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Pure ASPs face rough ride – BT

ERP is no-go

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Pure Application Service Providers (ASPs) are in for a rough ride as big systems integrators and telcos bundle managed applications onto their offerings. They will need to provide much more than just application hosting in order to survive.

This is the message from David Furniss, BT Ignite's eBusiness VP, who compares the ASP sector to the early days of telephony services. Previously, separate organisations provided voice mail and other value added stuff, but now it is available as a bundled offering from the telephony provider. Similarly, companies buying network infrastructure in the future will expect managed applications to be bundled into the mix.

BT Ignite currently flogs systems integration, content hosting, Internet services, network access and more. This positions the company precisely where it sees the ASP (or managed application) market moving.

According to Furniss, industry views of ASPs have changed significantly over the last two years. Previously, it was perceived as a hosted rental model focused on SMEs and often involved with ERP. Now it requires mixed deployment (some applications hosted externally, some remaining internal); it is aimed at enterprise companies; and ERP is a no-go.

This viewpoint is backed by research commissioned by BT Ignite, showing that company size is a key factor in the adoption of ASP solutions. On average, companies employing over 500 staff are "more than twice as likely to use the ASP model than their smaller counterparts, with large retail enterprises in the financial services and retail sectors being five times more likely to adopt an ASP solution."

And don't think it will come cheap, Furniss points out that 'rented' software, like a rental car, will cost more than purchasing the software outright, but offers the benefits of flexibility, freeing up of resources, reduced in-house support costs and the ability to update systems more easily. ®

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