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(August 18, 2000) - As we all struggle to make some
sense out of where we fit and how we function in a web-saturated
economy, one thing is clear: You can get burned living by
the labels.
The principle appears to be
well understood within the fast-expanding cluster of entities
labeled application service providers (ASPs), which are the
subject of our cover stories this month. These shape-shifting
denizens of the cyber deep are configuring and reconfiguring
themselves to whatever frameworks the market requires, understanding
that the best way to exploit web-related opportunities is
to match what's going on outside with in-house expertise and
wide-open responsiveness. Independent software vendors (ISVs),
value added resellers (VARs), systems integration experts,
IT consultants, ISPs and carriers of every description are
retooling themselves to cope with the sea change they see
coming with the software industry's adaptation to a network-based
model for application distribution and usage.
So far, it's a vision not fully
shared by the end-user community, or so it would seem from
the results of research such as the IDC survey reported in
our cover feature, which found that only about a third of
corporate executives responding to the research group's questionnaire
were interested in ASP services. But the survey also found
that, as for the level of end-user faith in the ASP concept,
it depends on what you're calling an ASP. Seventy-three percent
of the surveyed executives said that if they were to take
network-hosted software applications from third parties, they
would only trust providers they were used to dealing with--namely,
ISVs and VARs or other traditional outsourcing providers--rather
than relying on "pure-play" ASPs. That suggests that the disconnect
between the sellers' and the buyers' perspectives on the benefits
of outsourcing remotely managed software could quickly dissipate
as the traditional outsourcing vendors begin offering their
services through web-based technology at quality performance
levels customers are accustomed to, but at much lower costs.
Or, in other words, the comfort level goes up the more the
end-user thinks in terms of adapting to a network-based expansion
of existing suppliers' business rather than in terms of taking
services from ASPs.
Clearly, the efficiencies
surrounding computer-based networking founded on the common
packet language of IP (Internet Protocol) that are driving
B2B and B2C e-Commerce are affecting the software application
and distribution models, and many other aspects of traditional
business operations. This suggests that label-based thinking
on the part of company strategists who are focusing on e-Commerce
could be a barrier to reaping a lot of benefits associated
with the online phenomena that aren't labeled "B2B" or "B2C."
Whatever aspects of one's business a company takes online,
there's likely to be a flow through to other operations as
soon as the door is opened.
Handling various facets of
supply chain management online, for example, requires integration
with traditional back office billing and administration, but
also leads to more and more revamping of those legacy systems
as the online efficiencies multiply across company operations.
Or, in another example, moving to web-based customer care
provides an incentive toward integration of data and voice
over internal infrastructures in ways that could affect other
aspects of operations as well.
Where the emergence of hosted
software applications is concerned, the right perspective
is one that recognizes that this is the latest iteration of
long-standing trends in the use of software, says Leonard
Leff, CEO of the online billing management concern MyReceivables.com.
As he points out, this year-old startup is merely taking the
outsourced billing and collections model that has ably served
parent company CDS Group for more than 20 years to the next
logical phase.
"You can call us an ASP, but,
to us, it's just a better way to do what we've always done,"
Leff says.
Thinking ASP at a moment of
publicity overkill about "next big things" on the Internet
is a sure way to trip the mental switch to "off." But the
hosted application phenomenon isn't really about ASPs; it's
about the deepening extension of network-based technology
and applications into business operations. In fact, that's
what the entire process of building online business is really
about. Labeling it otherwise is to risk missing the full range
of opportunities that the increasingly intelligent broadband
IP networking model is opening at all levels across the business
marketplace
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