CAs Big ASP Plans Creeping

Company slow to deliver on ambitious scheme.

When Computer Associates International Inc. showcased its entry into the application service provider field last summer, the project was said to be symbolic of a new effort to highlight hidden gems under the $6 billion CA umbrella. It was, according to CA officials, to come out of the gate with experienced employees, a handful of high-profile customers and a steady revenue stream.

Six months later, however, the iCan-ASP subsidiary is still months away from introducing its first product, at which time it will likely meet with wary customers and stiff competition.

"Right now theres a little bit of uncertainty [in the marketplace about a company like iCan], so thats a challenge," Nancy Li, iCans CEO and former CA chief technology officer, said last week at the subsidiarys headquarters here.

At the time of its launch in August, CA CEO Sanjay Kumar said the ASP group was already a year into development. Kumar said the fledgling subsidiary would roll out that month with customers and revenue from the transfer of existing CA contracts with companies such as Nortel Networks Corp. and Hong Kong Telecom.

CTO Yogesh Gupta also described iCan as a high-growth business that "if independent in the marketplace, would be large com- pared to peers."

But as further details of its product development and the status of its customer base emerge, the future for iCan seems less bright, although it will play in a market that holds promise.

iCans core product, code-named ASP in a Can, will be a platform for controlling the infrastructure and management services of application hosting, such as provisioning, metering and SLA (service-level agreement) enforcement, according to Li. The product will have been two years in the making if it hits its target ship date in late March.

As for customers, iCan officials now say the list is limited to a half-dozen smaller service providers—mostly in Asia—that have signed "memos of understanding" as pay-to-play beta users. Revenue from those evaluators is "nowhere near what the cost of the software is," said a source within iCan.

CA officials did not respond to numerous requests for comments to clarify Kumars initial characterization of iCan. Beta testing on the iCan product began about two months ago, and announcements of real, paying customers are imminent, Li said.

At least one beta tester has agreed to buy ASP in a Can when it ships. Centrixnet Solutions Inc., a service provider in Salt Lake City, uses iCans product for SLAs, metering and other services in conjunction with its own ASP- model wireless broadband tools for small and midsize enterprises.

"We have a confidence level with CA," said Centrixnet President and CEO Mac Adamson, whose company has been a CA customer since last month. "We look at [iCan] as an extension."

iCan is targeting its software at telcos; Internet service providers; ASPs; ASP aggregators; and any other company that plans to make, sell or resell hosted applications. iCan plans to sell the product through direct and reseller channels, while CAs own sales force will deal with the enterprise sector, Li said.

Industry insiders say products such as iCans will be vital if service-based software is to succeed. But iCans approach remains questionable.

"I think iCan-ASP will have a lot of competition," said Laura McCabe, an analyst at Summit Strategies Inc., in Boston. "There are also a lot of advantages to taking best of breed and knitting them together."

"Youve got to execute really fast, and youve got to get it right," said Dave Castellani, CEO of Mi8 Corp., a New York-based full-service ASP. Like many service providers, Mi8 developed in-house some of what the iCan software tool is expected to offer, but the com

pany would have considered buying it from someone else had such a product been available, Castellani said.

Still, he asked of the forthcoming iCan product, "Is it going to work? Is it scalable? Is it complete? If they were pitching us ... theyd have to prove it to me."

John Steensen, CTO of top-tier hosting company Intira Corp., of Pleasanton, Calif., points out other pitfalls.

"[System management] has always been one of [CAs] core competencies," Steensen said. "But theres always a dichotomy of Are you my supplier or my competitor? Whats our incentive if working with you will move some of our customers to you?"

"We absolutely see a need for products like this in the marketplace," Steensen added. Intira also built similar services in-house out of necessity—having it be available from a third party would be a plus, he said.

Li hopes others see that need as well and that iCan will assuage their hesitancies. "Even though we are funded by CA and were not looking for outside funding, we went through all the pains of a startup with our projections and research of the marketplace," Li said. "Were shooting for certain revenue targets, like double-digit millions toward the end of the fiscal year.

"In our first release, the focus is the hosting framework and the OSS [operations support system] solution," Li said. Another key feature is an Extensible Markup Language and Java-based control portal that is configurable for end users or service providers, which will allow for remote control of provisioning, account usage and service-level management.

Sales of the software will be through both term and subscription models. No timetable exists for a possible public offering, Li said, adding that "our road map is to become an independent company." Version 2 of the product is planned for the third quarter, she said.

On the topic of competition, Li admits that the market is open to many players. Potential competition, according to Li, could come from Microsoft Corp. and its .Net platform, from an enablement company such as Citrix Systems Inc., or from a telecommunications or managed infrastructure company like WorldCom Inc. or its Digex subsidiary.