MS Exec Challenges IT to Seize ASP Opportunity

Peter Boit, vice president of Microsoft Corp.'s eCommerce Business Solutions Group, encouraged IT professionals at the Chicago Software Association's one-day ASP conference here yesterday to pursue opportunities in the nascent market for application service providers (ASPs), but he cautioned that many business issues must be addressed for the market to take off.

"Take a risk. Make a bet. But do something and learn," Boit told the audience of about 500 professionals attending the ASP conference. "This is all about learning. The people who win going forward are the ones who are learning today.

Those on the sidelines will have to play catch-up very rapidly."

Opportunities abound for companies that host and manage applications and information technology resources for clients or subscribers remotely via Internet technology, Boit noted. Many different players may be involved including independent software vendors, ASPS, network service providers, and resellers, he said.

Microsoft is trying to move the ASP model forward by providing a supportive platform through Windows 2000 and related applications such as SQL Server 2000; by promoting of XML as an industry standard; and by developing the Next Generation Windows Services (NGWS), Boit said.

Microsoft announced plans on Jan. 13 to assemble the first Internet-based platform of NGWS, which will incorporate such features and capabilities as a new user interface, natural language processing, application development approach, schema, and new file system into new products and services. Microsoft officials have said that a key set of NGWS will be hosted on the Internet.

In addition, the software giant is acting as an ASP through its bCentral portal. Launched in late 1999, bCentral provides business services to small businesses including building, hosting, and maintaining Web sites. Microsoft is also involved in ASP pilot programs to offer its Office productivity software and its Exchange e-mail program as hosted applications.

Although customers seem to be demanding these services, there are a number of business issues to tackle. The issues include what types of service level agreements to establish, whether to enter the market as a reseller or a wholesaler of services, how to price the service, how to track and manage the service, and how to compensate resellers.

"The business model is not set; we are all trying to understand it," Boit said.

The advantages of hosted services accessible over the Web for IT organizations will drive the growth of the ASP model, Boit asserted.

The ASP model will benefit business customers because they will have ready access to the applications they need, when they need them without any "heavy-lifting" or heavy IT spending, Boit said. Companies will be able to scale usage as they grow, and they will be able to respond much more quickly to competitive pressures and focus on their core competences, he said.

Businesses can scale their usage of an application as their needs grow, rather than committing to more technology than they immediately require, the Microsoft executive said. Plus, Boit noted, they will get access to the expertise of application developers, rather than having to making sure they have that expertise in-house.

Consumers will favor the ASP approach because it could provide them with more control over their information resources, Boit added. For example, consumers typically have to seek out a variety of sources, such as their banker, their insurance agent, and their real estate broker, to get a well-rounded view of their finances. An application provider could bring all sources of information together in one application and charge the user a fee for the unified view, he noted.

"In many ways, the ASP model brings the reality of applications without the heavy IT infrastructure necessary or the resources to development them in-house," Boit said.

Sponsored by the Chicago Software Association, the one-day conference was titled "Software Breaks out of the Box: Transforming an Industry" Microsoft Corp., in Redmond, Washington, is at http://www.microsoft.com/.

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