NETWORK WORLD NEWSLETTER: JEB BOLDING
on APPLICATION SERVICE PROVIDERS
06/06/01 - Today's focus: ASP trade show malaise: Reader
                          response

Dear Wincenty Kaminski,

In this issue:

* The mediocre success of service provider trade shows
* Links related to ASPs
* Featured reader resource

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Today's focus: ASP trade show malaise: Reader response

By Jeb Bolding

Responding to a previous newsletter about trade shows (Trade
show malaise hits ASPs - http://nww1.com/go/0606ASP.html) Jon
Price, vice president of service provider events at Penton
Technology Media, offered some interesting elaborations on the
mediocre success of xSP-oriented  trade shows.

Previously I mentioned that service providers should go to
trade shows that are vertically-oriented in order to capitalize
on their specific industry expertise. However, I didn't put
much of a framework behind that assertion.

Price commented that there are a couple of reasons for treating
service provider software like you would any other outsourcing
option.

First, most service providers have not been in business very
long. Trade shows typically follow cohesive market messages and
service providers have not yet had time to pull their messages
together. Consider Java. I went to the first JavaONE show and
it was fairly lame because only a few companies saw the power
of using Java for enterprise applications, let alone had
developed applications using Java. The first JavaONE was
primarily a Javasoft and Sun evangelizing event. To its credit,
JavaONE was the only Java show, so there wasn't any
cannibalization. But service providers haven't been so lucky.
The poor economy, and the fragmentation of the service provider
industry almost assured most xSP trade show failures.

But Price argues that there is even a deeper issue that has
been ignored in the trade show arena, which goes to the heart
of hosted service selection versus traditional client/server
software selection and that is fear in the IT department.

Price says: "Why doesn't IT consider application service
providers (ASP) as an alternative to software? ASP service is a
strategic outsourcing move that potentially eliminates the need
for building a more expansive IT staff, its supporting
infrastructure, and the management requirements of both. This
is a very tough career decision for any IT manager, because any
success demonstrated by the ASP can also be viewed as the
failure of a manager's development and delivery team. If that's
not bad enough, corporate management may like what they see so
much in short term savings and quick deployment, that they
begin to outsource everything, along with the poor IT manager
making the recommendation in the first place."

Neither Jon nor I are arguing that IT will actually face its
Waterloo by adopting an ASP solution. However, that does not
change the concern within IT. Any time someone outsources
development - and I mean the development of anything, be it a
business or marketing plan, or software development - the
person using outsourcing as a crutch is taking a risk. The
people doing the outsourced work might do it better than the
salaried employees.

To make matters worse, Price notes that: "As an added support
mechanism, or peripheral project, it's possible that some IT
managers would strongly consider using an ASP to allow more
time to focus on core initiatives. But most ASPs, application
infrastructure providers and managed service providers are
gunning right for the core services that are provided by in-
house IT."

ASPs might find their sales easier if they focus on peripheral
applications that are not at the core of IT competency. I would
argue that many vertical ASPs are doing just that. They provide
solutions that most IT staff doesn't want to undertake, and so,
are not threatening.

Fortunately, this attitude is probably temporary. Applications
and services are becoming blurred as the distributed, thin-
client nature of the Web permeates all software. Price comments
that, "Before long, Web sites, Web software, Web applications,
Web 'services,' and the remaining 'Internet-enabled'
traditional software applications will soon be viewed as one in
the same: just plain old applications that provide utility and
service, driving business forward."

But for now, there is the issue of culture that must be handled
delicately.

You can reach Jon Price at: mailto:jprice@penton.com

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To contact Jeb Bolding:

Jeb Bolding is senior consultant with Enterprise Management
Associates in Boulder, Colo., an analyst and market research
firm focusing exclusively on enterprise management. Bolding has
10 years of experience in the network systems industry, most
recently with eCollege.com, an ASP for higher education, where
he was director of product development. He can be reached at
mailto:jbolding@enterprisemanagement.com.
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RELATED EDITORIAL LINKS

ASPcon Fall 2001
http://www.aspcon.com/fall2001/default.asp

Management service providers feast on challenges
Network World, 06/04/01
http://www.nwfusion.com/archive/2001/121307_06-04-2001.html

Tally debuts Web-based asset-mgmt. service
Network World, 06/04/01
http://www.nwfusion.com/archive/2001/121461_06-04-2001.html

Breaking ASP news from Network World, updated daily:
http://www.nwfusion.com/topics/asp.html

Archive of the ASP newsletter:
http://www.nwfusion.com/newsletters/asp/index.html
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FEATURED READER RESOURCE

User Excellence Award

If you've completed an interesting network project in the last
12 to 18 months, here's your chance to gain industry
recognition for it. Network World is currently accepting
nominations for its annual User Excellence Award. For more
information and an online nomination form, go to
http://www.nwfusion.com/nw/awards.html#excellence
Deadline for submission is June 11.
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