NETWORK WORLD FUSION FOCUS: MIKE JUDE and NANCY MEACHIM
on APPLICATION SERVICE PROVIDERS
Today's focus: Full circle: ASPs the new Big Blue?
03/15/00

Dear Wincenty Kaminski,

Today's focus: Full circle: ASPs the new 
Big Blue?
---------------------------------------------
By Mike Jude and Nancy Meachim

The terms &ASP8 and &IBM8 may have more in common than being three-
letter acronyms.

Remember Big Blue of the early +60s? The vision, then, was centralized
computing. Mainframe computers hosted complex, expensive applications
that end users accessed via dumb terminals. IT infrastructure,
especially memory, was expensive and needed to be controlled. With
computing resources centralized, IBM reasoned, they were easier to
maintain.

Of course, IBM got it wrong, in that computers became a cheap commodity.
And users weren,t happy simply using dumb terminals. They wanted a
bigger share in all that technology offered. So, as memory prices fell,
so did the idea of central control. Dumb terminals were transformed into
intelligent desktop machines that could store applications and data. The
glass house populated by white-smocked technicians went out of fashion.

Looking back on those times, many of us would shake our heads and wonder
how IBM could have been so wrong. But maybe Big Blue wasn,t so far off.
Thanks to the advent of application service providers, centralized
computing is making a comeback. ASPs offer centralized application
management.

The market started as a way to offer the benefits of Server
Advertisement Protocol and other complex enterprise resource planning
software to small companies or companies with less technical savvy. But
ASPs now host all kinds of applications, including small, multilicensed
programs whose images are downloaded to end users on demand. But, the
principle remains the same: Central control makes support much more
efficient and usually cheaper. How about that, IBM?

To be fair, the dynamics of an ASP are very different from old
centralized mainframe operations. An ASP doesn,t just host and support
an application for general distribution over an in-house proprietary
network. Unlike the IBM vision, an ASP is very dependent on network
service. It is also very sensitive to service levels. In the +60s, if
the mainframe let you down, you ended up twiddling your thumbs for an
hour or so, and your only recourse was that white-smocked fellow.
Nowadays, users start to scream if service is interrupted for even a
minute. And woe to the ASP who brings down a customer operation. The
world of the ASP is much more complex than that of the old +60s shop.

However, if one could magically transport a computer user from the +60s
to the wonderful new 2000s, would it seem all that different to him? In
an ideal ASP world, a la Scott McNealy,s vision, users would sit down
at a semidumb terminal, download the application du jour, and start
working. What did the +60s user do? Kind of the same thing!

So you are probably wondering, what is the point? Just this: IBM,s
problem was leaving the customer out of the equation. And look what
happened. Customers rebelled. They didn,t buy IBM,s spiel. It became
the &in8 thing to hate IBM. Why? Because the guys in white smocks
couldn,t spell service and didn,t care about customers.

To be successful, ASPs need to learn from the past. They need to tattoo
service on the forehead of each of their employees. There are too many
choices, today, for customers to put up with inferior service. That,s
one big difference from the +60s. Customers now can literally choose
any service provider in the world. Just being big doesn,t cut it these
days.

To contact Mike Jude and Nancy Meachim:
---------------------------------------
Senior consultant Michael Jude and research director Nancy Meachim are
with Enterprise Management Associates in Boulder, Colo.,
(http://www.enterprisemanagement.com), a leading analyst and market
research firm focusing exclusively on all aspects of enterprise
management. Jude has over 18 years of experience in the
telecommunications industry, most recently with US West, where he was a
manager of public policy. Mike can be reached at
mailto:jude@enterprisemanagement.com. Meachim focuses on e-business
management. She is currently conducting a research study on ASP
management that is due to be released in April. Nancy's email address
is mailto:meachim@enterprisemanagement.com.

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Buzz: Application Otsourcing, Network World Fusion, 09/27/99
http://www.nwfusion.com/buzz99/roundasp.html

ASP Research page, Network World
http://www.nwfusion.com/research/asp.html

All About ASPs
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http://www.aspindustry.org/

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