IDC Study Reveals Vast Partnering Opportunity in ASP Market

FRAMINGHAM, MA – AUGUST 16, 2000 – IDC's Priority Partners Study reveals enormous opportunity exists for partnering with application service providers (ASPs). According to IDC, more than 80% of ASPs are actively seeking software vendor partners, and a significant number are looking for service, resale, telecommunication, Internet service provider (ISP), and hardware vendor partners.

 

The study also finds the specific partnering needs of ASPs differ significantly from any other partner segment, and programs designed to meet the needs of other partner types are unlikely to satisfy the particular requirements and expectations of ASPs. For example, sales training was found to have a statistically significant correlation with an ASP's intention to grow its business with the vendor in the future, but was not statistically significant for any traditional partner segments (e.g., value-added resellers or logistic, product, or service-oriented partners).

"ASPs are seeking partnerships with a variety of technology product and service firms, with a particularly strong emphasis on software vendors. By understanding the ASPs' business needs, vendors can develop a more attractive value proposition and ensure they are easy to do business with," said Stephen Graham, vice president of IDC's Global Software Partnering and Alliances research.

This promising market represents a break for those able to take advantage of this new channel and a risk to companies that cannot modify their products and business practices to meet its needs.

IDC predicts spending on ASP services will grow to $7.7 billion in 2004, from $300 million in 1999. The likely growth of this market has the potential to displace independent software vendors (ISVs) that fail to capitalize on this change. Therefore, software vendors should attempt to understand the market coverage that can be achieved through ASPs and begin to identify appropriate partnership channels.

"Partner programs are a vital mechanism for software vendors to effectively manage sell-through and sell-with alliance relationships," Graham said. "Partner programs also offer a set of pre-defined standards that guide the agreement terms and conditions a vendor sets for interacting with partners and define a hierarchy of conditions for preferred access to vendor resources."

Partnering with ASPs — An IDC Priority Partners Study explores the issues relevant to partnering with application service providers. This report is written for vendors wishing to extend ASPs as an additional channel and provides the information and insight required to develop effective programs and compelling value propositions. It is based on a survey that measures partner characteristics and satisfaction across several dimensions. Other deliverables in the study include top-line survey results and a partner fit assessment tool. To purchase the report, 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 600 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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