ASPs: Vertical Industry Strategy Key to Future Success, IDC Says

SAN FRANCISCO, APRIL 6, 2000 – At IDC's AppSourcing Forum, which concluded yesterday at the Hotel Nikko in San Francisco, analysts and other industry experts stressed the same party line. Taking a vertical industry approach to the application service provider (ASP) market is critical to achieving the most successful business model. By focusing on vertical industries, ASPs can package more complete solutions for their target customers.

"The key message for attendees to take away from the past two days at IDC's AppSourcing Forum is that a vertical industry strategy is critical to the success of an ASP," said Clare Gillan, group vice president for IDC's Applications and Information Access research.

"How vertical should you go?" asked an attendee during Gillan's interview of Paul Loftus, general manager, Solutions and Integration for IBM's Software Group. "Go as deep as you can within the vertical industry, and go as deep as you need to in order to stay ahead of your competition in terms of the technology," Loftus replied. In further reference to verticals, Loftus advised, "Focus on them and know them inside and out."

In a morning panel discussion, venture capitalists concurred that the best long-term business model for an ASP is to focus on a specific vertical industry. Creating a sustainable, reliable, and secure infrastructure on which to survive in the exploding ASP marketplace will be important to the success of an ASP. In addition, offering system integration solutions will be a powerful differentiator as well as staying away from complicated customized applications to achieve a sustainable and efficient service delivery.

"Customization is the enemy," observed John Gantz, IDC's senior vice president and chief research officer, during his closing remarks. "ASPs need to serve the needs of many and not get sucked into time-consuming and inefficient customization apps."

In one final note, Gantz optimistically stated, "Some of you will be market leaders in six years, and some of you will be millionaires in three years!"

IDC Conference on ASPs

IDC's AppSourcing Forum: Managing and Growing a World-Class ASP Business explored what it takes to succeed in the ASP market. This conference featured industry analysis and forecasting combined with customer feedback, case studies, and actionable advice from ASP experts. It took place April 4-5, 2000, at the Hotel Nikko in San Francisco. For more information about how to purchase the event's main session video tape, visit

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 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at

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

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