The New Name's Not Worth It

In the ASP marketplace today, new terms appear to emerge on a daily basis. To date, there are no fewer than six labels designating providers of network-delivered applications services. These include application service providers (ASP), Internet business service providers (BSP), full service providers (FSP), solutions service providers (SSP), Internet business process outsourcers (I-BPO), and ASP aggregators. These are not to be confused with the ISVs, ISPs, NSPs, telcos, SIs, Internet data centers, and ASP enablers that are endeavoring to become ASPs themselves or to provide infrastructure services for ASPs. This taxonomic chaos would hamper the growth of an established, mainstream business model; for a new business model with unproven demand, it might prove stultifying. In their quest for product differentiation, service providers run the risk of dampening what many expect to be a booming ASP industry.

At the heart of this terminological confusion are the ASPs and BSPs. Application service providers deliver application functionality and associated services across a network to multiple customers using a "pay as you go" payment model. Providers such as Interliant, Corio, & USi, which deliver packaged applications over a network for their customers, fall into this category. Recently, business service providers (BSPs) have come to market offering web-architected one-to-many applications that clients can access with a standard browser. These providers, which include Agillion, eAlity, and Employease, offer software functionality as a pure service for a low monthly price and generally without heavy start-up investments by the customer.

These terms, however, obscure more than they reveal. Successful ASPs are not simply resellers of applications in a box. In order to survive, leading ASPs increasingly deliver integrated back- to front-office applications suites (including, in some cases, access to e-commerce portals), together with a host of integration and consulting services designed to improve their clients' technology environments and business processes. They frequently incorporate vertical expertise into their services, and many provide customized solutions as well, for a price. In other words, the most promising ASPs offer business services, as well as application services, to their clients.

For their part, today's BSPs typically provide web-native point-solution applications. Because engineered for the Internet, these applications often perform more reliably than "web-enabled" client server applications, and their ease of use and low price appeal to small companies and startups. Many BSPs, however, do not offer traditional business services to their customers, opting instead for a self-provisioning, volume-driven strategy. Whether this model can thrive without providing integration and process consulting services, or vertical industry expertise, is an open question. By way of a provisional answer, some BSPs are beginning to provide these services, either on their own or via partners. Also, BSPs such as eAlity and Agiliti provide their customers with broad suites of applications.

Thus, even though these delivery models rest on different technologies, they converge more than their labels admit on their face. And the points of convergence will multiply if, as seems likely, ASPs increase their use of web-architected applications and BSPs expand their range of applications and value-add professional services. Market convergence is also suggested by the fact that enterprise applications vendors are reengineering their applications to reside in the Internet, ASPs are partnering with electronic marketplaces, BSPs are adding to their professional services portfolios, and new service aggregators are integrating suites of third party ASP & BSP applications on unified platforms.

Under these market conditions, the differences between ASPs and BSPs become a matter of degree rather than kind. The purpose of this observation is not to dismiss these differences, but to suggest that in a market where ASPs, BSPs, FSPs, and SSPs (to name but a few) compete for an elusive, increasingly bewildered customer set, and where labels conceal at least as much as they reveal, the ASP industry should consider closing ranks, emphasizing common ground, and honing a unified marketing pitch. For after all, market share is critical only when there is a market.

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