ASPnews Home

News

Analysis

Trends

Strategies

ASP Directory

Community

About Us

Search ASPnews:



internet.com
Developer
Downloads
International
Internet Lists
Internet News
Internet Resources
IT
Linux/Open Source
Personal Technology
Small Business
Windows Technology
xSP Resources
Search internet.com
Advertise
Corporate Info
Newsletters
Tech Jobs
E-mail Offers
internet.commerce
Be a Commerce Partner
Cheap Plane Tickets
Digital Camera Review
Register Domain Name
Memory Flash Cards
Online Education
Batteries
T-Shirts
Remote Access
Advertising Trucks
Online Degrees
Best Digital Camera
Cheap Web Hosting
Digital Camera Review



ASPnews Focus
Top News:
» SOAs So Close, Yet So Far

» Why SaaS Is Making a Comeback

» Join the Discussion: ASPnews.com's industry forums

Plus:
» More ASP News

TOP 50
Top 20 Providers
 & Top 30 Enablers
Free Newsletter!



ASPnews Shortcuts
Week's Top News

ASP News at internetnews.com

Industry Events

Discussion Forums

Industry Basics

Site Guide

Get Sun Java Studio Enterprise and Sun JavaTM Studio Creator, plus unlimited access to the Sun Developer Network for just $995. Craft better, more reliable code faster and easier than ever before.

STRATEGIES
 


WebSideStory: An ASP Survivor
By Kevin Newcomb

March 4, 2004

On-demand Web analytics provider WebSideStory has weathered the stormy seas of the ASP industry, and is confident that better times lay ahead. Today, the company is finding success with a straightforward plan — to make its service simple, relevant and real-time.

“Users need to have simple, unambiguous graphical presentation layers that communicate information very quickly. They need to be simple to implement so the ultimate end user can change it without going through IT,” Chief Marketing Officer Rand Schulman tells ASPnews.

To this end, WebSideStory in February debuted HBX, its next-generation data collection and mining service. HBX, the tenth version of the enterprise-class HitBox analytics service, integrates WebSideStory’s real-time data collection architecture with the ability to mine visitor data down to the individual browsing session. The result is up-to-the-second visitor intelligence that is highly actionable.

HBX includes custom-defined graphical key performance indicators (KPIs), including gauges and interactive charts, that enable users to chart their site performance against corporate goals. Affinity reporting features enable users to understand and establish relationships between two or more distinctive pages or content groups, allowing a commerce site to optimize cross-sell opportunities or a media site to sell more advertising.

HBX allows users to access all the data it generates via products they already use, like Microsoft Excel, rather than solely through the interface of that software product. “Ultimately, the products need to work within the user’s workflow, they need to be relevant,” Schulman said.

Opinions on the ASP concept have ranged widely over the past few years — from being touted as the future of software, to being considered an outdated concept. As in most cases, the truth lies somewhere in the middle. Companies like WebSideStory who have stuck with the model through thick and thin are now starting to reap their rewards, as public opinion of the industry has taken a swing back toward the positive, and more companies are looking to software service providers to fulfill their IT needs.

According to Schulman, the upswing in the adoption of ASP is based on both the ease of implementation of the ASP model, in that it doesnt involve IT, and the push-back of enterprises in the traditional software licensing models, where companies are questioning the tactics of vendors like Microsoft, SAP or Siebel who make a significant portion of their recurring revenue on maintenance and support.

“Enterprises are pushing back, saying ‘I bought this software license, you guys need to support this. And by the way, we’re not going to upgrade, so you’re going to have to support us longer,'” Schulman says.

An inherent difference between the two software models is in the incentive the company has to satisfy its customers, Schulman says. “Software companies have a conflict of interest — it’s their job to make sure the customer is NOT happy, so they can sell them an upgrade in two years. We have a large amount of the company completely dedicated to supporting the customer on a daily basis. We’re not even charging these guys, it’s implied in the model.”

In contrast, the ASP model is highly responsive to customer demand, with new product revisions released three or four times a year, compared with one new release every 12 to 18 months with traditional software. Feedback from customers can usually be built into HBX within six months, and sometimes in three, he says.

“ASPs save company money, and allow the company to make more money and yield a greater ROI, because they are building features and functions that are required by the marketplace,” Schulman says.

