ASPs in the Driver's Seat

Posted 05/15/2000

ASPs in the Driver's Seat
Hosting Players Put the Pedal to the Metal With New Applications, Initiatives 
By Gail Lawyer

Consumers have caught on to the trend of leasing automobiles. The communications and computing industry hopes the same concept will catch on when it comes to software applications for business.

The rent vs. buy model for outsourcing applications promises to allow telecom service providers--and, for that matter, any business--to jumpstart their market-entry plans. With hosted applications, there no longer is a delay after IT staffers are hired to develop and deploy in-house systems. This means companies can take their services to market sooner, and that results in a faster time to revenue.

The SUPERCOMM 2000 exhibit hall will undoubtedly be abuzz with new, hosted applications, as well as partnerships and initiatives between hardware and software vendors aimed at bolstering the development of the fledgling ASP market.

These companies are trying to stake their early claims in a potential gold rush. In 1999, spending on ASP services reached a meager $296 million. However, that spending will surge to more than $7.8 billion by 2004, according to a mid-March report entitled "Worldwide ASP Market Forecast: 1999-2004" from IDC (www.idc.com), a division of International Data Corp.

Major partnerships that will be featured at SUPERCOMM include those spearheaded by Abatis Systems Corp. (www.abatis-sys.com), Cisco Systems Inc. (www.cisco.com), Hewlett-Packard Co. (www.hp.com), Lucent Technologies Inc. (www.lucent.com), Microsoft Corp. (www.microsoft.com) and Sun Microsystems Inc. (www.sun.com).

"The business market is where we'll see most demand for ASPs, specifically in messaging and collaborative projects," says Mark Chestnut, director of ISP/ASP business development at Microsoft. For the past several months, Microsoft has made its Office and Exchange applications available over the Internet. Among the outsourced applications are Word, Excel, PowerPoint, Access, Publisher, FrontPage and Outlook. Together, these applications allow for e-mail functionality, group scheduling collaboration and information sharing.

The applications are offered through a variety of Microsoft partners, including Concentric Network Corp. (www.concentric.net), Qwest Communications International Inc. (www.qwest.com), USinternetworking Inc. (www.usinternetworking.com) and Winstar Communications Inc. (www.winstar.com). Microsoft also is working with three independent software vendors (ISVs) that have developed applications that run over Microsoft's platform.

Microsoft has been partnering broadly in the ASP space, and its goal is to "provide the premier platform for hosting ASPs," says Chestnut. At the core of Microsoft's plan are Windows NT, the recently introduced Windows 2000 and the company's year-old BizTalk initiative. BizTalk pushes the use of extensible markup language (XML) as a standard in the development of business-to-business e-commerce software.

At SUPERCOMM, Microsoft's booth will feature many of its partners, including Cisco and HP. Microsoft and Cisco will be showing the end-to-end solution for deploying outsourced applications and services they announced in October. The collaboration allows ASPs to offer a variety of hosted solutions based on the NT server platform, the Microsoft SQL Server 7.0 database, Site Server Commerce Edition and Cisco networking solutions.

Cisco, too, will have its own booth at SUPERCOMM, which will feature its previously announced New World Ecosystem, says Eugene Lee, vice president of marketing for Cisco's application technology group. The Ecosystem, which was announced about a year ago, has well over 100 partners that are developing circuit-to-packet and packet-based solutions that can assist service providers in quickly rolling out competitive and differentiated offerings. "Access voice and data services have commoditized. We want to prevent churn [with] offers that thicken the value stack to each customer," says Lee.

In addition, Cisco will be featuring its Cisco Hosted Applications Initiative and its previously announced ASP Certification program. The certification program is an extension of the Cisco Powered Network Program. "ASPs get all the same benefits a large service provider gets, if a pure-play ASP commits to purchase service from a Cisco Powered provider and run it over a Cisco Powered Network," says Lee. "We're finding that it's a big deal."

HP and Microsoft will be featuring their recently released Service Provider-in-a-Box (SP-in-a-Box) solution. SP-in-a-Box is a web and application-hosting framework, incorporating HP's NetServer system and storage hardware with Microsoft's NT, Windows 2000, Site Server 3.0 Commerce Edition and Microsoft Commercial Internet System.

"SP-in-a-Box is pre-integrated and includes products for customer care, billing, smart Internet usage, metering, and enables transaction billing for marketing and sales," says Anne Burris, global ASP/ISP program manager for HP's network and service provider business unit. Burris says that HP and Microsoft also plan to announce some SP-in-a-Box customer wins at SUPERCOMM.

Sun also will be hosting other companies it has collaborated with in the Partner Pavilion portion of its booth. Partners featured will be participating in the SunTone program and the more recently introduced iForce initiative.

SunTone--which was introduced at Telecom 99 in Geneva--is an effort to get industry players to design and deliver service level guarantees for performance, security, availability and uptime of network-based services. iForce brings together Sun's "dot-com" programs, products, services and solutions for all customers.

"These play into our whole philosophy," says Yael Zheng, director of marketing for Sun's network service provisioning group. "We don't compete with service providers or telco customers. We try to bring more business applications to them from the dot-com and ASP spaces."

