World Telecommunication Day 1999 |
The telecommunications service provider sector has hosting fever. In the past year alone, literally dozens of major communications carriers have announced applications-hosting initiatives designed to draw more corporate-level functions off of their customers' networks and onto their own. The phenomenon could potentially encompass all kinds of corporate network functions.
The phenomenon has also given rise to a new category of telecommunications carriers: the application service provider (ASP). While entities like USinternetworking, IBM Corp.'s Global Services and EDS Corp. have been offering outsourced services over the Internet for some time, the business model is just now beginning to trickle out to the telecommunications carrier industry as a whole. The ASP trend is also pushing developers of software and servers to reinvent themselves as service providers.
The idea behind the ASP concept is for service providers to play host, offering enterprise network applications to their corporate customers and relieving them of the associated cost and burden of owning, managing or supporting the applications - not to mention the underlying infrastructure. Corporate customers gain access to the hosted applications via the Internet or a dedicated leased line that connects to the service provider's central storage facility.
Several major telecommunications carriers are currently touting new application hosting efforts and referring to themselves as the newest members of the ASP ranks. Frontier Communications Inc., U S West Inc. and Qwest Communications International Inc., for example, are all hoping to convince corporate customers to migrate their information technology applications off their own networks and into the safekeeping of their public network carriers.
Frontier's effort is an extension of the carrier's hosting effort, which supports companies' Web site and e-commerce efforts. To date, Frontier has not announced specific alliances with enterprise software vendors, but it has highlighted its ability to support messaging, work-flow management and sales force automation applications on its Microsoft NT and Sun/Solaris servers.
''We have the ability to take any application and move it from the customer premises to our network,'' says Rolla Huff, president and chief operating officer of Frontier Communications. ''They're going to use the Web to use the applications from any browser. The market is any application that resides in a customer environment.''
Frontier's plan is to develop applications like e-mail and unified messaging itself, and also to form partnerships with developers of financial and enterprise resource planning (ERP) software platforms.
Qwest, meanwhile, has aligned with SAP and its software platform for human resources and financial planningsupport, which it is offering to corporate customers through its CyberCenters.
''We have the ability to take SAP down-market, into a marketplace that's feeling the need to deploy these kinds of ERP systems to keep up with their competition,'' says Mack Greene, vice president of voice and data product management at Qwest.
US West has aligned itself with USinternetworking Inc., an early veteran of the nascent ASP market. Under a deal struck between the two companies, US West is the exclusive distributor within its 14-state territory of e-commerce applications from USi.
The ASP drive is not limited to network operators, however. Several software companies have been formed with the express purpose of becoming the leading providers of certain types of enterprise applications - possibly in hopes of forging partnerships with networked ASPs that can support and distribute the applications. These include companies like Instill Corp., which provides software for managing different components of the food service industry.
In addition, software and server stalwarts like Sun Microsystems Inc. and Microsoft Corp. have announced plans to make business-related software applications like word processing available as hosted applications. Sun recently purchased Star Division GmbH, a German developer of corporate software applications, as part of its effort.
Despite the seemingly endless opportunities that exist in the high-level applications hosting market for large businesses, a recent study from research firm Cahners In-State Group cautions that ASPs must not ignore smaller business sectors if they want to ensure a steady revenue stream. The study identifies small office and home office workers as the most likely candidates for outsourcing entire IT suites to ASPs.
Jason Meyers