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Early customers of application service providers tend to pull services from their ASPs, using outsourced software to run their own businesses. Now Fuji Photo Film U.S.A., a unit of the $13.2 billion Japanese conglomerate, is using an ASP to push a new line of ser- vices out to its customers.
Its a model that could unlock some of the potential of the ASP industry.
Fuji is using Breakaway Solutions to host and manage an application package that helps commercial printers and other consumers of its imaging supplies to digitize their work. Myfujifilm.com lets printers and their customers browse and retrieve stored images, proof files, and generally communicate and collaborate online throughout the design process. Four beta customers are live on the application now, with an official launch due later this summer.
The Myfujifilm service supports a critical transition in Fujis business, as the company responds to technology changes in its traditional markets. “As a manufacturer of hardware, we realize that our business will decline in conventional products, and we need to make up revenue in the digital world,” says Kirk A. Brauch, director of technology at Fuji Photo Film U.S.A.
The five-year business plan for Myfujifilm calls for the service to be a profit center and also a possible sales driver for equipment and other services. “Our first target market is Fuji customers, and this service was designed for them,” Brauch says. “But if someone else likes it, we could get them into input devices like digital cameras, output devices — a stem-to-stern offering.” In other words, as new customers try out the service, they may be enticed into buying other Fuji offerings.
Users will pay a subscription fee, as well as pay for particular events, which can then be charged to their own customers; itemizing costs is more difficult in nondigital production.
“Fuji is not trying to disintermediate its middlemen with technology, but to enable them,” says Bill Loftus, Breakaways CEO. “They want us to provide an enterprise-level service to their customers, to build and strengthen their relationship.”
After corporate bosses in Tokyo approved the project last fall, Fuji spent several million dollars on application development with asset management software vendor Engage and other companies.
The decision to look outside for management talent was made early. “We had the idea; we had some cash, but we needed someone with more expertise in managing these applications than we do,” Brauch says.
Time to market was another factor that favored the decision to outsource.
Choosing a hosting and management partner was a serious job. “We went down the path of ISPs [Internet service providers] and hosting companies,” Brauch says. “We did our due diligence because we were looking for a partnership. An ASP is not a commodity buy. Breakaway is already equipped to do what we needed them to do. They can supply the engineering talent to handle the maintenance of the code.” That makes his job easier, Brauch says. “Other guys who try to do this keep a case of Maalox under their desk.”
Another Breakaway client pushing services out to its customers via ASP is Sun Microsystems, for which the Conshohocken, Pa., company hosts and manages some 18,000 files that allow users to download and patch Sun software.
But many companies are still getting used to the idea of pulling services from an ASP, and dont see managed services as a business driver as well.
“Were in discussions with a lot of companies, but they havent quite grasped it yet as stated that way,” according to Loft*us. “This is part of the second wave of refined ideas that are coming.”
Outsourcing the management of proprietary software — turning companies into vertical service providers — could be a big business.
“Companies have invested billions and billions [of dollars] in internal applications,” Loftus says. “That is a vast, untouched asset.”
Earlier this year Ralph Szygenda, General Motors chief information officer, was quoted as saying that the automaker was considering the commercialization of some proprietary software by renting it out, but no details have emerged.
“If the Net is about building closer relationships with customers, you would think this kind of project is a natural,” says David Murray, director of sales and marketing at Fuji.