May 30, 2001, 12:00 AM — The xSP acronym refers to an overarching category of service providers,
of which ASPs are but a small element. Like applications, many other
services and IT capabilities are now being offered over the Net as
outsourced services. Generally, these services are offered through
annuity-based pricing schemes.
During the recent dot com slump, many analysts and speculators
predicted a similar fate in store for Net delivered services.
Application Service Providers (ASPs) were given a particularly poor
prognosis. As it turns out, the ASP sector's revenues ended the year
2000 substantially ahead of predictions according to several analyst
houses.
Analyst believed that the decline of the dot coms would be devastating
for the young ASP and xSP industries. The dot com businesses were
perceived as the most natural market for xSPs, and ASPs in particular.
The xSP business model made the most sense for startup companies that
needed instant infrastructure and unlimited scalability.
Many analysts failed to recognize that while the dot coms themselves
were an important aspect of a Net-based business imperative, it was
only a small one. The real story was the business supertankers
beginning to make the same course correction, only much slower.
Businesses of all kinds and sizes have accepted that Net related
business, from front-to back-office, are necessary to compete. The
momentum was shifting and continues to do so.
The problems are perceptual. If market watchers only look for quickly
visible trends, then they tend to discount the changes that take longer
to materialize. The public, as well as the technology community, fell
prey to the over-blown "Buck Rodgers" estimates of what the near term
developments were going to bring. In the end, the viability of a new
technology, or application of technology, involves more than the
technology alone or its business application. The power of a technology
is rarely realized outside an infrastructure of supporting elements.
The automobile, for example, was of insufficient impact to engender a
revolution until an infrastructure system was developed. Roads made the
automobile a means of bringing people, their goods, and services closer
together.
The parallels between the automobile and Internet revolution are not
without substance. IT services delivered across the Net alone are not
sufficient to be a revolution. Hook it all up right, and make it
compelling to businesses of all ilk, and you will have your revolution.
For xSPs, an "ecology" of elements is most important. The xSP ecology
is built on the interrelationship between technology, infrastructure,
and business models. Each aspect supports and enhances the others'
viability.
The fiber optic Net's development, coupled with recent advancements in
related fiber optic switching technology, promise hugely enhanced user
experiences for Net delivered services of all kinds (we won't even
mention 2.5G wireless developments here). The ability to deliver IT
services with a high-quality user experience, in many ways better than
that achievable locally, and goods such as streaming and real-time
media of all kinds will unquestionably secure the xSP model's future.
Often, when a new technology arrives people believe that its first
iterations must necessarily resemble its future manifestations.
Believing that the xSP model's full potential is already known would be
short-sighted. In the coming weeks, the mission of ITworld.com's xSP
Trends newsletter will be to help you stay abreast of what is happening
in the xSP and Net delivered services world. It should be an exciting
ride, so stay with us.
