IBM and Microsoft extended credibility to the troubled ASP (application service provider) market last week with ASP development programs and brand-name assurances intended to inject new life into the ASP phenomenon, analysts said.
Despite the ASP model's failure to live up to expectations, IBM and Microsoft decided to try the ASP route to counteract stalled acceptance rates by enterprise customers and waning enthusiasm among traditional software reseller and partner channels, industry observers said.
Microsoft announced last week that Qwest Communications International, USinternetworking, and ManagedOps.com met eligibility requirements to become members of the Microsoft Gold Certified Partner Program. USinternetworking received certification as a host for Microsoft's Exchange, e-commerce server, and application offerings. ManagedOps.com will serve as an application host, whereas Qwest will offer Web access to Exchange.
Joining Hewlett-Packard and Compaq Computer, IBM last week unveiled a mechanism to accelerate the transformation of ISVs into ASPs through its ASP Prime program. Supporting Microsoft Windows as well as its own WebSphere, Lotus Domino, AS/400, and Linux infrastructures, IBM's program offers ISV clients access to ASP Prime Center labs to test and develop applications under Big Blue's watch. In return, ISVs must commit to using IBM software and hardware in their ASP solutions.
"The whole hosted services market is trying to move from early adopters to the mainstream market," said Laurie McCabe, an analyst at Summit Strategies. "With all the ASP horror stories getting so much attention, ... I think it will give customers more confidence that some of the bigger players in the IT industry are really doing due diligence."
Further muddling the ASP industry outlook, software resellers -- critical cogs in the future viability of ASPs -- are as confused as their customers as to whom they should align themselves with, McCabe said.
Although vendors have fumbled, users could still benefit from the hosting model as evidenced by Sunoco's determination that a third party would better handle hosting duties for its suppliers, said Bill Latta, procurement services manager at Sunoco.
Sunoco spent three months internally managing its links to Ariba's online business-to-business network for indirect procurement from vendors with negotiated contracts, Latta said. But the arrangement had its limits.
"We are not an IT company," said Latta. "The materials management group did not want Sunoco to have to develop the expertise in-house to provide for the day-to-day operation of the system, nor did it want to be bogged down with implementing new software versions." Earlier this year, Sunoco handed over the Ariba application reins to CoreHarbor, a Georgia ASP, Latta said.
In spite of the risks, Auxilor, a graduate of IBM's ASP Prime program, decided to expand its Visual Health Desk market from Lotus Notes users to those who need a hosted IT help desk accessed via a browser. Auxilor will add to the mix of its offerings rather than rely solely on hosting, said Alan Forbes, president of the company. ASP deployments can be tenuous: The vendor's only previous ASP hosting arrangement for Notes lasted just eight months.
"Even a dozen ASP customers for a given month will not give you the same numbers as selling two copies of your software into the old software license model," Forbes said.