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June 16, 2000

The swelling ranks of FSPs - Full Service Providers - gained their latest recruit today with the formal closure of PSiNet's acquisition of Metamor Worldwide.

Metamor - renamed PSINet Consulting Solutions, Inc this morning by its new parent PSINet, Inc - unveiled its FSP strategy earlier this week as the two companies put the finishing touches to completion of the deal - see related ASP News story at internetnews.com, Metamor Extends Offerings, Jun 14th, 2000.

The PSINet-Metamor combine was not the only provider to be heard promoting the FSP acronym this week. Two Atlanta-based concerns, Cereus Technology Partners, Inc and Eltrax Systems, Inc, announced an agreed merger to create an FSP on Tuesday - see related ASPnews.com story, Cereus Picks Up Eltrax In Merger, Jun 14th, 2000.

And yesterday, the grandaddy of all FSPs, Boston-based Breakaway Solutions, Inc - which adopted the acronym a year ago - released details of its latest batch of customer wins, attributing its success to the FSP model.

Summed up in the company catchphrase, "think-build-operate", Breakaway's FSP concept is to offer all the end-to-end ingredients of a solution, from strategic consultancy right through to running the end result as a hosted solution. It believes offering an end-to-end porfolio of services differentiates it from traditional consulting firms and ASPs, who each provide only half the solution.

But as this week's events have shown, many rivals are following suit and adopting the FSP model, often investing huge sums to do so. PSINet's acquisition of Metamor was valued at a cool $1.9 billion when it was first announced in late March - see related ASPnews.com story, PSINet Aims to Join ASP Giants, Mar 22nd, 2000.

A similar combination of IT services and Internet hosting muscle had been consummated a month previously with the launch of Agilera, a well-funded joint venture between top hosting provider Verio and midmarket IT services business Ciber Inc. See related ASPnews.com feature, ISP+ITS: Converging forces, Apr 14th, 2000.

Different interpretations

Metamor (now PSINet) Enterprise Solutions president Art Slotkin interprets the FSP model as meaning that customers have a single point of contact where they can offload as much - or as little - of their IT as they want. "Our FSP model allows the client to choose whatever they want from a broad continuum of services, or simply choose a service level and let us take responsibility for deciding how to deliver it," he said on Monday.

In other words, being a full service provider means offering a complete portfolio of traditional IT services as well as a specifically ASP model. Customers will be able to choose either to license software from PSINet on a monthly subscription, or have the provider take over the operation of software they already own. If they want a completely customised solution rather than a prepackaged application, PSINet will oblige.

So does the ASP model become simply another service offering in the portfolio of a new breed of consulting, outsourcing and hosting giants that call themselves FSPs? Denise Grey, president of Eltrax' ASP business unit, warns that if an ASP tries to be all things to all clients, it ends up offering watered-down solutions and under-serving its customers' IT requirements.

Her definition of full service provider has more in common with the Breakaway model, which stresses the continuum from strategic consultancy through to managing the delivered solution. The model finds its best fit with smaller, fast-growing companies that want to act fast and are constantly evolving their applications infrastructure.

"Our value proposition for customers focusses on providing break-away applications," Grey said. "We start with a business' goals and aspirations. Eltrax shows a business how to attain those goals by acting as a consultant and then backs it up with valuable services and managed customer care."

With many more providers crowding in under the FSP umbrella, it is in danger of becoming no more than a shorthand term to describe an IT services company that also happens to offer applications hosting. That will disappoint its hard core adherents, who believe it defines an integrated service model that depends on a close and constantly-evolving relationship with the client.

Additional reporting by Patricia Fusco

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