From the News Desk

SAN MATEO (01/28/2000) - Sorting through a muddled ASP affairThe ASP (application service provider) hype balloon continues to inflate, but the market has barely taken off. Perhaps the biggest problems for companies looking to procure services from application hosters are figuring out what ASPs actually are and how to evaluate them. And once again, overzealous marketing may be that industry's biggest enemy.

With several layers needed to ensure a secure hosted data center -- or even just a single application -- potential customers need to know who's behind the salesperson's smiling face and the shiny corporate conference room. The reliability of the data center, the network services, the application, and the tools to integrate and secure connections between providers and customers are touchstones for differentiation.

As our Page One article by Jennifer Jones outlines, major telecom players are moving into the market as well.

At first glance, this is a good omen. Having a name such as AT&T or Sprint as a partner in your outsourcing plan can legitimize the idea and perhaps quell some concerns over the quality of service.

But the entrants of the carriers is far from a cure-all. For one, it muddies the waters even more. AT&T, for instance, joins a list of vendors from start-ups to ISVs jockeying to be seen as the leader in application outsourcing, even though the most appropriate models are murky.

Choosing what data center applications you'll be outsourcing, not whether or not you'll outsource them, is a major strategic decision for any company going forward.

The other remaining issue is integration and customization. Until now, most ASPs have taken a cookie-cutter approach. They'll offer an application and a few hosting options, but they won't customize the service.

But no matter how appealing the subscriber model is to vendors, users need differentiation beyond infrastructure.

Does the ASP industry need more time to mature? Will your company give serious consideration to application hosting in the coming year?

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