( BW)(FUTURELINK-DIST-CORP)(FLNK) ASP News Review Features FutureLink in First ASP Case Study "FutureLink: Building the Information Utility"
Business Editors
CALGARY, Alberta--(BUSINESS WIRE)--May 6, 1999--
Visit FutureLink's Web site at www.futurelink.net/aspnews
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FutureLink Distribution Corp. (NASD OTC BB: FLNK) is pleased to announce the publisher of ASP News Review, Farleit Limited, has selected FutureLink as the first application service provider to be featured in a series of case studies to be released in 1999. The full text of this report can also be accessed at the ASP News Review Web site at www.aspnews.com.
"FutureLink is one of the founding pioneers of the application service provider (ASP) industry. It enthusiastically promotes a vision of computing as a utility service, available as simply, cost-effectively and universally as water, power and telephony," said the report's author Phil Wainewright, founder and managing editor of ASP News Review.
"Its championing of the utility model of computing makes it an especially appropriate subject to kick off our series of ASP case studies," he added. ASP News Review is a specialist newsletter and complementary Web site which tracks and analyses the developing worldwide application service providers industry.
"I am happy to see that an objective view of our direction, strategy and market position is positive," said Cameron Chell, Chairman, President and CEO of FutureLink. "Mr. Wainewright has established himself as a leader in this industry. ASPNews.com is the defacto "industry newsletter" and is held in high regard. We are pleased that ASPNews.com's first case study is on FutureLink."
"FutureLink's ambition is to fulfil a longstanding dream of information technologists: the creation of a utility model of computing which makes IT available cheaply, freely and without barriers to the widest possible constituency," Wainewright wrote in the report.
"As it develops the competencies and infrastructure for distributing ASP services through channel partners, the realization of that long-term vision of utility computing provision will finally begin to take shape," he concluded.
Excerpts from the report follow:
"Barring unforeseen obstacles, an on-line interactive computer service, provided commercially by an information utility, may be as commonplace by 2000 AD as telephone service is today." - Martin Greenberger, writing in The Atlantic Monthly, May 1964
It seems appropriate that the first in an occasional series of reports highlighting individual application service providers should have as its subject a company that describes itself as "The World's First Computer Utility Company". As the publisher of ASP News Review, Farleit Limited has dedicated all of its resources over the past six months to tracking the emergence of a new class of computing services provider. These application service providers (ASPs) take a particular slice of computing - such as an accounting application or a project management package - and deliver it to users across an Internet or telecoms connection as a packaged, ready-to-use resource.
In doing so, they appear finally to fulfil the vision first outlined a third of a century ago by Greenberger, a computer scientist at the Massachusetts Institute of Technology. It was a vision of computing delivered across the wire at the flick of the switch, just as predictably and effortlessly as we already receive electricity, telecoms and water.
Market Background
New technologies and practices in information technology (IT) during the 1990s have created the conditions today for the emergence of a new approach to computing. This new approach spares users the pain and expense of developing and operating their own computing infrastructure. Instead, it lets users access computing resources which have already been set up at a convenient network location, and which are operated and maintained by teams of skilled, experienced specialists.
These computing resources take various forms. Many users access different resources from different providers, as well as continuing to maintain some in-house resources of their own. Those they source from outside are known as application services, and the third-party specialists who operate and supply them have become known as application service providers (ASPs).
Three strands of application services
Application services have emerged from three separate developments in IT in the late 1990s. Despite the very different origins of these three phenomena, they are all converging on a single model. Each of them offers online application services on a subscription basis. This is either as part of a lease arrangement, which spreads the initial cost across monthly payments for a three- or five-year period, or as a monthly pay-as-you-go rental scheme.
Market potential
Although the application services market is relatively young and undefined, and thus all but impossible to size with any precision, there is a consensus among analysts that it is growing at high speed.
(a) In the report Packaged Apps Outsourcing, published January 1997, Cambridge MA-based Forrester Research projected rapid growth for outsourcing of enterprise applications. It still stands by those figures today, which projected a total market more than doubling each year to reach $21bn in 2001. Within that figure, it projected over 400% average annual growth for what it called apps rental, to reach $6bn in 2001. This is often interpreted as the total size of the application services market, but in fact ASPs will also take a share of the remaining $15bn. * The report Worldwide Application Service Provider Forecast, 1998-2003, published March 1999 by IDC of Framingham MA, sized the market for high-end ASPs, which it defines as those who deliver complex applications with sophisticated supporting services. It estimated average annual growth at 91%, and sized this part of the market at $150m this year, rising to $2bn in 2003.
ASP technology platforms
The advent of application services has been enabled by the development of server-based network computing. This allows Windows PCs, terminals and web browsers to access today's sophisticated business applications running on high-powered network servers at the provider's data center.
There are various components to the technology. The ability to run applications so that they continue to perform well in a wide area network environment is vital. Under-the-cover capabilities, which deal with issues such as security, manageability and system performance are also crucially important. One of the reasons customers turn to ASPs is to benefit from service levels that are higher than those they can achieve on their own resources. ASPs have to operate an infrastructure that meets high standards of security and reliability.