Zheng says she expects that new subcomponents of SunTone and iForce will be announced at SUPERCOMM. Other demonstrations at Sun's booth are likely to include hosting services, document management and online financial transactions.

Among other upcoming announcements, Abatis will discuss its Expedite! Technology Lab--a network environment where partners can test and showcase technology software aimed at on-demand, pay-as-you-go, advanced IP services for business. The lab is part of the Abatis Expedite! Initiative, which brings together ASPs, ISVs, network service protocols (NSPs), value-added resellers, systems integrators and technology partners. Under the initiative, companies can work together to accelerate delivery of IP services--such as enterprise resource planning and customer relationship management applications, as well as on-demand video conferencing--by leveraging the strengths of the partners.

Expedite! will "help NSPs move into the new world of adding value between the ASP and the end users," says Louise Turner, Abatis' director of business development. "We've talked with NSPs about moving from voice and data transport to offering service, but they're unsure about how to get there."

Also at SUPERCOMM, Abatis expects to demonstrate its business service architecture, so attendees can see services being provided simultaneously and the QoS behind them, says Turner.

At the Center

The form and functionality of the data center, where hosted applications reside, will be a major component of vendors' displays at SUPERCOMM.

"We'll show a data center environment that is more flexible about the applications it supports," says Susan Barbier, Lucent's director of offer realization. At the show, Lucent expects to announce a joint agreement with a technology partner that will add high-speed processing inside the data center.

Other announcements expected from Lucent include a suite of marketing services, as well as professional services and business consulting for the ASP industry, Barbier adds.

Nortel Networks Corp. (www.nortelnetworks.com) also will show "the breadth of its data centers" and "professional services in the ASP enablement space," says Jim Dondero, Nortel's director of ASP solutions marketing. In February, Nortel acquired Dimension Enterprises Inc., an engineering and business strategy consulting firm. Dondero says that Dimension's significant data center capability will allow Nortel to help service providers build new levels of quality, reliability and portability into data centers.

Nortel also will feature its Managed Applications Services Initiative that, in partnership with HP and several software companies, is designed to help service providers bring applications and e-business solutions to small and medium-sized enterprises.

Ziatech Corp. (www.ziatech.com) will be showing off its just-released products that will scale back the amount of data center real estate ASPs need to use.

The product, called Ketris, is an integrated, high availability, NEBS-compliant server platform. Ketris has a server density of one-half rack per server. "We build a robust telecom-style platform with servability on telecom equipment and put in a feature for monitoring and how to manage deployment," says Dave Bottom, Ziatech's Internet business unit manager. Ketris is compatible with Windows NT, Sun Soft Solaris X86 and Linux.

Objective Systems Integrators Inc. (www.osi.com) is hoping to help ASPs better manage their services. The company will be exhibiting NETsight, an ASP management solution it announced in February. "We're focusing on how [ASPs] will be able to get a view of their network from a PC," says Jim Frey, OSI's director of market programs. "SLAs are a big challenge for ASPs. Those that can ensure uptime will be the winners."

NETsight, which will be integrated with OSI's reference model architecture, allows ASPs to detect, isolate and correct service-affecting problems on the network, roll out new services quickly and meet SLAs. Frey says OSI also expects to announce a new product line with a target price of under $100,000 that is designed to help startups and fast-growth companies.

Applying Themselves

Several companies will be announcing or showing actual hosted applications specifically for telecom service providers.

New Era of Networks Inc. (www.neonsoft.com) is planning a suite of products that allows CLECs to rapidly change their processes, says Fred Thompson, NEON's vice president of marketing and business development for the communications industry. "We'll target the CLEC/startup market. They're the ones who don't have the time, interest or applications," he says. Thompson says NEON seeks to provide tools to manage business processes, as well as a whole suite of applications services.

Quintessent Communications Inc. (www.quintessent.net) is adapting its Tele.Commerce Solution to be delivered in a hosted application model. "We're targeting ICPs that want to benefit from our provisioning process, but can't justify buying the license" because they're too small or just starting up, says Brian Vincent, Quintessent's president and CEO.

The web-based Tele.Commerce ASP can be used as a permanent solution for OSS interconnection, delivering flow-through provisioning from data origination to tracking service orders. It can also be a stepping stone to the licensed version as the service provider grows.

Current Tele.Commerce ASP customers include Avista Communications (www.avistacom.net), FirstWorld Communications Inc. (www.firstworld.com) and GST Telecommunications Inc. (www.gstcorp.com).

Sylantro Systems Corp. (www.sylantro.com) will be showing off its communications business--or "c-business"--suite of applications, which telecom service providers can offer their small and medium-sized business customers. "The opportunity is to add revenue to the eroding voice revenue and [aid in] customer acquisition and retention," says Laura Thompson, Sylantro's vice president of marketing and business development.

At the basis of the c-business model is using the business phone as the "ultimate thin client device," she adds. Borrowing from the cell phone model, businesses that use Sylantro's application could "click" to return calls, taking full advantage of the phone's LCD display. Included in the c-business plan is a communications portal through which VARs, office managers, and even end users can change their calling parameters and service options.

Behind the scenes is Sylantro's applications switch, which serves as both the delivery mechanism and application development platform. The switch is protocol and transmission independent.

Thompson says Sylantro will announce a third key component in its ASP strategy at SUPERCOMM.

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