ASPs Strive to Master Business Model, According to IDC

FRAMINGHAM, MASS., FEBRUARY 8, 2000 — Although early entrance into the application service provider (ASP) market is one of the keys to success, being first to market does not guarantee long-term success in this still emerging market. According to an IDC study of 23 leading ASPs, companies in this market need to master the complexities of their business model — and most are still struggling.

"Brand equity alone will not be enough to enable today's leaders to become tomorrow's mainstays in the application service provider market. ASPs must be able to leverage the knowledge they acquire," said Meredith McCarty Whalen, manager for IDC's Internet Services and Application Service Providers research programs. "Today's ASPs are rapidly moving down the learning curve of a business model, the complexity of which shouldn't be underestimated. They're learning about the finiteness of partnering, the complexities of operations, and the importance of scalability. How well an ASP learns these lessons will be a key determinant to its future success."

Report Findings

Most ASPs are targeting selected industries, with manufacturing, financial services, and services mentioned most frequently.

One of the biggest challenges ASPs face is expanding their operations with global consistency.

Most ASPs rely heavily on partnerships for either the application or the network infrastructure. However, many are still struggling with the question of who to partner with.

While partners play an important role in the ASPs sales process, most ASPs are not utilizing all of their channel options.

In its new report, IDC’s Application Service Provider Leadership Study: Building, Managing, and Growing an ASP Business (IDC #B21129), IDC examines the developing ASP market. The report profiles the offerings and business models of 23 leading companies in the market. It paints an overall picture of the ASP market and provides information on each company's:

ASP service offering

Target customers

Plans for geographic expansion

Pricing

Sales strategies

Service delivery

Partnerships

The companies profiled are as follows: Applicast, AristaSoft, BrightStar Technology Information Group, Corio, CyLex, eALITY, ebaseOne Corp., EDS, Eggrock, eOnline Inc., FutureLink Distribution Corp., IBM Global Services, Interliant, Interpath Communications, LearningStation.com, NaviSite, Oracle Business Online, QSP Inc., Qwest CyberSolutions, Telecomputing, The TriZetto Group Inc., USinternetworking, and World Technology Services. To order a copy of the report, contact Sally Donovan at 1-800-343-4952, ext. 4219 or at sdonovan@idc.com.

IDC Conference on ASPs

IDC's AppSourcing Forum: Managing and Growing a World-Class ASP Business will also explore what it takes to succeed in the ASP market. This conference will feature industry analysis and forecasting combined with customer feedback, case studies, and actionable advice from ASP experts. It will take place April 4-5, 2000, at the Hotel Nikko in San Francisco, Calif. For more information, visit http://www.idc.com/events/asf2000/.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 42 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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