Last Edited: 07-17-2004

ASP^(tm) Summit

Application Service Provider Summit
Hyatt McCormick Convention Center

Chicago, IL  July 12-13, 2000

There appeared to be about 500-600 delegates attending this  conference.  I ran into Jim Swinger and  Kate MacKay of Lucent. This was billed as a small regional show, but there were speakers from as far away as the UK and Japan. The exhibit area was quite small. There was as much on display as say the Lucent booth at Supercomm 2000. The room was a little more spread out than the Supercomm booth.

I attended ASP Summit  to get a feel of what the ASP industry is like. Basically, The view I learned at ASPCON was confirmed. ASPs are the year 2000 version of the mainframe. Instead of accessing software on your PC, you connect to a server over the internet and access software resident on the server. This is a business service, not residential. 

Messages repeated many times at this conference: There is an IT skills shortage. SLAs are important.

VGs for ASP Summit are at www.key3media.com/asp/chicago2000/proceedings.html  (username: attendee,  password: ASPCH)

Additional ASP web sites. 

•  http://allaboutasp.org 
• http://www.aspcon.com  
•   http://aspindustry.org  
• http://ispcon.internet.com/spring2000/presentations.html (username: ISP2kvip  password: ISP2k71374)

7-12-2000 Wed. 9:00am Global Vision Panel 
Chaired by ASP Industry Consortium
John Frazier: Chair & Founder of eBaseOne Corp (a good speaker)
President ASP Industry Consortium
Martin Walker: VP Marketing 7 (from the UK)
Masuda Yashimoto

There were no slides for this session and the audio was bad. I picked up whatever I could.

• SLAs (service level agreements) was a big item.
• ASPs are there to deliver higher quality of service than companies can do themselves
• 3 biggest issues for ASPs
  • Security
  • performance
  • scale to large sizes
• Attitude: Banks (your money) vs. ASPs (your data). are you going to let them hold it? Your prized possession? You let the Bank of America hold your money because you think that it is secure and you can get it whenever you want it (e.g., ATMs). Where is your money? you really don't know.
• ASPs will not get business critical services now...until the above bank-like attitude kicks in. Until then, we must identify applications that businesses will allows ASPs to host. Then work up to business critical services. editorial note:  I think that banks are trusted due to a long history (100 yrs) and FDIC.
• Q&A Session: 
  • Good (IT dept) help is hard to find. ASPs aggregate. But how do you staff the ASP? Especially given the larger aggregated data centers, the IT help must be even better given the larger responsibility.
  • No ASPs do everything end-to-end. A hard support problem given multivendor.
  • SLA problems soon to be logged in Geneva.
  • We must retrain IT staff to act like ASP staff. How your decisions affect others. Can't just reboot exchange... somebody may have a 20 page e-mail they were about to send.

7-12-2000 Wed. 10:00am Next Gen ASP Models Panel 
Candle did most of the talking, Exodus, Deloitte, Ernst & Young, AT&T Solutions

Show of hands: Few ASP Customers, 25% current ASPs, 25% future ASPs, 25% suppliers to ASPs.

• Why ASPs? Started by ERP.  900K people IT skills shortage. BIG
• Phase 1: use one ASP.
• Phase 2: use many ASPs... how do ASPs talk to each other in an ecosystem? They suggest the CandleNet ebx as an integration internet that interconnects ASPs (e.g, Qwest, Exodus), trading exchanges (e.g., Digital island), and commerce providers (e.g., exodus)
• Marketing: End-User Response Time (transactionally measured) How much BW is needed? 8 second e-commerce rule (Zona Research). How long you will wait on an internet shopping cart before bailing out. Maybe get end-user tracking (e.g., draw a map) to reduce bail outs

7-12-2000 Wed. 11:30 am SUN Talk  Plenary (Looked like King's SUN talk from ASPCON)

editorial note: Oracle & Peoplesoft were mentioned many times at this conference but neither was in attendance.

