IDC Maps Out Course For ASP And Software Vendor Partnerships

FRAMINGHAM, MA – MAY 16, 2000 – For the application service provider (ASP) concept to be successful, effective partnerships between software vendors and ASPs are critical. However, many software vendors are having a great deal of difficulty navigating the partnership course. In its

new report, Partnering with ASPs: Licensing and Channel Strategies, IDC provides a road map for this most essential excursion.

"Software vendors trying to pursue ASP market opportunity absolutely must understand the partnering needs of ASPs," said Stephen Graham, vice president

of IDC's Global Software Partnering and Alliances group. "Effective partnering is a core competency that leading firms in this market will inevitably possess

and leverage to build competitive advantage."

According to IDC, the difficulty in partnering is caused by the lack of standard business models for ASP agreements, which is making it hard for

vendors to fully appreciate the broader implications of a potential deal until after it has been signed.

To simplify the partnering process, IDC suggests software vendors start with a thorough understanding of customer needs and partner requirements to build

adequate coverage of the market opportunity. To completely comprehend customer needs, vendors have to be aware of the buyers' decision-making process and the reasons they want to purchase from an ASP and not the vendor itself. "Coverage is where it all begins," Graham said. "All partnering strategy decisions

should begin with the end user to ensure that the vendor's profit motives are not supplanted by a desire to get involved with an emerging channel."

After considering coverage, the next step in the partnering process should be developing a value proposition. IDC says vendors cannot develop an

effective value proposition without clearly understanding the ASP business model.

"Only when coverage and value proposition have been considered should vendors think about negotiating agreements with prospective partners," Graham

said.

To simplify the process of selecting partners, IDC has developed six partner agreement models. These models are published in Partnering with ASPs:

Licensing and Channel Strategies (IDC #B22202). In addition to outlining the partner agreements, the report looks at the key issues ISVs face when they

partner with ASPs and how they can address these issues. The report also examines customer needs and ASP business issues. To order a copy, contact

Cheryl Toffel at 1-800-343-4952, ext. 4389 or at ctoffel@idc.com.

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound

business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of

rigorous primary research and in-depth competitive analysis. IDC provides 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, ebusiness companies, and the financial community.

Additional information can be found at http://www.idc.com.

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

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