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A Winning Combination: Software-as-Services Plus Business Consulting and Process Services
By Laurie McCabe
January 30, 2004
A natural consequence of the multi-tiered computing architecture that enables the ASP model has been its resolution into a number of interlocking layers, each with its own areas of core competence. With various elements of the solution performed on separate, specialist servers, it becomes an obvious next step to have each of those elements catered for by separate, specialist providers.
Within each of those layers there are many different possible components. While an end user customer experiencing an ASP solution will deal with only one provider, in most cases that solution will be made up of various components coming from several providers at different layers of the solution stack. Alternatively, it may be fulfilled by just one or two providers, each of whose activities straddle several layers. Some major participants may never have a direct ASP relationship with the end customer.
Some ASPs continue to argue in favour of a vertically-integrated model in which they own and control every element from top to bottom, while others promote the merits of outsourcing to best-of-breed providers. The former approach can deliver tighter integration and more assured control, while the latter normally benefits from greater economies of scale. But every provider outsources at least some element of the solution. Those who host at their own data centres rarely write their own software. None, so far as ASPnews.com is aware, generate their own electricity. It is up to providers – and their customers – to weigh the risk of outsourcing against the cost of in-house provision, and strike the balance that best suits their particular requirements.
ASPnews.com divides the ASP channel into the four primary layers described here. Every solution is made up of all four layers, irrespective of whether there is just one or a multitude of providers who participate.
The first step in the chain is fulfilled by solution providers. These are the true ASPs, who package the software and infrastructure ingredients together with business and professional services to create a finished offering to present to the end customer.
The simplest ASP offerings are completely automated. End users access them directly from a web site in order to achieve a finished goal, such as renting and building a simple e-commerce site, or performing a videoconferencing call. Sometimes, they may generate a physical result, for instance an online design application might allow users to create, specify and order printed business stationery.
Others add the services of a human operator to fufil a professional or business service. An accountancy application service might include the provision of bookkeeping services or cashflow management. In business process outsourcing, human operators complement software automation to provide a complete business function.
More sophisticated providers act as aggregators of multiple services. They use their expertise and knowledge of the market to combine application services to meet a user’s needs, also taking care of implementing the applications and ensuring they integrate with existing systems. In some cases they may additionally source or deliver professional services that complement the online applications. IT resellers, systems integrators and other professional service providers often act as implementation and consulting partners in these engagements.
Integration is becoming an increasingly important part of the aggregator role, as customers seek to extend the range of ASP solutions they take advantage of. In some cases the aggregator’s only role is as an integrated access point for services that originate from other providers. Volume market providers such as telecoms providers, banks and professional organisations are most likely to play this virtual ASP role. Such mass market aggregation, for instance of Internet access, phone services and online applications,promises to bring application services to new volume price points and market penetration.
Software providers add the vital ingredient that enables the finished application service. The software may be a ready-made, packaged application that is adapted for ASP delivery, or it may be specifically developed for the purpose. There are a number of application server platforms suitable for the creation of ASP offerings, although at present few offer a complete set of services for functions such as service deployment, subscriber management, support, service level management and billing.
While most development is done in-house by ISVs, a growing number of software houses and integrators are developing specialist skills in building online application services to order.
The next layer is a rapidly-emerging space with rich pickings for talented early entrants. Many providers offer individual services such as utility storage and server hosting, or operational resources such as call centres, finance, technical support and so on.
Some have gone on to co-ordinate third-party services along with their own in-house skills and resources to provide a complete infrastructure that allows their clients to operate as ASPs. This ASP infrastructure provider (AIP) role includes the co-ordination of network and systems management, the supply, operation and management of systems hardware and software, and the management of ASP subscriber accounts, billing and customer support. A further important element comprises application management, service level monitoring, helpdesk infrastructure and the streamlined messaging of alerts and support information between partners within the ASP channel stack.
Many ASP pioneers have gravitated towards this AIP role, sensing the opportunity to turn their early experience into a marketable commodity that can be packaged and sold as a solution to newcomers. They help vendors port existing client-server applications across to the ASP environment, often advising on the finetuning and re-engineering required to enable them to run effectively from a shared, Internet-based data centre.
At the network layer sit the providers of basic communications, data centre resources and value-added IP services. Communications include the physical connections, the routers that handle the IP traffic, and associated performance, reliability and security applications. Data centre resources typically embrace the provision of colocation space, protected electricity supplies, physical security and maintenance services. Value-added IP services include virtual private networking, network caching, streaming media and firewalls.
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