editorial note: Sometimes ASP was referred to as "service provisioning"

• from 1999 to 2000: #ASPs grew from 70 to 100, and #customers per ASP grew from 25 to 170.
• ISV migrate to ASP
  • People Soft's eCenter
  • Siebel Sales.com
  • Synopsis
  • mySAP.com
  • JDe.sourcing
  • I2 Tradematrix
• DoCoMo is into Cell Phone games. JAVA is in the phone and used to maintain state once the connection is broken.
• 100 companies have asked SUN to help migrate NT to Solaris because they need scaling and web interfaces... a big change from two years ago when NT was hot.
• SUN Tone is a branding "certification" like Intel Inside
• One should write software with web APIs (JAVA, HTML, XML) not Solaris, Windows, or Linux
• ed note: "a SUN sales pitch" : Start ups are partners, not customers

7-12-2000 Wed. 1:30pm Tom.Bleir@IND.Alcatel.com VP ASP Market Development

This session had standing room only (about 200 attendees)

• Staffing was the big issue again
• Hosting Motivation: 
  • lack of internal resources
  •  network connectivity
  • Total cost of ownership less than half that of traditional or client/server
• Movement to voice & video  editor's note: ASPCON had essentially  no mention of voice. ASP Summit mentioned it a few times.
• Scaleable with no truck roll
• 5% of customers purchase with web commerce only. This moves up to 65% when click-to-operator is added as a call center option.
  
• SLL encryption is 128 bit or more but is slow. O.K. for encrypting credit cards but too slow to encrypt an MS word document
• Policy enforcer/manager/server: The more the Service provider does, the less the IS dept does
• Internet arch...cache is important for performance (delta)
• 1Gb/s, 100Mb/s, 10Mb/s connections to routers.
• Suggested 3 levels of service;
  • bronze ASP: w/firewall & VPN
  • silver ASP: add content SW to faster servers
  • gold ASP: add cache

   

7-12-2000 Wed. 2:30pm A Panel
ASP One... a new ASP in Chicago...incorporated last year

• Nowadays (since the April 2000 stock market crash), there is a lot more inspection on internet companies. The internet is no longer a vast frontier where any idea is O.K.
• being in business for 15 months is considered a long time.
• Concentrix  is an infrastructure company. In fact,  ASP One "complained" that the companies that are the most profitable in the ASP business are the infrastructure providers like Concentrix and Microsoft who provides an SQL server with a pricey licensing fee.

7-13-2000 Thurs. 9:00 a.m. Plenary Keynote A Panel
CEO from JamCraker... from India 10 yrs ago... went public in 1998.

• ASPs are a strategic inflection point (Andy Grove defines these as events that will make a 10X change in how people live.)
• ASP revenue $150M in 1999 to $22B in 2003
• 100 ASPs in 1999 to 1000 ASPs in 2000
• Competition to ASPs are Microsoft, Oracle etc.  editors note: but they are making the most ASP $$$ by licensing to ASPs
• Why ASPs now?
  • lots of cheap bandwidth
  • new killer apps are web based only (e.g., B-to-B)
  • internet is there and reliable
  • IT talent shortage
• In 5 yrs, no one will talk about applications anymore. Only solution-based utility services
• ASPs will thrive, but models must evolve to become viable (e.g., pricing must change)
• There will be a market shakeout, 1000 ASPs can't survive.

