The problem with the application service provider (ASP) market is that most people, apart from a select few, are still struggling to understand it.
It is almost 12 months since analysts such as Durlacher predicted that the new ASP mini-industry would become a multi-billion-dollar market in Europe, yet actual users of these services are still quite rare.
Last month, Computer Reseller News sponsored the ASP Partnering Forum, held at the Renaissance Hotel near Heathrow Airport. The forum's aim was to help users understand the mystery of this growing market.
But before that can happen, vendors need to get resellers on their side - although it would also help if they could get their story straight. To this end, 1000 partnering meetings were held between 29 and 30 November.
Part of the confusion stems from mixed messages about what these new service providers will offer and how they will deliver it. There are at least 14 different ASP models. They can't all be right, so which, if any, are workable?
As Ken Livingstone, Mayor of London, said of transport secretary John Prescott's Public Private Partnership scheme to solve the capital's transport problems: "When it takes six months to understand a scheme, that's a good yardstick for something that [won't] work."
The same applies to the IT industry's service sector. Although the general consensus is that all applications will be delivered by service providers, even the definition of what an application is divides the industry.
Paul Briggs, editor of Computer Reseller News, invited a panel of ASP experts to try and explain the situation to an audience of about 70 users and one reseller.
The EquiP experience
Ian Morris, founder of recent startup distributor EquIP, is in the unique position of being both an ASP customer and an equipment supplier.
As a customer, he is impressed with the convenience of it all. "We saved money and time using an ASP, which meant we could concentrate our energies elsewhere. Even in the US, I could dial into our network to get our numbers," he said.
Because EquIP is a new company, the service it buys from service provider Pasporte is uncomplicated, Morris explained. The company has a relatively small user base (EquIP has 16 employees) and the Sage accounting package it uses is straightforward.
"The problem with most other applications is that they are too old to be delivered across the wide area," Morris said. "They were designed for another environment where bandwidth is not a consideration. Anything that uses Citrix [thin clients) has to be pretty skewed. I wouldn't trust it."
Morris has other more practical reasons for being sceptical. EquIP supplies products such as load balancing software to improve the performance of service providers' technology infrastructure, and regularly provides customers with consultancy on their applications.
"Some ASPs ask us for advice about maintaining uptime. We make the assumption that, given the scale of their ambitions, they would have hundreds of servers that they want us to synchronise to maximise performance," Morris said."Sometimes it turns out that they don't need a load balancer because they've only got two servers. Think about that. They are talking about managing hundreds of clients and yet they aren't geared up to do anything. They've got two servers," he added.
The ASP sector would not be the first to provide IT services that are sold and built 'on the fly'. But if this is the case, it is hardly surprising that very few ASPs have any customers to show off.
But Alison Heath, channel development director at Netstore, a new ASP, claimed: "We have more than 500 users."
"So how many accounts is that you have - one or two?" asked Morris.
"Two," Heath admitted. This is still more than most ASPs.
But the fact that EquIP has purchased ASP services itself proves there is a market for such offerings, although the sector appears unlikely to establish itself properly until various barriers are removed.
According to John Chapman, business development director at Westcon, the most important of these barriers is security. "Unless we offer 'five-nines' security, we will never persuade clients to make the leap of faith to give someone else their applications and data," he warned.
But Richard Goodley, business development director at Dragnet E-Business, said this was not the only challenge facing ASPs. "We need to better highlight the benefits. We have to make it blindingly obvious where cost savings will come in if we start managing applications for customers," he said.
"Having said that, once the hard work has been done and we are in the door, then resellers will have continuous turnover."
Ian Morris painted a very grim picture. "I don't think there's too much ASP work actually being done today," he said.
"I completely disagree," countered Heath.
The question is: when will users disagree? None of this should matter to resellers, however. Should a new type of vendor emerge that has not worked out how to crack the market, such a situation only gives resellers more time to adjust.
It is not the reseller's problem, for example, if ASPs cannot work out which applications to sell, who to sell them to, or how to deliver them. They can continue making money the same way they always have done.
When some sort of pattern emerges from the confusion that is the current ASP market, then resellers may want to think about getting involved.
Dialogue RenaissanceComputer Reseller News
hosted a debate with some of the key players in the still-dormant application service provider market. They addressed an audience of end-users to discuss the issues in this sector. Representatives included:
- Ian Morris, co-founder of EquIP, a distributor of convergence products
- Alison Heath, channel development director at ASP Netstore
- Peter Gee, director of strategic alliances at Pasporte
- John Chapman, business development director at Westcon
- Richard Goodley, business development director at Dragnet E-Business
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