From ASPs to MSPs

Application service providers have been getting a lot of attention over the past year, with conferences springing up and lots of press coverage. But the early ASP bandwagon seemed heavy on the vendor side, with conference attendance high in vendors but low in actual users.

Recent Enterprise Management Associates research showed a significant interest in ASPs, and a reasonable number of respondents identified themselves as ASP services users. But the research also indicated that there is confusion about what constitutes an ASP, with numerous network service providers (NSP) named by users as their ASP.

One reason frequently cited by users for not jumping on the ASP bandwagon is reluctance to give control over to a third party, especially an unknown entity. It may be that the only way to overcome this objection will be when big players with a strong history in outsourced services and service-level agreements move into the game. As NSPs move from managed WAN services to Web hosting, this seems to be a likely progression.

Meanwhile, given that the ASP gold rush has been slower to take off than many expected, there seems to be a significant number of ASPs who are now reinventing themselves as management service providers (MSP). Venture capital firms put an initial round into a start-up, and the company starts selling, only to find a much slower market than anticipated. Eager to find a business opportunity, many seem to be turning to management for the small to midsize business market.

MSPs include vendors who deliver a service with management tools but leave the actual management to the users. They also include vendors who provide a completely managed service as well as the people to perform the management. MSPs can provide network-focused services as well as systems management-focused services (e.g. managed servers and desktops, including software version control, inventory and problem management).

Another variation on outsourcing as a whole is in the area of remote monitoring and management of systems hardware. Remote monitoring has been a feature in mainframe hardware for 20 years, and also has become a part of high-end server and storage systems. The so-called "phone home" capability of a box to call the manufacturer when there is a problem has become an assumed function, with more advanced remote monitoring, remote diagnostics and remote management functions built on top of those basic capabilities. Vendors such as IBM Global Services, Compaq, Sun and EMC now include these functions. Interestingly, these management services are some of the same services touted by the new MSPs.

Clearly, the xSP space is changing and evolving at a rapid rate. New players are emerging every day, with slightly different focuses. As they battle for differentiators and try to redefine terms to match their particular focus, the waters get muddier. Hopefully, at the same time, the services they offer will provide more value and more choices to meet the widely varied needs of the marketplace.

Dennis Drogseth is a director with Enterprise Management Associates, a leading analyst and market research firm based in Boulder, Colorado, focusing exclusively on all aspects of enterprise management. Dennis has extensive experience in network management platforms and products and is researching trends in management software and changing IT roles internationally. His 18-plus years of experience in high-tech includes positions at IBM and Cabletron. He has been quoted in the press and is a speaker at industry events. He can be reached via e-mail.

Audrey Rasmussen is a research director with Enterprise Management Associates in Boulder, Colorado, a leading analyst and market research firm focusing exclusively on all aspects of enterprise management. Audrey has more than 20 years of experience working with distributed systems, applications and networks. Her current focus at EMA is e-business, SMB/SME and MSPs. She can be reached via e-mail.

Enterprise Management Associates in Boulder, Colorado, is a leading analyst and market research firm focusing exclusively on all aspects of enterprise management software and services.

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