An inside perspective on the ASP market

ITworld.com –

Sean Sears is the CEO of abridean, a Halifax, Nova Scotia company that offers application provisioning software for application service providers. In 1995 Sears helped launch Canada's first national ISP. He also founded a venture capital company, which ultimately spun off abridean. Sears has given a lot of thought to the ASP market's viability and what it will take for the market to live up to its promises.

"We have the adoption we should expect," Sears says with regard to the slow market growth of ASPs. "I'm floored that the take rate is as high as it is."

Sears acknowledges the ASP market was initiated without a lot of the pieces necessary to provide fully functional solutions. For example, ASPs were founded on the notion of offering enterprise applications -- many of which still can't be licensed for ASP delivery.

When I asked Sears if he thinks the market can be successful, given the incomplete service offering, he doesn't equivocate: "Is there a latent demand? Absolutely!"

As far as work to be done, ASPs need to get to the next level of the delivery model, Sears says. This will include, for example, services that users can order and configure themselves. ASPs need to be able to automate usage metering and billing. Customers need a predictable model for billing. No one will be interested in billing based on time in use, says Sears, who advocates billing based on licensing functionality. Users should be able to use only the functionality that they need, he asserts, without having to buy access to functionality they don't need.

Sears makes it clear he believes that ASPs can deliver integrated solutions in ways that internal IT shops can't. Whereas internal IT staff worry about maximizing the use of an existing investment, an ASP can provide highly scalable, very dynamic solutions that can be customized quickly.

Sears is bullish on the ASP market. I asked if he thinks the ASP market will follow the ISP model towards consolidation and standardization. He predicts it won't. Instead, the ASP market will follow the software market, says Sears, with many players exploiting many niches.

Inflated expectations -- often pumped by analysts -- have had a negative impact on the ASP market, according to Sears. While a dot-com may be able to post a Web page and get a thousand customers in one day, it is unreasonable to expect an ASP to do the same thing. ASPs have been inventing a new technology and delivery mechanism. In such an environment, Sean argues, acquiring 150 business customers in a year is outstanding performance.

Sears believes that the network is fundamental to delivering quality of service. He notes that while he expected network service providers to have a "leg up" on the delivery of complete network-enabled solutions, it has not happened. ASPs need to figure out how to partner with carriers, at the very least, to ensure service quality, Sears says.

Finally, I asked Sears what advice he would give ASPs that want to differentiate their services and achieve success. His response: "Go back and ask the customer."

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