CA to host IT operations

In what could signal the next wave in the application service provider (ASP) market, Computer Associates next year plans to detail a palette of network management services -- including storage, desktop management, security, and network management -- to be available on an outsourcing basis.

The software giant is also devising a strategy to allow existing ASPs to offer application services to corporations via its CA-Unicenter network management platform.

Although initial entrants in the ASP fray typically have targeted outsourced enterprise resource planning (ERP) and customer relationship management (CRM) systems, businesses soon will be gaining more application-hosting options for IT's nuts-and-bolts infrastructure applications, based on CA's plan. Large corporate IT shops have shown lukewarm interest in the ASP idea because they have the staff and financial resources to invest in revenue-producing applications such as sales-force automation and data warehousing.

But CA's focus on mundane IT operations could strike a chord with organisations of all sizes.

"Those are areas where large companies will say that this is basically an overhead IT function. They have to do it, but there isn't a big gain, or they're not involved in re-engineering like [they would be with] a CRM application," said Laurie McCabe, an analyst at Summit Strategies, in Boston. "It's where they would want to offload the headache."

For Unicenter customers, an ASP that uses the Unicenter platform to integrate various application offerings could be compelling, according to Mark Allen, the CIO of Aspen Medical Group, a health care company based in St. Paul, Minn.

"We could tie in [our] two Unicenter applications and do some proactive alerting on systems and network availability, for instance, and shoot information right through to the end-user," Allen said.

Because Aspen Medical already has many Unicenter functions installed in-house, it would not look to outsource existing applications. However, new applications that require large investments in servers and personnel, such as storage, are outsourcing candidates, Allen said.

One CA official had a similar assessment.

"Customers that are willing to invest some effort and invest in their own IT infrastructure are going to use software and own the hardware. As their business model does not allow them to invest any more [money in infrastructure], they're going to move to a service or ASP model," said Marc Sokol, senior vice president and general manager of global marketing at CA.

Analysts said competition to provide an integration platform will heat up as ASP clients demand that various hosted applications are well-integrated and have common provisioning and billing functions.

"There are going to be lots of companies rushing in there trying to make deals," said Rich Ptak, an analyst at the Hurwitz Group.

CA took an initial step in its strategy to address the ASP market last week with the formation of a joint venture with PC manufacturer The Acer Group, in Taiwan. But another analyst said that, despite CA's services organisation, the company is a better fit as a technology provider.

"There are a lot of players in [the ASP] area who not only have a longer track record but are arguably focused entirely on the marketplace,"said Frank Prince, an analyst at Forrester Research.

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