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Application Service Providers (ASPs): A Manager's Guide

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Application Service Providers (ASPs): A Manager's Guide


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  • Copyright 2002
  • Dimensions: 7-3/8" x 9-1/4"
  • Pages: 336
  • Edition: 1st
  • Book
  • ISBN-10: 0-201-72659-9
  • ISBN-13: 978-0-201-72659-6

Application Service Providers (ASPs) lease hosted software applications over broadband networks to companies of all sizes as a faster, less expensive, and simpler alternative to installed applications. ASPs especially benefit small-to-mid-size businesses (SMBs) because, until these services existed, most of these organizations could not afford enterprise applications. While the ASP industry is still young, experts predict that it will soon become amulti-billion dollar industry fueled largely by the explosion of SMBs looking to cash in on the Internet-driven global “e-conomy.”

ASPs free your company’s IT, training, technical support, and customer service staff from the onerous chore of installing, upgrading, and managing traditional in-house applications. As an executive or manager responsible forgetting the most competitive bang for your technology buck, you’ll find this ground-breaking guidebook invaluable for short-listing, evaluating, and selecting the best ASP match for your company’s business and IT requirements.

Application Service Providers (ASPs): A Manager’s Guide defines the ASP business model, explains the components of the “virtual” ASP technology platform, and differentiates between the various types of ASPs. This book also covers important topics such as:

  • Ensuring your data is secure with an ASP
  • Defining a service level agreement with an ASP
  • Choosing an ASP with the best pricing model for your business
  • Comparing ASP customer service and technical support programs
  • Selecting value-added technologies, such as wireless access, from an ASP
  • Evaluating ASP supporting players known as xSPs
  • This book also discusses future key developments that could affect your company:ASPs’ impact on the traditional reseller channel, emerging technologies and trends that will further improve how ASPs deliver hosted applications, and winning ASP survival strategies.

    Finally, Application Service Providers features informative appendices listing selected ASPs by type, vertical markets served, and applications hosted. The author, leading you through the ASP evaluation process, includes comprehensive checklists of questions that you should ask ASP candidates before signing a contract.


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    Table of Contents



    1. The Tangled Roots of the ASP Phenomenon.

    New Technology.

    New Network.

    New Implementation Model.

    New Network Outsourcing Model.

    New Competition.

    New Mergers and Acquisitions.

    New Alliances.

    New Value Proposition.

    New Industry.

    Key Concepts.

    2. The ASP Coalition-No Single Vendor Can Do It All.

    The ASP Hardware.

    The Hardware Platform Components.

    The Key Characteristics of ASP Hardware.

    Types of ASP Hardware Providers.

    The ASP Network.

    The Network Platform Components.

    The Key Characteristics of an ASP Network.

    Types of ASP Network Providers.

    The ASP Software.

    The ASP Software Components.

    The Key Characteristics of ASP Software.

    Types of ASP Software Providers.

    ASP Market and Application Expertise.

    Infrastructure Service Providers.

    ASP-Enabling Software Platforms.

    Value-Added Services.

    Key Concepts.

    3. The ASP Hardware Platform.

    Hardware Components.

    Hardware Provisioning.

    Server Clustering.

    Load Balancing.

    Web Server Caching.

    Characteristics of ASP Servers.

    Key Concepts.

    4. The Data Center.


    Data Backup.

    Natural Disasters.


    Updating and Testing Disaster Recovery Plans.

    ASP Partner and Alternate Site Backup.

    Environmental Control.

    Key Concepts.

    5. The ASP Network.

    The ASP Network-An Overview.

    Access-ASP to Broadband WAN.

    The Broadband WAN.

    Frame Relay.


    ATM and Frame Relay Interworking.


    Access-Broadband WAN to Customer.

    The Local Loop-ISDN, xDSL, and Cable Modems.



    Key Concepts.

    6. Varieties of ASP.

    Pure-Play ASPs.


    VAR ASPs.

    Service Bureau ASPs.

    SI ASPs.

    ISV ASPs.

    Related Service Providers.

    Key Concepts.

    7. Security Issues for ASPs.

    Determining Your Security Risks.

    Types of Security Risk.

    Security Techniques.



    Access Control.



    Audit and Accounting.

    Security Equipment.



    Proxy Servers.

    Customer Requirements and ASP Strategy.

    Appropriate Security.

    Prioritizing Security Threats.

    Security Tiers.

    Security Policies.

    Different Rules for Different Users.

    Types of Confidentiality.

    Security Audits.

    Physical Security.

    Key Concepts.

    8. ASP Service-Level Agreements.

    The Network SLA.

    Network Availability.

    Network Throughput.

    Network Redundancy.

    Network Equipment.

    Network Scalability.

    Network Peering Arrangements.

    Network Delay.

    Network Service-Level Corroboration.

    Network Reporting.

    Network Provisioning.

    Network Support.

    Planned Network Outages.

