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Weekly Review: The Truth About ASP-Delivered Apps
By Phil Wainewright
August 21, 2001

Amazingly, there are still people around who believe the ASP model is all about delivering heavyweight applications in bite-sized chunks to smaller businesses. That perspective is mistaken both about the type of customer and about the type of application.
The myth that ASPs deliver what I call "cut-down software for cut-down companies" took a further battering last week with the launch of preliminary results from the ASP Industry Consortium's global survey of ASP take-up. "We were pleased to find that large businesses are leading the way in purchasing ASP services," commented Consortium chairman Paula Hunter.
In fact, the survey of more than 3,000 respondents around the globe found that larger businesses are actually more likely to buy ASP services than small businesses. (See Consortium's ASP Tracking Study Released).
Of course, the main reason smaller companies aren't buying is that the enterprise software industry has failed to adapt its products to the needs of smaller businesses. So ASPs have no choice but to market their application portfolios to the Fortune 5000 companies they were originally written for. Fortunately for them, these companies are comfortable with the concept of outsourcing, so many of them have become willing ASP customers.
Indeed, many now want to become ASPs themselves, too. At least, that seemed to be the message coming from IBM product managers at its developer's conference in San Francisco last week.
It appears that, responding to customer demand, the next version of IBM's WebSphere commerce server platform will incorporate ASP billing and security utilities. These will enable enterprises to implement internal charging for usage of their installed packaged applications such as SAP and Siebel. Although the transactions will merely record internal accounting charges from one division to another within the organisation, adding ASP functionality will make it easier to track, control and account for user consumption of IT resources.
The Web-Native Myth
Beyond this publicly stated intention, other possibilities exist, of course. Another myth about the ASP model is that it only applies to established, packaged applications. But this one is even wider of the mark than the previous one about the size of enterprise. There are already many more users of Web-native online applications delivered in the ASP model than there will ever be of traditional client-server enterprise packages such as SAP, Siebel et al.
Strangely enough, only a minority of these Web-native online applications are delivered by ASP startups. The most overlooked segment of the ASP landscape is the one that's grown out of the explosion of enterprise Web sites and portals, delivering online services and applications to employees, customers and partners. One reason it's been missed is that few currently charge a direct monetary subscription, although that doesn't make the services any less commercial.
Many of these proprietary in-house Web-native applications have been developed on application server platforms such as BEA WebLogic and IBM WebSphere, which between them contol the lion's share of the market. Building ASP access and billing functions into WebSphere will allow enterprises to turn their Web-native applications and services into revenue-generating assets, creating a huge explosion in the number of Web-native commercial ASP services — and turning an entire generation of established enterprises into ASPs.
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.