IT managers feeling squeezed by overcrowded, overhyped ASP market.
Call it the inverse theory of overhype: The more vendors that enter the ASP market, the more wary corporate IT grows of hosted applications.
The dizzying array of application service providers is giving IT managers pause. It's also prompting analysts to warn of an inevitable shakeout among ASPs that could leave customers high and dry.
In theory, an ASP is supposed to off load the burden of managing some or all of a company's IT resources, thus freeing customers to focus on core competencies. In reality, security, network reliability, and the ability to eventually own and manage the applications being hosted are more important.
Patrick McQuown said he believes in the concept of hosting applications over the Web. It's the execution that worries him.
McQuown, president of Proteus, a Washington-based Internet strategy and consulting company, has been talking to a half-dozen ASPs about renting project management software for his consultants and developers. He is still making up his mind about the ASPs.
The sticking point
Many of the ASPs he's talked to have balked at eventually allowing Proteus to bring the rented applications in-house.
Because of this and ongoing concerns about the Internet's reliability, McQuown said he hasn't yet decided on an ASP.
"Until I hear from these companies about whether they are open [to allowing Proteus to bring the software in-house in the future], they are not going to get any business from us," McQuown said.
He is not alone. "ASP" is arguably the most overused term in the IT industry today. Over the past few months, easily more than 100 companies have announced ASP offerings. Seemingly, every vendor from ERP (enterprise resource planning) software developers to telecommunications companies (through partnerships) to startups are offering rented applications over the Web or leased lines, most often for a per-user fee.
Last week, Microsoft Corp. and Cisco Systems Inc. became the latest big names to announce an ASP partnership. The two unveiled a deal to provide back-end infrastructure to ISVs to let them host applications.
Just which of the companies claiming to offer ASP services will be left standing is anyone's guess.
"It's a nascent market," said Rita Terdiman, an analyst with Gartner Group Inc., in San Jose, Calif. "It's moving very quickly, and no one knows who are going to be the winners."
Until then, IT managers are approaching ASPs with cautionâ€"if not outright disdain.
"What you're doing is outsourcing strategic advantage," said Frank Calabrese, manager of IS at Bose Corp., in Framingham, Mass., and a PC Week Corporate Partner.
And many ASPs have yet to prove that they have the infrastructure and the ability to deliver services consistently or integrate ASP applications with legacy software, Calabrese said.
