SME IT Guide
March, 2001

The ASP Reality

In a continuing series of discussions about ASPs, SME IT recently organized a Roundtable session inviting prominent players to unveil the buzz associated with this industry and focus on the opportunities available locally.

This event sponsored by IBM Singapore included participating companies such as Solomon Software South East Asia, Hitachi Asia Ltd, 8layer.com, eXtropia, Intelliant Pte Ltd, PWR Powerlan (S) Pte Ltd, T2Mail Pte Ltd, IBM Singapore Pte Ltd, ECnet Limited and Out-Smart.

One of the main topics that ensued from this Roundtable was there are a wide variety of ASP services available ranging from application rentals in which customers subscribe and pay on a monthly basis to complete remote data centers with front-end and back-end facilities specified by the industry. While some offer specific applications like Enterprise Resource Planning (ERP) or Human Resource (HR) others offer a wide variety of applications. However, despite a sound and compelling business proposition offered by the ASPs, these companies are enjoying limited success locally. The acceptance level is still low although huge growth is expected in the Asia Pacific region. Like end users who have their concerns, ASPs too have to deal with issues such as financial support, pricing, human resource, competition and marketing opportunities. Despite this, ASPs are increasing in numbers.

As David Shick of T2Mail put forward, "For the ASP industry to succeed, there is a need for a change of mindset. Customers must realize that by switching to an ASP model, they can save money. The bottom line at the end of the day is cost."

Laurent Dedenis of Solomon Software reinforced this by stating that ASP business in Singapore is not as mature as in the US. In addition, he added, "You need competition especially on price. At the end of the road, customers can compare and make the decision."

Also, according to Bo T F Yu of 8layer.com, collaboration is a better option for ASPs. "Most end users would want end-to-end solution. So to complement what we do (content management), we look for partners who provide ERP or CRM solutions. There is a synergy and together we can do co-branding."

The consensus reached is that the market is not big enough for ASPs here. While communication cost and bandwidth access are important issues that ASPs have to deal with, having a market is seen as a critical component for success. Further, collaboration is necessary to strengthen ASPs' positioning although it does not matter if the partnership is with an infrastructure provider or another ASP but the bottom line should be cutting cost, getting a critical mass and ensuring profitability.