Research and analysis of specific topics in the world of application service providers and online rental computing.
Creating ASP fusion
A convergence of technology and business trends has brought a new means of acquiring
computing within the reach of enterprises today. The past year has seen the emergence of
a new breed of business computing provider, the application service provider (ASP). This
next-generation information technology services company delivers computing to customers
from a network-based data centre. Enterprises no longer have to own or operate the
hardware and software on which their business computing runs. Instead they pay a fee to
the ASP according to usage, typically on a monthly subscription basis.
Little more than a year after it first came to light, this rapidly-growing IT delivery channel is
already entering a new phase of development. This chapter reviews some of the market
and technology trends that have brought us to this point, and describes how the spectrum
of ASP choice is evolving as various lines of development converge. We conclude with a
brief account of how Interliant in particular has brought about a fusion of separate traditions
in its own recent history to offer an integrated set of ASP choices, foreshadowing
developments that we expect to see in the wider market. The following chapter describes
the potential impact of application service provision on enterprise IT strategy, and provides
an assessment of the principal choices ASPs are making available to enterprises,
Interliant's ASP offering as an illustration.
ASP MARKET TRENDS
Several separate market trends have fostered the emergence of online application services
as a viable option in mainstream enterprise computing.
Acceptance of outsourcing
The concept of outsourcing is increasingly accepted in business today. Management gurus
and investors alike emphasise the merits of concentrating on core competence, and of
bringing in outside specialists to perform all non-essential functions.
Within the IT landscape, evolution in technology has enabled outsourcing to become much
more selective. Many businesses now outsource specific elements of their total IT
infrastructure to an outside service provider, including the provision and operation of the
data network, the monitoring of service levels experienced by users, and increasingly the
provision of specific applications themselves.
The spectrum of application services now available as a managed service ranges from
simple website design packages, passing through hosted email and messaging, right up to
high-end enterprise resource planning (ERP) applications. This new wave of outsourced
application services is typically priced on a per-user, per-month subscription basis.
Such developments have been encouraged by an increasing trend among IT departments
to view themselves as internal service organisations, tasked with understanding key
business issues and finding solutions to them. Outsourcing allows such groups to
concentrate on delivering strategic business value, leaving everyday operational issues in
the capable hands of an external provider. For smaller enterprises, the issue is a lack of
knowledge and resources to deploy and operate the new technologies they need to retain
their competitiveness. Outside providers can bridge that gap between the possibilities
business owners perceive and the practical inaccessibility of today's business applications.
INTERLIANT AT THE ASP FRONTIER
Interliant's twin-track history has brought about a unique blend of ASP expertise within the
company.
One half of its dual pedigree stems from leading US web hosting provider Sage Networks,
which acquired the original Interliant company in March 1999, and adopted its name. Sage
Networks, founded in late 1997, grew rapidly from its inception through the acquisition of a
series of web hosting companies scattered across the United States. In the process it
amassed a substantial catalogue of expertise in website, e-commerce and intranet hosting.
The second strand stretches back to 1993, and represents probably the most extensive
continuous record of application hosting by any ASP in the industry today.
· In 1993, Interliant began developing a Notes system that would act as a messaging
gateway, hosting infrastructure and online community for Notes users and developers.
· In January 1994, the system went live with almost 80 separate companies, all using the
same shared Notes server - the first such deployment of Notes.
· During 1993 to 1996, Interliant built up a substantial business hosting private Notes
'extranets' for large enterprises such as Compaq Computer. It also began hosting
applications developed by Lotus Domino partners.
· In 1996, it began work on an add-on package for Domino that would support online
rental of hosted applications.
· In January 1997, the company adopted the Interliant name and introduced ASP-style
pricing models for its Notes hosting and email services, quoting a flat fee per user.
· In June 1997, Lotus launched Instant!TEAMROOM, a browser-accessed, hosted
collaborative application, and Interliant became the first provider to offer it. At the same
time, Lotus announced that it was working with Interliant to co-develop Instant!Host,
following on from the work on supporting rented Domino applications that Interliant had
started the previous year.
