Software companies are leaping on board the "rent an app" bandwagon market, but the advocacy group charged with promoting the application service provider (ASP) business admits potential customers are confused.
The ASP Industry Consortium is holding its first all-member face-to-face meeting in San Francisco this week and is announcing that its membership has rocketed to around 70 companies since the group was announced back in May.
Applications companies, ISPs and Internet infrastructure companies are signing up and while the list of members is impressive - including IBM, BT, AT&T, Microsoft, Cisco to Sun - there are some big names missing.
None of the leading ERP companies such as Oracle, SAP or Peoplesoft - are members yet, although all three of those companies are hoping that the "rent an app" business will provide them with a new distribution channel for their products.
Applications outsourcing is being targeted at small and medium sized companies - those without an IT department - that could rent the capability but don't own or manage the software and hardware.
There are a couple of reasons why several big name companies have not joined, said Paula Hunter, the consortium's vice president who is also Compaq's director of emerging markets.
One is simply that the bigger companies take longer to identify who should actually represent them and second: "There are definitely those who want to have a single voice and don't want to dilute their message by being a part of a consortium."
Nonetheless Hunter said she was amazed at the co-operation within the 26-member board of the consortium. Members were sitting across for their competitors but in a day agreed an agenda for the future, she said.
The key task is "to shape and define" the market, she said. "There is such a variety of business models that we aim to bring some consistency into explaining the business value of applications hosting. Customers are confused at the moment."
To help convince potential customers the consortium has set up an Education Committee, which is charged with articulating the message to the pubic. A second committee will define "best practices" dealing with such areas as service levels, back-up and disaster recovery. Those "best practices" will enable customers to better judge what is being offered by an ASP.
US analysts are saying that the marketing for application outsourcing will grow spectacularly. IDC says the market will be $150.4 million worldwide this year and will be $2 billion by 2003, thereby growing annually at 91 per cent.
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