Weekly Review: Old ASP Ideas Are New Again

A few months ago, a pair of would-be entrepreneurs contacted me for advice on a business idea that they'd developed. "It seems such an obvious proposition, and yet as far as we can see, no one else is doing this," they told me as we set up an appointment to meet.

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Sitting in a busy hotel lounge a week later, I listened as they enthusiastically explained their new idea: "We've both worked in the SME [small and medium enterprises] sector. We know what sort of IT headaches small businesses face," they explained. "There must be thousands of companies out there who would jump at this ... we want to deliver Microsoft Office and Exchange over a broadband link for a monthly subscription. It's perfectly feasible using Citrix technology. We can't understand why no one else is doing this."

The reason why I offer consulting as a sideline business is that it keeps me in contact with what's really happening out there in the market, as opposed to what the industry's vendors, analysts and journalists believe is going on. Because I specialize in ASP and Web services business models, it keeps me focussed on the practicalities of implementing and marketing business propositions in these emerging sectors (it's fortunate this is what I do it for, rather than the money, which startups these days are always very short of).

I'm always ready to hear virtually anything in the first meeting with a prospective new client, but this was, quite literally, the last thing I had expected. I explained that their proposition had indeed not only been tried but had proved the downfall of an entire swathe of the first generation of ASPs, from startups like FutureLink to big names like the a-Services venture by Cable & Wireless. The pair had had trouble finding anyone doing the same thing they had in mind, for the simple reason that they'd started looking just after the last of those who had tried before them had finally expired.

The Energy of the Innocent
I could see their enthusiasm was undimmed, so I suggested they study some of the survivors who do seem to be making the model work, such as Telecomputing in Norway, Multrix in the Netherlands, ManagedOps, Veracicom and others in the U.S. To understand more about the pitfalls on which others had stumbled, I recommended they speak to vendors with a lot of experience of working with ASPs of this type, including IBM, Microsoft, Progress Software, Softricity, Tarantella and, of course, Citrix.

Since I'm always wary of writing off any idea as having no chance whatsoever, I concluded with the thought that, perhaps at the very moment when everyone has rejected the concept, the time is now ripe to make a successful business out of it. There are technologies available today that counteract many of the management and deployment challenges faced by first-generation ASPs, much of it developed as a direct result of their experiences. It may never be a goldmine, but there's every chance that such a business today might well produce a moderate and sustainable return. I wished them well with the venture and took my leave. I haven't heard from them since.

Fresh Look at Passing Fads
The encounter was a valuable reminder for me of the way new ideas ripple through the population. Some seven years after the early pioneers began to think about using Citrix technology to deliver applications-to-rent, others are still coming up with the idea today, completely innocent of its long history.

Why should they know any different? They've been getting on with their lives, immersed in their work, their families and their outside interests, never once having any cause to look into the niche fads of each passing year. They arrive at the concept with a completely fresh approach, simultaneously ignorant of and yet advantaged by the accumulated wisdom of others who've come — and gone — before them.

Thanks to this encounter, I'm no longer surprised by or derisive of new entrants into the ASP market, however outdated and bankrupt their proposition appears to be at first sight.

A Yen for the ASP Model
Last week, for instance, Fujitsu Outsourcing Service announced that, "beginning June 10, it will become the first Japanese company to provide an outsourcing service to distribute PC applications to end-users."

How can I, without knowing the details of the proposition, dismiss the plan as a naive, inadequately researched and ultimately doomed adventure by the Japanese computing giant? "The Applications on the Fly (AppFly) service ... will allow user companies to launch an ASP-based application software distribution service," reported Japanese news agency NDC. Independent software vendors (ISVs), ISPs or enterprise users will be able to set up applications for an initial fee of 750,000 yen ($5,859), followed by a monthly fee per 100 users of 70,000 yen ($547).

Learn From the Past
With access to the right expertise, management tools and marketing skills — along with a realistic business plan — I believe it is now possible for virtually any form of ASP venture to be successful. But one thing I think I can say with certainty is that there is no ASP proposition that has not been tried before. If you don't take the trouble to research what those ASPs did and to learn from their mistakes, then it doesn't make any difference whether you're a huge enterprise or a humble startup, I can guarantee you'll repeat the very same mistakes.

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