Local ASPs pick application winners

As Clear Net launches its new ASP service Envision, Andrea Malcolm looks at which applications are suceeding in the ASP market and finds Microsoft Office lagging.

As application service providers grapple with the question of which applications best suit being rented over the internet, one stands out as least suitable - Microsoft Office.

With up to eight months' experience now under their belts, local ASPs are instead picking email/collaborative software and customer relationship management (CRM) as the winners.

The alliance between Microsoft/Telecom/EDS, esolutions, which started offering Office online last August, is not seeing a large uptake of the Microsoft desktop suite online. Esolutions channel manager Sue McCarty says it has added a couple of new customers since the launch date, when it had four customers. Its payroll application, NettPay, developed by Datacom, is faring better but the biggest demand is for infrastructure services such as the network security service, safecom, and hosted fax service, e-fax.

Nor has esolutions added any new applications. McCarty says the alliance is moving away from the strategy of being purely ASP “because at the end of the day it’s all e-commerce. We don’t offer standalone applications we are bundling them with services to help companies do e-commerce.”

Microsoft network solutions group manager Steve Haddock says he never saw Office as being the be-all and end-all in this market.

“Not the way it is currently architected, although that will change in the future. I think Exchange will be a killer. Also in general a financial suite and a customer management suite. Those will drive the uptake.”

Haddock says four more ASPs have signed up to supply Microsoft applications online since it introduce ASP licensing last October. These are AppServe (a subsidiary of Computerland), Clear Communications, Hitachi Data Systems and OneNet (a subsidiary of Financial Systems).

Clear Communications, which last week launched its ASP platform Envision, is offering Exchange and an online intranet service, but won’t be going with the likes of Microsoft Office.

Clear Net manager Drew Gilpin says it will only offer applications to which it can add value and generally these are network-type applications. “We are trying to focus on the ASP providing a benefit and getting rid of administration. Both intranets and Exchange require a lot of management and administration and that’s where we can add value to the customer. But you don’t have to administer Office, so what’s the point?”

Auckland chartered accountancy firm Nicholas Associates is one of the first customers to sign up to Envision to provide Exchange to six staff. Prior to this the company had had email but not collaboration and it is also adding the intranet service. The intranet costs around $9.95 per user per month.

Nubizz, which was set up last year by venture capital company ZZ Inc, will offer Microsoft Exchange within the next three weeks, charging about $50 per month per user.

GDC Communications is offering Office, Exchange and most other Microsoft applications through its ASP service iVASP (integrated voice application service provider) but all customers rent bundles of apps and services rather than standalone applications, says GDC executive Jimmy Baroutsos.

Baroutsos believes CRM software will be “the buzz” this year and the company is negotiating with four CRM software companies and an enterprise resource planning (ERP) software provider about hosting their products. It has just started hosting the financial systems by Sage, with the first customer, sheet metal manufacturer PPS Industries, about to change over.

GDC is also targeting niche markets with applications for transport, medical/health sectors, finance and insurance, building, and professional services and real estate. Real estate chain Harveys is renting Real Estate Manager, which was developed locally by Vision Computing.

Unisys ASP Solutions general manager Sean McDonald says 70% to 80% of the division’s business is coming from mid to high-end users renting customised solutions like CRM and ERP. “Unisys is very focused on CRM, e-commerce, ERP type applications.”

Customers of these services include Fisher & Paykel, which is also using the ASP service to provide access to sales agencies in the US, the GCS Supplycorp-owned procurement portal SupplyNet, NZ Funds Management, Fencepost.com and Athena.

McDonald says the lower-end ASP Direct market has not grown as fast as the company has expected. “This is probably due to internet speed, customer appreciation and the fit of the application suites. I wouldn’t say the market is fragmented but it has become diffused.”

As for Microsoft applications, the value proposition still doesn’t deliver, he says. "Their .Net strategy is sound but Microsoft Office, under its current architecture and pricing model, does not stack up.”

Computerland subsidiary AppServ does ASP and also houses applications for customers, although they hold the licence. Managing director Graham Clarke says it is providing Office bundled with email and infrastructure services to the petrol supplier Challenge. AppServ also hosts Challenge’s JD Edwards ERP system.

AppServ’s first customer, Cellphone City, has merged its business operations with Business Directions and Ben Rumble, so the number of seats has expanded to 200 over 40 sites using the accounting system Global Systems 3000 and various Microsoft applications. National Mail, the mail delivery company which challenged NZ Post but then folded late last year, was also a customer.

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