7-13-2000 Thurs. 10:00 a.m. Plenary Internet Security Systems www.iss.net 

• Compound Annual Growth Rate (CAGR)
• Written Policy & Guidelines: How much risk am I willing to take to open up my business to the internet.
• There is a lack of trained security specialists
• It takes at least 35 people to run a security company, ISS has 1000.
• ISS has a network management partnership with Lucent

7-13-2000 Thurs. 11:00am Panel "ASP Market: Myth or Opportunity" (no slides)
Chaired by Smart Partner Editor at Large: Steve Vaughan Nichols
Top Layer Networks: Geff Ambroze
Qwest: Doug Mow
Conxion: John Seamster

• What model doesn't work: Moving desktop apps to the network. In other words, MS Office should stay on the desktop, not at the ASP. The IT dept is O.K. with desktop support of this.
• Microsoft will announce ASP pricing soon (this week). For Office 2000 and SQL2000. Likely expensive.
• Qwest: When he heard of ASPs, he had flashbacks to 1979 when he was working on  timeshare systems. For the consumer market, he likes ASP for the one-time user (no more COMPUSA if you need a graphics program once)
• Top Layer networks mentioned voice (a WAP case?)
• panel joked that www.SAP.com was hard to use. PeopleSoft mentioned again.
• VoIP now, e-mail, paging, hosting... so that small companies don't have to buy a switch (ed: Centrex vs PBX??)
• ASP serves small & medium businesses
• Moderator: By 2002, Infrastructure companies (e.g. Oracle, Microsoft, SUN) will survive. 97% of ASPs may die. 
  Like the 49ers gold rush. The gold rushers didn't make $$$$...the prospector's suppliers did (laundry people are still around today)
  So are Levis!!! Qwest chimed in: Wall street loves infrastructure (e.g., fiber) During the B-2-B stock market crash of April 2000, Apps companies lost 70% while infrastructure companies went down only 14%
• Billing software is an unsolved problem.... SLA implementations are also an unsolved problem.
• SLA Example: If you are an ASP for a bank, they have metrics on how fast they can process checks and what the error rate is. They will want an SLA with these metrics, not a packet loss rate quote.
• Note: one can buy insurance against the SLA. You can also get a discount on your insurance if you have good security.
• There is a trade off for custom solutions vs. low prices.

7-13-2000 Thurs. 3:45pm ASP Performance: Customer Performance Expectations

• Usually when ASPs talk of customers, they mean the IT dept managers. This speaker is looking at customers as the actual users of the service.
• Most SLAs are vague so that when things go bad, the ASP can say "I never promised that..." and will not get sued.  This speaker feels that SLA should be clear to set (i.e., lower) expectations.
• Examples: Response time (242 sends to add an employee record)
  • 100 Mb/s 6.2 sec.
  • T1  10 sec.
  • 56K Modem: 40 sec. response time
  • 28.8K modem: 70 sec.

  Note: 1000 sends to add an inventory item.  Therefore, need new apps designed from the ground up to be internet centric.

• ASPs today can't measure response time. Their policy is "Just try it and see". If things don't work out, get another ASP.
• Pieces of the solution are coming
• Availability-Uptime: 
  • 80% of problems are Software and Administration.
  • Problems in Stable Systems are rare.
  • Upgrades and other changes are minefields.
• Economy of this Business: One-to-Many. Keep everybody on the same copy (not 2 releases behind)

Exhibits

• The exhibit area was quite small. There was about as many displays as say, the Lucent booth, at Supercomm 2000.
• I noticed that not present at the show (exhibits or talks) were Lucent, Microsoft, and Cisco.
• Nortel exhibited but did not present during the sessions. Nortel pitched their IN-NCC as an ASP infrastructure. They will also act as a complete consultant to an ASP an even advise them on floor space and floor loading. They will essentially do everything except build the building.
• SUN was the major show sponsor. Presenting several keynotes and they had their own session track for one day. However, I did not see an exhibit from SUN.
• I spoke to Qwest at their exhibit. They are an ASP and provide some of their own equipment. They  use Lucent for fiber transmission. They are ASPs for small and medium sized businesses up to about 1000 people.  They noted that Microsoft has approached them to sell Outlook to small and medium sized businesses. Apparently Microsoft has saturated the market using other channels and this is a way to generate more revenue from Outlook. 
• Video Servers are on the show floor. One company has a video server with a Microsoft viewer and Lucent fiber for a system in Seattle.