Application Service Providers and e-business

Simply stated, an ASP is a service provider whose specialization is the implementation and ongoing operations management of one or more networked applications on behalf of its customer. One key attribute beginning to rapidly evolve is the emphasis on Web-based e-business application management as an important differentiator from the more traditional outsourced client-server application management services.

There are many in the industry, including myself, who believe that this class of service has enormous potential. One important example that illustrates the type of service that will be offered by these providers is a recent announcement that was made by IBM Global Services at the recent PC Expo show. In this announcement, IBM rolled out a series of new hosted business applications that support critical accounting, human resource and sales automation services for small and midsize businesses. Typically, it is these users who have been the least able to support their own in-house IT operations and have utilized managed service providers as a viable alternative. The rapid increase of e-business deployment does nothing to change this. In fact, the specialized nature of these services makes it more likely that users will choose an external provider.

IBM also announced key partnerships with three software providers - Great Plains, SalesLogix and Ultimate Software. These partnerships will address the deployment of business application products within the Global Services network. Also, they will provide the means to offer users some creative financing options including the use of - you guessed it - software leasing. The IBM partners that will support this service are Fidelity Leasing and First Sierra Financial.

The value proposition that IBM is offering small and midsize business users is the freedom from the budgetary drain of maintaining in-house IT operations, particularly for Web-based services, while freeing up in-house staff to concentrate on managing current operations and evolving the business in a rapidly evolving e-commerce environment.

While no one would realistically argue that the initially announced range of applications and financing options is sufficient by itself to provide an incentive for a large number of users to move in this direction, it nonetheless is a good example of what I expect more providers, particularly ISP-type providers, to be offering in the not-too-distant future.