement and are likely to fail.
"There are telecommunications companies at heart, who want to reinvent themselves," he said. "There are software companies that are trying to rent their software. There are consultancy outfits that want more business."
"But I would suggest that at the end of the day, these horizontal ASPs are at risk because they are providing one part of a total solution," he warned. "Because of the competition out there, they have to make commitments they can't possibly provide."
According to Poelma, the ASP's that will prosper are those which focus on particular market segments but provide the full range of services.