ASP so far fails to live up to potential

ASP is supposed to offer massive business potential, but it is still to realise the big predictions that have been made for it.

ASP is supposed to offer massive business potential, but it is still to realise the big predictions that have been made for it.

According to the analysts, ASP is supposed to be a massive opportunity. Some even predicted it would be a multi-billion industry by 2002, a mere 12 months away.

But the reports back from the frontline don't seem to back it up. Yuri Pasea, managing director of FutureLink Europe, which launched an ASP division nine months ago, admitted last week that the ASP sector had not taken off as predicted.

There's no way I can tell you, hand on heart, that its been a wonderful success based on analyst predictions. He suggests that the industry has been a victim of its own hype, claiming that most of the marketing around ASP has been directed at people in the industry rather than customers. That said, he's not disconsolate about it.

Meanwhile, Horizon Technology blamed its investment in the ASP market for a 35 per cent drop in profits in the six months to 31 December. In a statement, chief executive Samir Naji said "In April last year the group launched ASP i-Fusion and because this business model requires significant upfront investment, the group flagged that initially this would be a loss-making business."

At the same time, Microsoft group marketing director Jeremy Gittins revealed that Office had not been as successful in the ASP market as the software giant had originally envisaged, partly because people seemed more than happy to stick with it on their hard drive, rather than farm it out to somebody else.

Who are the customers? It had been assumed that smaller businesses would be the most attracted to the idea of ASP, because they would be happy to allow someone else to run their IT operation and free up their limited resources to concentrate on other aspects of their business. As with so many assumptions about SMEs, it has proved not to be the case.

Instead, most of the interest has come from enterprise businesses with plans to deploy one or two applications across 100 seats or more.

The consensus seems to be that as such companies are used to the concept of outsourcing, they have found it easier to get their heads around the idea of shifting to an ASP model.

As Pasea puts it: “We’re not offering them something that hasn't happened before; Smaller companies appear to have taken a much more conservative approach to the situation, steering clear of any risk until the concept has proven itself.

Charting a difficult course The issue now is whether the business drivers are in place, as much as any necessary technology, to make the ASP case attractive to resellers and their customers.

Current indicators would suggest not yet. And if the present US slowdown drifts over to this side of the Atlantic, the incentive to shift to something new and untested when it's a question of all hands on deck could be even less pronounced than it is now.

Read more on IT outsourcing