ASP market heats up

Businesses can expect to be offered a range of ASP-hosted products this year as vendors prepare for Telecom's latest venture into the market.

Businesses can expect to be offered a range of ASP-hosted products this year as vendors prepare for Telecom’s latest venture into the market.

After a few false starts, the market for ASP, or application service provider, products is growing and local ASP companies are confident they’ll be able to co-exist with their deep-pocketed competitor.

Last month Telecom Advanced Solutions said it had terminated its contract with ASP vendor GDC Communications to resell its iVASP product, and was talking with other ASP developers to create its own services using the Officeware brand.

ASP products are delivered to client computers over a network, and usually sold on a subscription basis.

GDC’s general manager of technical services, John Hodgson, says his company will remain competitive and Telecom’s presence is welcome because it will direct attention to the ASP market. “We have no concerns about our ability to compete with Telecom.”

Roger Cockayne, CEO of HDS, says smaller businesses are wary of larger companies such as Telecom. “I think they have got a conversion to make,” he says.

“When you’re an SME you want to deal with SMEs also,” he says. “If you’re a small customer, you’d be a bit frightened of being Telecom’s customer number 3-2-4-0-1.”

HDS offers Business Fabric, a collection of products hosted at its Wellington and Auckland premises and developed by partners in New Zealand and abroad.

Telecom has made it clear that it wants some of the SME action. Hugh McKellar, business manager for commerce solutions at Telecom Advanced Solutions, says Officeware will initially be targeted at companies that don’t want to carry a large IT infrastructure, including small businesses and new ventures.

“If you wanted to start up a business, why would you want to spend money [on IT infrastructure]?” he asks.

Other Officeware targets are organisations planning an investment in infrastructure, companies that want to focus on their core business, and companies that have a distributed workforce, McKellar says.

There are differences in the ASP products. Cockayne says Business Fabric isn’t intended to deliver core systems, but instead to deliver “useful” applications. HDS also hasn’t tried to integrate the various Business Fabric products.

“We have kept everybody discrete,” he says. “When you put a data exchange in place, you get some opportunities and you get some problems also.”

In contrast, Telecom’s McKellar says Officeware is most useful when a company outsources all of its IT services. “Otherwise, the customer needs to retain quite a lot of internal resource,” he says.

Although Telecom will be offering ASP products developed by other companies, McKellar says Telecom will integrate those applications itself.

GDC’s Hodgson says integration is important when customers buy a complete ASP solution, but larger companies looking to purchase a single ASP service for cost reasons will be less concerned.

One advantage Telecom might have is the ability to bundle phone and internet services with Officeware, but GDC and HdS will wait to see what pricing plans Telecom releases this month or next.

“The only concern that I would have would be if they found a way in the regulatory system to share networks,” Hodgson says. “I think Telecom has to get a lot of things right on the ASP side before [bundling] becomes an issue for us.”

HDS has its own bundling arrangements, offering Iconz internet connections to Business Fabric customers.

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