Enterprise software supplier JD Edwards has abandoned its strategy of operating directly as an ASP (application service provider) in favour of working through channel partners and concentrating on its core business, writes Antony Adshead.
JD Edwards set up its direct ASP division for US customers at the beginning of this year with the establishment of JDe.sourcing and made plans for a worldwide roll-out. Rival ERP (enterprise resource planning) suppliers Peoplesoft and SAP subsequently launched in-house ASP divisions.
Analysts view the move as indicating an immaturity in the ASP market as well as a rethink on the part of software suppliers. Tony Lock, analyst at Bloor Research, said, "There's no doubt that ASP is a good model, but do the software suppliers have the skills to implement it? It is perhaps better for them to allow someone else to take the blame if things go wrong rather than having their name associated with ASP delivery failures. In any case, many of the large corporates are hanging back from the ASP model and waiting for improved bandwidth and reliability. It Is the best solution for JD Edwards and we could well see SAP and Peoplesoft following suit."
JD Edwards marketing director Trevor Salomon said, "I don't agree that it looks bad. Companies have to make business decisions and work to business plans which they believe will make money and bring customers. We found that our customers wanted to work through partner channels and so this is what we will provide."
JD Edwards is the first to abandon the model in favour of developing partner channels. JDe.sourcing had only gained two customers since its launch. Those accounts are being handed to partners. On the upside, JD Edwards' partners number 22 in 18 countries, with another 40 applications for partnership being currently handled.
In May, the company announced a restructure, with the loss of 800 jobs worldwide, but announced that the direct ASP model was one to which the firm was firmly wedded.