WebSideStory, founded in 1996, was a very early leader in the ASP space. After the initial ASP hype phase subsided, the company saw a decline in the ASP adoption rate, based on both broader economic conditions, as well as confusion in the marketplace as to the definition of what an ASP is, Schulman says.

“For instance, I don’t consider USi to be an ASP, since they’re hosting other people’s products,” he says. “That whole business model didn’t work out, because they had to buy the application from PeopleSoft or Siebel and then lease chunks of it out to the market. There’s some basic confusion as to the true benefits of ASPs.”

One thing that has helped eliminate that confusion is the evolution of ASP services over the years. Rather than targeting the IT decision-makers, who have sometimes felt threatened by a perceived loss of control to an ASP, today’s ASPs have grown in functionality while simplifying their use, so that the end users are the ones who go to management and pitch the benefits of the service.

“I believe the products have become much more simple to use, so you can build demand from the targeted user, in our case the marketing individual. Plus these products are much easier to implement. In the old days, it took a plethora of people to customize the tags and implementation scripts. With the release of HBX, the user will be able to implement these things very simply and the end user will be able to customize the kinds of data they expect out of these products without involving IT,” Schulman says.

The rising demand for software delivered as a service is going to take its toll on the enterprise software giants, Schulman says. As more companies embrace the on-demand model, customers are going to require it as an option, and those that don’t have an on-demand option are going to be negatively affected, he says.

“It’s going to negatively impact the big software companies, but that what happens in the computing business,” he says. “There’s always evolutionary change, where leaders in one decade are laggards in another. Now’s the time for the leadership of the industry to change from those who have this installed base of software to those who are creating on-demand products. What we’re talking about is the future of computing.”

It won’t be easy for the ones that do buy or build an on-demand offering to succeed, he says. Fear of competing with their primary software business as they change over to the ASP model has kept companies like Siebel and Oracle from getting involved until now, he says.

“Public software companies are really going to have to be able to explain the balance sheet differences based on the new way they’re selling software,” Schulman says. “They have all these stockholders that have looked at the company in a certain way, and they’re going to have to rearrange their mindset. Companies are going to have to communicate why it’s different.”

Even after the larger players decide to get into the industry, it may not be as simple as they think to succeed, Schulman says. Being successful with the ASP model is tricky — there are issues to deal with that aren’t there in regular software, like all the administrative functions that ASPs have to build into their product and running a huge NOC. Most software companies in the past have focused on building a software application and never had to deal with those kinds of issues, he says.

Life as a public company for those who have delivered on-demand services from the start will not be as difficult, Schulman says. With salesforce.com filing for a public offering in December 2003, and others like NetSuite, RightNow and WebSideStory presumably not far behind, there are real benefits of the model from an investors point of view.

In licensed software companies, talk around the end of a quarter may turn to the ‘elephant on the fence’ — which way will that elephant fall, regarding a big deal — into the quarter or out of the quarter, Schulman says. “For ASPs, it’s not that way. We have visibility into the revenue, an in addition we have new business coming in on top of it.”

WebSideStory’s customer attrition rate is down to about 9 percent a year, and on top of that, they continue to sell new bookings. From an investor’s standpoint, ASPs like WebSideStory are garnering huge multiples of earnings and revenues, between 35 and 55 times forward earnings, he says.

In a traditional enterprise software company, up to 30 to 50 percent of the installed base doesn’t upgrade, and that’s going up, because people overbought licenses and don’t want to buy any more, Schulman says. Instead of upgrading, some companies end up establishing their own internal expertise on the software version they have, and not paying any more to the software company.

“That’s like every buildings having its own power-generating plant, maintaining its own generator and having its own mechanics, rather than having a regional utility company,” Schulman says. “ASP computing represents the move away from that.”

Email this Article
View Printable Version
Back to Companies

 

Featured Links
Learn the secrets of the popular search engines!
Free Web Hosting Buyer's Guide -- Click Here!
Enhance your Web site with the Dynamic HTML HierMenus Code


JupiterWeb networks:

internet.comearthweb.comDevx.comGraphics.com

Search JupiterWeb:

Jupitermedia Corporation has three divisions:
Jupiterimages, JupiterWeb and JupiterResearch

Copyright 2005 Jupitermedia Corporation All Rights Reserved.
Legal Notices, Licensing, Reprints, & Permissions, Privacy Policy.

Jupitermedia Corporate Info | Newsletters | Tech Jobs | Shopping | E-mail Offers


Give us your Feedback