Tackling a Host of Options

When ASPs partner with other providers, customers need to nail down service responsibilities.

Attention, Enterprise ASP customers: Do you know for sure whos managing your mission-critical data, and whos taking responsibility for making sure the applications you depend on are available when you need them?

These days, the answers to those questions are not so obvious. Thats because more and more application service providers, rather than hosting applications and creating new managed services themselves, are instead contracting with other online providers for significant portions of the online services they offer to customers.

The good news, experts say, is that, as a result of this trend, enterprise IT managers will be able to obtain a wide range of hosted applications and managed services from a single ASP source.

The not-so-good news? Before signing on with an ASP, experts say, IT managers will need to do more research to understand where services are coming from and just how secure and reliable they really are.

"If you look at the ASP supply chain, there are a lot of moving parts, including data centers, power supplies, storage, IP infrastructure, monitoring, security and more," said Lew Hollerbach, managing director at Aberdeen Group Inc., in Boston. "ASPs are realizing that you dont really need to own it all. They can partner for a lot of it."

So what are ASPs, in essence, outsourcing to other ASPs and MSPs (management service providers)? Anything and everything, starting with core infrastructure: data centers and networks. ASPs and independent software vendors becoming ASPs are turning to large outsourcing providers to host their applications. Sabre Holdings Corp., in Fort Worth, Texas, for example, said applications from its eMergo ASP unit are being hosted by Electronic Data Systems Corp., in Plano, Texas. Similarly, ERP vendor QAD Inc., of Carpinteria, Calif., is using IBM to host its new ASP offerings.

Some ASPs are even repositioning to become hosting providers for other ASPs. USinternetworking Inc., for example, has 34 ISVs in its AppHost service. They include a range of Web-based application developers, including eRoom Technology Inc. and Niku Corp.

Many ASPs are also looking to partners for managed services that they can resell to enterprise customers. Elite.com Inc., an online time and billing ASP for professional companies, for example, uses a hosted PKI (public-key infrastructure) service—CerTrax managed PKI Service from Certia Inc., of Herndon, Va.—to provide its managed security offerings. Similarly, IntelliServices Inc., an ASP for health care providers that is based in Charlotte, N.C., gets its hosted security services from Telenisus Corp., a security MSP in Rolling Meadows, Ill.

Experts say there are a couple of reasons why ASPs are turning to other ASPs and MSPs for core parts of their business. First, enterprise customers are increasingly demanding that ASPs provide customized, managed services, not just one-size-fits-all hosted applications. To meet that demand without going broke, Aberdeens Hollerbach said, ASPs must partner for services rather than build them themselves.

Secondly, Hollerbach said, compared with just a couple of years ago, when ASP pioneers such as USi and Corio Inc. launched, ASPs today can easily tap into hundreds of hosted services from MSPs. A growing number of startup vendors are focusing on linking ASPs with third-party infrastructure providers. Techsar Inc., Xevo Corp., Computer Associates International Inc.s iCan and New Moon Systems Inc., for example, have emerged as so-called ASP provisioners.

While enterprise customers are likely to benefit from the wider range of managed services ASP partnering will create, however, experts say that the trend will also place increased burdens on IT managers seeking to get the best deals from their ASPs.

"The temptation is to want to hand over all responsibility to the ASP, but thats not going to work, particularly in this very dynamic environment," Hollerbach said.