MSPs vs. ASPs

By JEB BOLDING
Network World ASP Newsletter, 12/20/00

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The management service provider waters are very muddy now as the industry attempts to define itself and establish metrics by which it can measure its progress. One reason for some of the turbulence is that there is no clear distinction between an application service provider offering and MSP offering.

The MSP Association defines an MSP as " a company that delivers information technology infrastructure management services over a network to multiple customers on a subscription basis. " But there is nothing to keep MSPs from offering ASP services, and vice versa.

I invited Gopan Madathil, director of product management at Objective Systems Integrators, to share his views on managed services. Folsom, Calif.-based Objective Systems Integrators develops infrastructure management products for e-businesses, ASPs, MSPs and communications providers.

Madathil notes that based on the MSP Association's definition, there is not much difference between an ASP and an MSP. " An ASP is a company that provides remotely-hosted software and other computer-based services to users over the Internet or other WANs on a subscription basis, " he says. " An MSP tailors the ASP model to provide remotely-hosted network management solutions and then adds something ASPs do not offer - the network operations staff to control the software and manage the end-user's network. "

Madathil says there are three critical selling points that make MSPs viable:

* Customers can focus on their core competency. Neither a dedicated network operations center (NOC) nor an IT staff is required. This eliminates the overhead associated with training and retaining network analysts and engineers.

* No software and hardware infrastructure costs. The challenges of performing backups and upgrading and maintaining systems on a routine basis are eliminated. Outsourcing enables predictable costs, which is a significant benefit to anyone considering using an MSP, Madathil says.

* Fast implementations. Start-up organizations will have a shorter path to implementation, enabling core services to be up and running rapidly.

Madathil broadly defines MSP offerings as falling into one of two segments: NOC-in-a-box and NOC-for-hire.

With the NOC-in-a-box, " the MSP provides the management application on a lease basis to the end user, hosts the management application, handles maintenance, backups and upgrades, " he says. " But, the customer manages its own networks, systems and applications using the tool provided by the MSP. "

Customers save money, he says, because they need to hire only IT operators, not more costly IT analysts. In addition, an MSP frees up IT analysts, who often are tied up with monitoring and operations issues, to focus on the strategic development of their network systems.

An NOC-for-hire picks up where the NOC-in-a-box leaves off. It provides the operations staff and monitors a customer's network at the MSP's own network operations center. This reduces, if not eliminates, almost all the day-to-day operational tasks for the customer, Madathil says.

The monthly subscription charge is higher for this type of service, but provides significantly higher value for a company that is outsourcing specific pieces of its infrastructure, or is too small to afford expensive IT staff.

I would imagine that certain vertical solutions would be a good fit for the NOC-for-hire model. For example, a company may use a NOC-for-hire MSP for security implementations that require expensive expertise to launch and can be maintained without having a presence on the customer site.

Gopan says that to become an MSP " you need network and systems management expertise, knowledge of the tools you plan to use, and a service-oriented mentality. "

The same is true for an ASP: You need to have an application and development mentality that is focused on productization and general business needs.

I suspect the lines of demarcation will further blur between ASPs and MSPs as they both acquire expertise in the other's market space.

For ASPs and MSPs in the marketplace, the opportunity for partnership is quite high. Each has expertise and technology that is valuable to the other - if they can figure out who is going to survive the market slowdown.

To contact Madathil, send e-mail to gopan@osi.com

Senior Analyst Tim Wilson is with Enterprise Management Associates in Boulder, Colo., an analyst and market research firm focusing exclusively on all aspects of enterprise management. Wilson has over 10 years of experience in covering e-business and enterprise management issues, most recently with InternetWeek, where he was chief of reporters. He can be reached by clicking here.

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ASPs can help a start-up quickly gain altitude, Network World, 12/11/00
 

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