Candle Corp addresses evolution of ASP market

For service providers, the importance of business value should be recognized. As service providers evolve from hosting to offering application support and providing business services, manageability, integration, and security become more important.
Written by ZDNet Staff, Contributor

As service providers evolve from hosting to offering application support and providing business services, manageability, integration, and security become more important. Management service providers will also play a vital role in this evolution

LOS ANGELES – Last week during a keynote presentation at the ASP Summit at COMDEX 2000 in Las Vegas, Aubrey Chernick, chairman and CEO of Candle Corporation, discussed the evolution of the ASP (application service provider) market from one focused on providing IT value to a BSP (business service provider) model that emphasizes delivering business value.

As service providers continue to elevate their value from hosting to offering application support to SMEs (small- to medium-sized enterprises) to doing the same for large enterprises to providing business services, Chernick believes that manageability, integration, and security all become more important. In addition, management service providers (MSPs) will play a vital role in this service-provider evolution.

“People often think of how the ASP industry focuses on ERP or office applications for the SME market,” said Chernick. “Success in the ASP market for the large enterprise may be better achieved via a vertical-industry strategy with a focus on business services rather than just application outsourcing.” Chernick continues by saying that this shift in thinking represents a morphing of the ASP model toward a model that is typically associated with BSPs.

According to Chernick, large enterprises face four key barriers in utilizing ASPs to outsource existing applications. The first barrier is the cost-effectiveness of outsourcing applications that typically are customized more than in the SME market. The other three issues are the technical aspects of security, integration, and technical management, including availability and service levels. Enterprise customers tend to be more formally concerned about these technical issues than SME customers.

Chernick states that service providers can target the large enterprise market through an MSP model. MSPs help companies cope with the increasing technical challenge of managing systems from networks to servers to the overall e-business infrastructure. “Candle is itself an MSP, and, through its CandleNet eBusiness Assurance solution, enables other companies to become an MSP in the service level management area,” said Chernick.

Beyond the ASP and MSP models that geared toward on IT application and operations value, Chernick noted that BSPs are focused on providing business value. Chernick points to an example of a BSP-oriented company called eMind.com, a leading provider of e-Learning services for the financial services market, that highlights its business services value over IT value.

In eMind.com’s case, business value can accrue to the HR and training area through lower training costs. Besides HR and training, the business operations area can accelerate employee training time and certification time (e.g. Series 7 and insurance licensing), meaning new sales representatives can more rapidly sell and cross-sell new financial products. This benefit becomes critically important after mergers and acquisitions that require new employees to be trained and certified in new business services.

Chernick foresees an industry of business service providers that provide network-oriented business services. Hewlett-Packard e-services and Microsoftâ.NET efforts were cited as examples of recent IT-industry initiatives in this area.

Candle is exploring technology and services partnerships with companies that would enable them to perform the baseline application integration and service-level management that large enterprises demand. On the technology side, the CandleNet eBusiness Platform(eBP) offers a “pluggable” architecture that treats legacy applications and third-party solutions as components that can be quickly restructured to meet business needs and vastly simplifies the creation of new e-business applications.

Candle’s eBusiness Assurance (eBA) solutions measure the performance of a company’s website and business-critical applications from the end-user perspective to ensure proper online customer service. Chernick adds that these solutions can be used for the SME and large enterprise markets as well as facilitating the BSP market.

According to Chernick, while these technology solutions offer answers to ASP technology issues, their greater significance is the value that they give to service providers and their customers.

"Speed-to-market is an overriding concern for businesses and the capability to integrate internal applications as well as business processes from suppliers and partners is critical," said Chernick.

"Once the integration work is completed, maintaining service levels for the company’s Web site and applications and how that pertains to the customer experience become the paramount concerns."

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