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How the ASP Model Complements E-Marketplaces

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This article examines how ASPs, once centric on selling applications over the Internet exclusively, are now looking toward the development of e-marketplaces as an additional channel for application delivery.
Louis Columbus is the author of 12 books and more than 40 articles on the Internet, e-commerce, and computing topics, including Realizing e-Business with Application Service Providers.

Once seen as a business model unto itself, the ASP model is now increasingly being relied on as one of several methods for delivering applications. Increasingly, e-commerce vendors are using the ASP model in conjunction with server-based applications as an approach to provide flexibility to customers interested in their applications. What's happening today is the migration of companies relying exclusively on the ASP model toward looking at the e-marketplace and exchange models as well. This market shift is clearly opening the flexibility of an ASP's functionality to a greater number of users in varying industries than was true before. It's clear that many of the ASPs of today will be focusing on e-marketplaces, e-marketplace participants, and business service providers. The following discussions define how ASPs will be affecting and also pursuing each of these opportunities for application delivery.

Discovering ASPs and E-Marketplaces

Software developers, industry analysts, and the industry press use the terms ASP and e-marketplace. For clarification, the definitions below are used for defining each aspect of e-business covered in this series of articles.

Application service provider (ASP) model. A network-based approach to delivering hosted applications in a one-to-many architecture. Companies that specialize in delivering applications exclusively through this approach are called application service providers. The ASP model is increasingly being used by order management, content management, CRM, and accounting application developers as one of several delivery approaches.

E-marketplace. There are three different types of e-marketplace: public, consortia, and private. Of these three, private e-marketplaces show the greatest promise to deliver consistent value to participants. E-marketplaces also today serve as the framework for organizing sell-side e-commerce applications including order and content management.


The rapid growth of e-marketplaces in the past 12–18 months has made them the largest integrator of ASP-based solutions to date. In the race to be the first e-marketplace to open for business in a particular industry, companies typically seek rapid development and deployment of applications for order matching, catalog conversion, transaction processing, and other e-commerce applications. This market dynamic is contributing to the development of order-management applications from Oracle and Cisco, both of which are looking to leverage their extensive channel strength and reach into companies wanting e-marketplace–based applications.

Almost by definition, e-marketplaces are founded by early adopter companies that are typically entering and demarcating new markets for themselves on the leading edge of business-to-business (B2B) e-commerce. While the necessarily short development periods sometimes require deployment of solutions in as little as 8–12 weeks, and rarely longer than 36 weeks, the available applications are far from standardized. Moreover, the wide spectrum of industries served by e-marketplaces and the corresponding variety of business models mean that much of each solution is highly customized. On an ongoing basis, e-marketplaces are expected to make use of the full spectrum of available services, including consulting, implementation, and operations. Because of these characteristics, the migration of ASPs to this market segment has been quick and responsive.

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