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By Phil Wainewright April 9, 2001 Despite the news that one more pioneer is to scale back its ASP operations, many other companies were continuing to expand their investments this week in developing online applications and managed services. Interliant, which first introduced hosted Notes services in 1994, gave up its expansion into high-end application services last week. The provider said it expects to sell off its division offering hosted enterprise resource planning (ERP) software, and in the meantime has suspended any further investment in offering enterprise applications such as financials, human resources, customer relationship management (CRM) and e-commerce solutions. (See related story, Interliant Lays Off 14%, Reduces Earnings Outlook.) Interliant's venture into hosting high-end applications came after its acquisitions of Peoplesoft application outsourcer reSource Partner (rSP) and systems consultant Soft Link in March of last year. (See Exchange to get ASP makeover, March 16th 2000.) It had built up a lengthy track record in hosting the Lotus Notes messaging system for midsized business and also hosted a large number of small business websites. The move to add online applications first began in 1998, and indeed the first-ever online news story by ASPnews.com reported the launch of Interliant's AppsOnline rented applications portal (see Interliant site offers instant online rental, Sept. 23rd 1998). Its later strategy to add enterprise applications became the subject of an ASPnews.com white paper, Interliant: ASP Fusion for the Enterprise (PDF format, 81k), published September 1999. The idea was that Interliant would offer a complete portfolio of solutions for the small to mid-size company, capable of acquiring customers at any stage in their development, and thus able to grow with them. But in the harsh light of today's economic reality, hindsight also suggests that this was a misplaced attempt to grab first-mover advantage across the whole spectrum of the emerging ASP market. Interliant scaled up to add enterprise applications such as Peoplesoft because it was scared of losing out to competitors at the prestigious high end. The unfortunate result now is a loss of face as it is forced to jettison the misplaced strategy. Managed websites and hosted messaging weren't sexy enough for Interliant a year ago; fortunately market demand has kept them ticking along nicely for the provider, and now it has decided to refocus all its energies on those areas. Interliant's error of judgement at the peak of last year's funding euphoria seems small compared to the excesses seen elsewhere. Debt-strapped broadband provider and ASP Winstar laid off large numbers of staff at its Office.com small business portal. Office.com has been a success in terms of winning large volumes of traffic as one of the Internet's most visited small business destinations, but it doesn't make money (See Office.com Burned by Winstar Cuts; Lays off 50%.) One interesting footnote to that story is a vivid reminder of those now long-ago times: TV network CBS gained its one-third stake in Office.com in April 1999 by trading in $42 million worth of advertising for it.
Heavyweight Enthusiasts Heavyweight enthusiasm came with the launch by IT services giant EDS of a new high-availability web hosting service in partnership with Microsoft, Compaq and Intel. Like Genuity and Loudcloud, EDS is offering a broadening range of managed hosting packaged services. But despite its undoubted expertise and longstanding background in outsourced computing, it never seems to set the world alight with its offerings. A year ago, EDS launched itself with much fanfare into the managed hosting arena, offering its services both to end user businesses and to ASPs on a white-label basis. But that initiative made no headlines after the initial announcement. As an ASP, EDS has an image problem, perceived as reliable but also unfamiliar with the special demands of Internet-based hosting. The need to bring web-savvy skills to bear on opportunities in the hosting market is amply illustrated by SAP's recruitment of portal expert Yahoo! to help build and host its enterprise portal offerings. Even though SAP has just tied up a deal to buy enterprise information portal platform vendor TopTier, it is still obliged to team up with Yahoo! to establish credibility as a pocket of portal expertise. This review of the week's news highlights is by ASPnews.com founder and consulting analyst Phil Wainewright. A comprehensive news digest is published every month in the ASP News Review newsletter, available exclusively to subscribers. |