· In January 1998, Instant!Host was released to developers.
· In September 1998, AppsOnline.com went live, offering a selection of Domino-based
applications for online rental, including Instant!TEAMROOM, now in a new version that
used Instant!Host for subscriber management. A number of other Lotus partners,
including Telia of Sweden and Bell Emergis of Canada, began offering
Instant!TEAMROOM as an online rentable application, also using Instant!Host to
manage subscriber accounts.
· In January 1999, Interliant began introducing other application server platforms besides
Domino into the AppsOnline.com environment.
The chronology demonstrates five years' experience of Notes/Domino hosting, a leading
role as an instigator and pioneer of work to make the platform shareable between multiple
client companies, and more than three years grappling with the complex issues involved in
offering applications for online rental over the Internet. Interliant has built up a formidable
depth of experience in application service provision.
Current offerings
Having completed its merger and then listed on the NASDAQ stock market in the first half
of the year, Interliant enters the final quarter of 1999 with a well-defined ASP strategy ready
for execution. It has invested significantly in evaluating and preparing new application
offerings from a broad range of vendors who work closely with ASPs. As well as its
traditional Lotus Domino hosting platform, it is now adding Microsoft Windows DNA,
Oracle8i and Unix platforms. Meanwhile, it has brought significant new data centre and
network capacity online, with advanced application hosting data centres now operational in
Atlanta, Georgia, Houston, Texas, Washington DC, and another coming online shortly in
the UK. All have high-bandwidth OC3 and DS3 connectivity to tier one backbones and are
positioned to collectively provide excellent coverage of both Europe and North America.
Interliant's ASP solutions fall into two principal categories, as described below.
Few ASPs have been marketing online business application services for as long as
Interliant. It is unique in combining over five years' experience of providing managed
hosting services for enterprise messaging and server-based applications, as well as having
an extensive background as a web hosting provider. It should not therefore be surprising to
find it pushing ahead into new frontiers of application service provision.
The range of services and ASP delivery models that it has at its disposal gives it an
unrivalled opportunity to pioneer the way forward for the emerging class of ASP
aggregators. Most of its peers offer either high-end enterprise applications or entry-level
Web-based self-service apps. Interliant is several steps ahead of the game in offering both
at the same time from a single source.
To realise the opportunity, the company must avoid falling into the error of believing that
AppsOnline.com is its offering for micro-businesses and small enterprises, while larger
businesses are served by its high-end enterprise application outsourcing. Instead, it must
view the two as part of a single integrated portfolio, giving its customers the opportunity to
access any combination of application services according to changing requirements,
without the need to establish additional relationships with new providers.
High-end application outsourcing customers will always have instant access to low-end off-the-
shelf services from AppsOnline.com. Meanwhile, the exposure that AppsOnline.com
receives on the web will be an excellent business development tool for the company,
bringing in a constant stream of new customers who could become candidates for more
sophisticated enterprise applications. As well as building relationships with smaller
companies who may in time grow to need enterprise-class ASP services, AppsOnline.com
will allow Interliant to show off its ASP offering to larger businesses that rent point solutions
from the portal.
Interliant should also consciously link AppsOnline.com into its customer service and support
infrastructure, using the self-service configuration, payment, training and support
capabilities that it develops for the site to bring greater efficiency and convenience to its
enterprise ASP procedures. Later, it may prove possible to create links in the other
direction, for instance adding hotline support options to the online rental offering using
Web-based telephony and collaboration tools to put users in touch with live support agents.
Behind the scenes, it should work to develop integration between the various applications
on offer, implementing common data structures where possible and ensuring that users can
easily transfer company data, user profiles and business policies from one app to another
without having to re-enter information. This will increase the convenience for customers of
adding extra applications to their configuration, at the same time as cementing the
relationship with the provider.
ASP case studies NEW! Sep 1999 Interliant: ASP fusion for the enterprise
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