Prime pickings for ASP survivors
Reading rumors of dot-com doom can pay off with easy pickings for competitors of ailing companies, as Mark Goldin learned in October. One of Goldin's co-workers at application service provider Elite.com, spread the news of competitor Red Gorilla's falling fortunes. Both offered a Web-based time and expense application. Goldin, Elite.com's president, jumped at the chance to pluck new customers from his competitor's ashes. "They were an annoyance to us, and we were wanting them to go out of business," said Goldin, who disliked that Red Gorilla offered a free service. "So we said, 'Why don't we get in touch with Red Gorilla and see if we can migrate people to Elite?'"
It almost worked, until Red Gorilla decided to turn to another ASP for help. Ironically, by December Red Gorilla's erstwhile partner, after having trouble with the migration, was calling Elite.com to take over the former Red Gorilla customers. So far, Goldin estimates that Elite.com has added 1,000 new customers paying at least US$9.95 per month per user.
It just goes to show: One ASP's failure can be another's business opportunity. A range of ASPs have found new customers in the ruins of competitors, either by seeking out the stranded customers or striking deals with competitors.
Intranets.com gained about 11,000â€"-or 35 percentâ€"-of the customers from failed competitor HotOffice.com after the companies worked out a deal when HotOffice.com closed in November.
For enterprise-application ASPs such as Qwest Cyber Solutions though, just any competitor's customers won't do. While Qwest hasn't struck any deals with failed competitors, CEO John Charters does see an opportunity to reach out to customers from struggling ASPs. But for Qwest, the target will be Fortune 2000 companies or their divisions rather than startups or dot-coms.
Qwest found one such match after the January demise of competitor HostLogic an ASP that had hosted SAP AG enterprise resource planning software. The US subsidiary of chemical processor Prayon Group turned to Qwest to host and manage the SAP software, which it will begin doing in May.
The interest for surviving ASPs, though, is more than just gaining more business. They also hope to prove to orphaned customers that the ASP model is viable and that strong providers remain. When BrassRing Systems, a division of BrassRing developed a transition for customers of failed human resources ASP competitor iSearch, it also emphasised the stability of its financial backing.
"An ASP can be a risky bet," said Tom Kramer, BrassRing's vice president of marketing. "It's still a good idea, but just be very certain that the company you pick is going to be there month after month and year after year."
