There was a lot of speculation back in 1999/2000 about how the Internet was going to obsolete shrinkwrapped application software. Software vendors were going to become application service providers — ASPs — delivering their wares over the Internet for a monthly fee, and everyone was going to be a winner. Like so many of the overhyped aspirations of those years, it all ended in tears. ASPs virtually died out and the model was discredited. Or was it?
I did try to warn people back then: application software would have to change if it was going to thrive in the Internet age. But the mainstream view of the ASP model saw it as just taking the same old applications from SAP, Oracle, Microsoft or whoever and simply porting them to an Internet data center. Well, folks, it wasn't. There is only a limited market for that type of application hosting, as is shown by the likes of Corio (now part of IBM), USinternetworking (now resurgent after its earlier encounter with Chapter 11), and Oracle's own Business OnLine division (now known as Oracle On Demand). Delivering the same old software, as a service, is not what it's all about.
The real ASP model, to my mind, has always consisted of a completely new class of applications and services, designed from the ground up to be delivered over the Internet on pay-as-you-go terms. A lot of people dismissed this model, because the first generation seemed unsophisticated and immature — and of course many were launched with spectacularly unrealistic business models. But the growing success today of leading proponents such as NetSuite, RightNow Technologies and salesforce.com (not to mention Web 2.0 incarnations such as BaseCamp and whatever Amazon has up its sleeve) suggests that there's a prosperous future ahead for providers that adopt a software-as-services model to deliver applications on demand. Just don't call them ASPs.