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Application hosting providers cultivate more complex service offerings
The evolution of man occurred over millions of years, a painstakingly slow process of mutation and adaptation amid a constantly changing environment. ASPs are evolving as well, except they're forced to adapt in Internet time.
Still a relatively new animal, ASPs are scrambling to meet rising customer demands for increasingly complex offerings and services. No longer simply renting out applications, ASPs are now functioning as integrators and portals, serving midsize and enterprise customers on what is slowly but surely becoming a worldwide scale.
Industry executives and observers say that's a far cry from ASPs' initial mission of supplying reduced cost of ownership, hassle-free delivery and speedy implementation of software. And the market for hosted application services stands to explode, projected to reach $25.3 billion by 2004, up from $1 billion last year, according to research firm Dataquest.
"If you look at the evolution of the ASP business, at first we were about taking an application and hosting it. The business model was as simple as that," says Kirk Krappe, senior vice president of products and markets at ASP Corio. "But we started getting all of these requests from customers, so we asked ourselves, 'What other services can we offer?' "
Over time, Corio's clients have increasingly demanded customized software, even though the applications it hosts are standard off-the-- shelf products, says Krappe. And since hosted apps are only as good as the other applications with which they communicate, Corio preintegrates the products it hosts, he adds.
"If you buy an SAP-hosted offering from Corio, it's already integrated to Siebel, and we've already written connectors to applications we don't host," Krappe says.
The Redwood City, Calif., ASP isn't alone in its push to provide integration services, says Laurie McCabe, > > vice president and service director at research firm Summit Strategies. "What we are seeing is that more and more ASPs are becoming ASP integrators," says McCabe. "They take responsibility and manage all the relationships and back-end integration of different applications and services on behalf of the customer."
Yet Corio's business has changed beyond the growth of its customization and integration services. It also has developed iView, a business-to-- employee service that creates a customized portal built...