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STRATEGIES
 


Aspective Finds Success Through Pragmatism
By Paul Rubens

July 2, 2003

ASPs that offer complex, customised applications are a rare breed these days, because it’s an extremely hard way to make money. These first generation ASPs are increasingly being replaced by web native ASPs which offer configurable apps on a multi-tenanted, or one-to-many basis.

How surprising then, to find a company offering enterprise applications like Siebel and BroadVision, and making money into the bargain. Yet this is precisely what Slough, UK-based Aspective is up to: last year its sales were up 13 percent and the company made a valuable, if modest, £593,000 profit

The company’s secret is pragmatism — it gave up its pure ASP strategy when it realized that the market wasn’t going to take off fast enough and added consulting and systems integration to its offerings. More recently it has developed a CRM and portal practice built around IBM WebSphere, and a wireless field service management system which it hosts and operated for customers with large mobile maintenance crews such as utilities and cable companies.

Last year Aspective’s ASP activities made up about £7 million of its £19 million in total sales, and in addition some of the company’s consulting revenue was a direct result of its ASP activities. Striking a balance between traditional IT services and ASP services is vital for the viability of the business, because consulting and systems integration has a cash flow cycle of about 90 days, while managed services have a cash turnaround time of up to 24 months, Aspective CEO Javaid Aziz, told ASPnews. “If you stay a pure-play ASP, then you run out of cash. Each of our contracts are individually profitable, but what differs is that ASP contracts require more up-front investment. In the short term profits are higher in consulting, but over, say, 30 months it evens out,” Aziz said.

Aziz, a former CEO of IBM UK, believes that future enterprise applications will have to be delivered as services — more like web-native applications — and the reason they are not already is that big enterprise vendors are dragging their corporate feet. “Companies like Siebel, SAP and Oracle haven’t gotten there yet. These companies are going down the tubes as they don’t seem to realize that software has to be delivered as a service,” he said.

But he believes that while companies like Salesforce.com have taken the lead in web-native software delivery, their advantage will be short-lived. “Salesforce.com won’t make it as they just don’t have the money in the bank. If IBM, SAP, PeopleSoft and others put their minds to it, they will wipe Salesforce.com and the others out.”

As well as diversifying its product offerings over the last 18 months, the company has also broadened its hardware base. Whereas before it exclusively used Sun boxes and Solaris due to a clear preference expressed by customers, Aziz says that customers are now happy for their applications to be delivered from Dell NT boxes, and also IBM machines running AIX.

“Customers are no longer sensitive to the hardware we use. Or if they are, they won’t choose to outsource,” he says. In the second half of 2003 the company will be looking at the option of adopting Linux as well, he added. Each customer has dedicated copies of the applications it receives running on separate servers in a Cable & Wireless data center in London.

Keeping customers satisfied is important in any business, and Aziz says Aspective is willing to offer more than availability figures in its service level agreements. The company will tie up to 50 percent of its fee to the attainment of specified ROI figures, but expects a slice of the ROI benefits in return. This, he says, is enough to convince most customers to pay Aspective in more traditional ways.

In the future, Aspective plans to increase its security and integration services, but the next big expansion for Aspective will be into the field of business process management. “Why not deliver more of the business benefit to our customers? We can deliver an IT service on a per-day rate, or we can agree to deliver a solution, which is what we do now. Why not take the whole business process and say, ‘what do you want to achieve — we will deliver it’? We can increase the wallet share from our customers by taking responsibility for, say, a whole call center.”

Aspective certainly seems to be enjoying strong growth, and the company is making money as well. It has come a long way since it was formed as a pure ASP in December 1999, and the key to its success is that while not abandoning the ASP market, Aspective has not allowed it to sink the corporate ship.

Aziz concludes: “What we have abandoned is purity of model. Our strategy is one of realism and pragmatism — we will take a dollar from anywhere, and we will do whatever our customer wants — as long as it leverages our key asset, our people.”

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