March 26, 2001, 3:17 PM — THE LATEST MOVES in the crowded ASP (application service provider) space prove that even traditional software and systems vendors are not immune to the emerging model's lure.
In fact, top-tier vendors are busily tailoring their established business models to snare a potential customer bonanza within the ASP market.
Novell and Hewlett-Packard last week proclaimed ASP-driven initiatives, and Lotus will amplify its own next week.
Observers say that these established players-cum-ASP companies are counting on customer loyalty to help them vie with the extensive networks of smaller, more specialized participants.
But for now, the established vendors must endure a learning curve while their size and legacy technologies somewhat impede their early ASP efforts, allowing smaller ASP specialist start-ups to gain ground on their deeper-pocketed rivals, said Amy Mizoras, an analyst at Framingham, Mass.-based IDC.
"For a lot of [customers], their legacy companies are becoming a liability. They are less agile than the start-ups, [which] don't have the same architecture issues" limiting responsiveness, Mizoras said. "In time that will change and that advantage will go away. Then it comes down to [best] service and price."
One customer identified challenges facing the old guard.
"Right now they have enough on their plate relative to the market they're in without trying to adapt to [serving] a partner venue," said Richard Arns, executive director of Chicago Research and Planning Group, a group for CIOs.
Novell last week pitched its OnDemand Services hosting and billing software as ASP building blocks. The company is moving toward a "subscription" or utility-type model, where it will act as a centralized middleman to link customers with ASPs, providing services to both parties, said Eric Schmidt, chairman and CEO of Provo, Utah-based Novell.
OnDemand will be at the heart of Novell's ASP services, augmented by its caching technology, iChain security, and e-business services, which are due this fall, as well as its planned NDS Web portal, called Blackhawk.
Cambridge, Mass.-based Lotus is also trying to cash in on the white-hot ASP market. The company finally formally unveils its ASP version of Notes/Domino next week, and is expected to announce partner agreements for hosting the software.