Anatomy of an ASP
Successful operation as an ASP depends on a formidable mix of qualities. The business must have the contract management and applications support skills of an IT provider; the network and data center management expertise of a full-service enterprise ISP; and the online instincts of a portal operator. Best practice among ASPs appears to highlight the following issues: Focussed business model, product selection and vendor relationships, infrastructure investment and management, financing, skills base and service level contract management.
Company strategy
FutureLink markets itself as "The World's First Utility Computing Company", emphasizing the theme in its marketing materials with pictures of a light switch, a phone socket and a heating thermostat, alongside a computer screen and keyboard. This portrays a powerful image of where the company wants to be. Its ultimate aim is be a leading computing utility supplier of application services to small and mid-size businesses (10 to 10,000 employees), with a reach throughout North America and perhaps globally.
That vision is led by company founder and CEO Cameron Chell, who is driven by a personal conviction that computing should be universally available, rather than creating a society of information 'haves' and 'have-nots'. He believes that a computer utility model which uses low-cost client access devices and which delivers service on a pay-per-use basis is the best way of opening out access to computing as widely as possible.
Channel to Market
To date, FutureLink has delivered application services direct to users. This is normal in the early stages of a new technology wave, when the pioneers have no choice but to take the concept to market and prove it themselves. In the future, it aims to step back from direct customer relationships. It will create an Internet-based distribution channel for its services, and market them through partner networks. There are two principal channels available IT resellers and ISPs.
In both cases, FutureLink will provide the infrastructure and expertise to support such offerings, effectively providing its proven ASP architecture as an application service to its channel partners, enabling them to concentrate on their core competence of IT enablement or Internet connectivity.
This channel vision begins to bring a new dimension to the computer utility imagery. As FutureLink falls back into the background behind its intended channel partners, it becomes more and more analogous to a power station, pumping out robust, reliable services into the network, for conversion at downstream transformers into usable slices of computing.
Alliances
FutureLink has built strong partnerships with vendors and providers, most notably Citrix Systems, which acknowledges its role as a leading ASP pioneer. It also maintains close links with other influential companies such as Microsoft and UUNet.
Relationships with application software vendors are also important for ASPs. FutureLink has followed a policy of building co-operative alliances with the vendors it has partnered with, including Great Plains Software, Onyx and others. Its practice of working with and supporting vendor channel partners is an effective strategy for building long-term relationships.
Product development and implementation
The final element in the picture is the ability to prepare and bring to market application services that meet the needs of prospective customers in a compelling, cost effective and reliable manner.
In FutureLink's case, its evolution has led it to develop a set of application services skills that are at more of an infrastructure level than it perhaps originally expected. It has come to understand that the ability to support and deliver applications remotely is itself an application service that can be packaged and marketed. It has therefore chosen to develop its skills and competencies at this level, and will offer those services to systems integrators and other service providers as a platform for hosting and outsourcing a variety of applications.
Its ability to offer this level of service is rooted in its own experience in developing application hosting and rental solutions, supported by the strength of its relationships with major vendors such as Citrix, Microsoft and others.
About the Publisher
ASP News Review is the flagship publication of Farleit Limited, a London, UK-based publishing venture which aims to combine traditional values of information publishing and analysis with the best of the opportunities offered by Internet technologies and the World Wide Web. The title is recognized as the premier independent source of news and analysis about the emerging online business application services industry. Leading providers and vendors subscribe to the monthly newsletter, while the free-access aspnews.com Web site is a popular source of information both for the ASP industry and for its prospective customers.
About FutureLink
Based in Calgary, Alberta, FutureLink, "The Computer Utility Company," is a founder of the Application Services Provider (ASP) industry. According to Forrester Research Inc., this industry is projected to reach $20 billion by 2001. FutureLink provides small and mid-sized businesses (10-1,000 employees) with off-site, Internet-based computing, allowing subscribers to escape hardware/software upgrade cycles, precisely control total cost of technology ownership and focus on their core businesses. FutureLink's expertise in application hosting, IT outsourcing, business practices consulting, and software development enables the company to offer an all-inclusive, trouble-free service at a predictable price. FutureLink offers computer and information service as transparently and reliably as today's utilities deliver electricity, water and telephone services. For more information, contact FutureLink toll-free at (877) 216-6001; e-mail: sales@futurelink.net; or visit the FutureLink Web site at futurelink.net.
Forward-looking statements and comments in this news release are made pursuant to safe harbor provisions of the Securities Exchange Act of 1934. Such statements relating to, among other things, the prospects for the companies to complete the transaction and enhance operating results, are necessary subject to risks and uncertainties, some of which are significant in scope and nature. These risks may be further discussed in periodic reports and registration statements to be filed by the company from time to time with the Securities and Exchange Commission in the future.
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CONTACTS: FutureLink, Calgary
Leone Bechard, 877/216-6001
e-mail: lbechard@futurelink.net
Troy Cleland, 877/216-6001
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