---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 03/27/2000 
08:47 AM ---------------------------


"NW on Application Service Providers" <ApplicationService@bdcimail.com> on 
03/23/2000 05:35:55 AM
Please respond to "Application Service Providers Help" 
<NWReplies@bellevue.com>
To: <vkamins@enron.com>
cc:  
Subject: ASP Noise


NETWORK WORLD FUSION FOCUS: MIKE JUDE and NANCY MEACHIM
on APPLICATION SERVICE PROVIDERS
Today's focus: ASP Noise
03/22/00

Dear Wincenty Kaminski,

Today's focus: ASP Noise
---------------------------------------------
By Mike Jude and Nancy Meachim

One problem with the application service provider market is that no one
has yet been able to quantify it. This problem jumped out at us
recently as we were surfing the ASP News Web site.

ASP News, which is a very good resource for anyone interested in the
ASP world, has developed a dynamic directory of network-based service
providers.  To give you an idea of how much information is included,
the directory lists four main categories and 15 subcategories.
Although these categories are not exclusionary, they clearly represent
a lot of companies.

The question is, What does it all mean? What is the difference between
an independent software vendor (ISV) and an ASP?  How is a prospective
customer supposed to find the right vendor for its needs?

Therein lies the rub, as they say.  ASP News, directory makes it appear
that the service provider marketplace can be clearly defined and the
vendors listed in a neatly parsed, easy-to-understand directory.  Of
course, it isn,t that simple.  An ASP infrastructure provider, or AIP
(how,s that for an acronym within an acronym?), may, by virtue of a
partnering arrangement, also compete against full-fledged ASPs.  And
what about the mutable ISV?  What little push is required for an ISV to
become an ASP?

The fact of the matter is that the ASP News directory made me realize
that we have so much information that we can,t see the trees.  We can
only see the forest.

As providers all vie for customer attention and try to satisfy every
user need, their messages are becoming confused.  The service provider
market has reached a point of information overload.  So much marketing
is being pushed out that customers are hearing only noise.  The message
is being lost.  It is as though every person in a community was on a
telephone party line all talking at once.  Star Trek,s Borg
notwithstanding, being on the receiving end of such a call would leave
anyone confused about what was being communicated.

Too much information can be worse than no information at all.  At least
we don,t have to spend time trying to understand silence.  Today,s ASP
market makes customers work too hard.

The huge potential of this new market is attracting all types of
vendors.  New players are jumping on the bandwagon every day (even if
only via marketing material).  As a result, customers are confused, and
providers are unable to differentiate themselves or their solutions.
In short, the ASP market is being held back.

So, how do we get past the competitive chaos? We get past it in typical,
free-market style.  Because there are too many providers, many will
simply find themselves unable to compete and others will be gobbled up
by larger players as the market coalesces into several major players
with significant chunks of market share and a few smaller providers
serving niche markets.

In our opinion, this is already starting to happen.  Many of the large
players in traditional markets such as enterprise resource planning and
accounting have already begun to form alliances to gain market leverage.
Next, we will see many of these alliances collapse into large monolithic
players, as the smaller members are simply absorbed.  Remember the
lesson learned from the U.S. local telephone service market: Successful
companies always consume their friends.

Why does this happen?  It happens because consumers demand it.  The ASP
market has been wildly successful in convincing executive decision-
makers that outsourcing is the way to go.  People at this level will
not tolerate bedlam for long.  All it takes is a few large customers
choosing the same ASP and the market will be on its way to downsizing
as the winners and sure bets emerge.

One thing is clear: The answer to ASP success is not to simply try and
shout louder.  It is to reduce the noise level, and make it simpler for
the customer to understand your solution.  Remember the Borg, only when
there is a multitude of voices giving the same message is there a
chance for understanding. Make sure you are sending a clear signal, if
you want to get through the noise.

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
FOR RELATED LINKS -- Click here for Network World's home page:
http://www.nwfusion.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

ASP advice, Network World, 02/07/00
http://www.nwfusion.com/archive/2000/86091_02-07-2000.html

The ASP effect on the software industry, Network World, 01/24/00
http://www.nwfusion.com/archive/2000/85264_01-24-2000.html

All the information you need to select an application service provider,
Network World:
http://www.nwfusion.com/research/asp.html

ASP News Review, Monthly newsletter of the ASP industry. (Subscription
required).
http://www.aspnews.com/Review.htm


Other ASP-related articles from Network World:

Keylime goes for big piece of Web site management pie, Network World
http://www.nwfusion.com/archive/2000/90238_03-20-2000.html

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