    Unplanned Network Outages.

    The Application SLA.

    Application Availability.

    Application Performance.

    Application Redundancy.

    Application Platform.

    Application Scalability.

    Application Security.

    Customer Application Administration.

    Application Monitoring.

    Application Service-Level Corroboration.

    Application Reporting.

    Application Provisioning.

    Application Support.

    Planned Application Outages.

    Unplanned Application Outages.

    General Practices.

    Key Concepts.

    9. ASP Pricing Models.

    The Major Types of Pricing Models.

    Other Fees.

    Real-World Examples of ASP Pricing Models.

    Key Concepts.

    10. ASP Customer Service and Technical Support.

    Up-Front Customer Service.

    Hosted Application Implementation.

    Client Preparation.


    User Policies.

    Data Conversion.

    Testing and Quality Assurance.


    Going Live.

    Routine Maintenance and Upgrades.

    Technical Support.

    Monitoring and Reporting.

    Call Centers.

    Billing and Mediation.

    General Expectations.

    Key Concepts.

    11. Enabling Technologies for ASPs.

    Virtual Private Networks.

    Different Types of VPNs.

    Value-Added Characteristics of Different Providers' VPNs.

    Networked Storage.

    Storage Area Networks.

    SANs' Value Proposition.

    Network Attached Storage.

    SAN + NAS + HSM.

    Why Lease Networked Storage from an ASP?

    Enterprise Portal Interfaces.




    Key Concepts.

    12. The ASP Channel.

    The Double Channel.

    SI ASP Strategies.

    Hardware Vendor ASP Strategies.

    ISV ASP Strategies.

    Rebranding and the Value-Added Channel.

    ASP Channel Winners and Losers.

    Key Concepts.

    13. What's Ahead for ASPs?

    The Data Center of the Future.

    Wide Area Storage.

    The Coming Value-Added Internet.

    The Microsoft Factor.

    Tribal Commerce within ASP Conglomerate Communities.

    Winning and Losing ASP Strategies.

    The Human Factor.

    Key Concepts.

    Appendix A: Guide to Location of ASP Case Studies in Different Chapters.

    Appendix B: xSPs (ASP-Enabling Companies).

    Appendix C: Selected ASPs in Major Vertical Markets.

    Appendix D: Selected ASPs Offering Major Types of Hosted Applications.

    Appendix E: Defining Your Low-Level ASP Requirements.

    Appendix F: ASP Organizations and Publications.



    Index. 0201726599T10242001


    I first heard about Application Service Providers (ASP) about three years ago from Marty Gruhn at Summit Strategies. I think I was doing an article on e-business, and she suggested I look into the value proposition of what she called Internet Application Hosting. She was hot on IAH—one of the few people who really were—and thought they would dramatically change the face of corporate computing. I followed her advice, and found ASPs so compelling that I started researching and writing compulsively about any ASP-related operations. Then ASPs and ASP-wannabes started seeing my articles and, of all things, began calling me for advice. This was a wonderful thing because I actually got to visit some data centers and talk shop with the people in the trenches.

    When I was an editor of several computing magazines, software companies would bring their new programs to the magazine offices and demo them for me. That was a great part of the job because we would often actually brainstorm problems they were having like pricing strategies, the right target customer, competition and so on. With ASP hosted applications, I could actually access the application right over my Internet connection—the techies just needed to give me a user ID. Later I could go out to the data center and see the "backend" of the operation—data center, network, security, storage and so on. Very impressive—like going to the Air and Space Museum at the Smithsonian.

    At the time there were only about 50 ASPs out there, the press had not become obsessed with covering the phenomenon and there were no formal organizations whatever devoted to ASPs. Indeed, many ASPs were glad for any kind of validation, guidance and marketing exposure.

    By my own informal estimate, there are now between 1000 and 1500 ASP-related businesses (called xSPs in the argot of the industry) out there, and it seems several new ones turn up every week. By any measure, the overnight explosion of the ASP industry is unprecedented. But what is unusual about it is that the numerical proliferation of ASPs is also complemented by their prolific diversification. ASPs already serve most vertical markets like finance, manufacturing and health care with most major enterprise applications like e-commerce, ERP and CRM, sales automation and collaboration. They also offer a full spectrum of IT platforms and networks. Usually a new technology approach penetrates one or two vertical markets and, once established, then migrates to other markets that are most similar to those already conquered. ASPs, like other generically horizontal "consumer-oriented" technologies such as PCs and mobile phones, is inherently more democratic.

    ASPs’ more democratic approach—the diversity of market focus and freedom of opportunity in the industry—might be its greatest strength. As yet, there is no 800-pound gorilla that can scoop up any promising new ASP and incorporate its winning tools and methods into its competitive arsenal. The industry is still pretty wide open—a good idea executed well can go far. But that democratic approach might also be the industry’s greatest weakness—anyone with an idea and some money can launch an ASP. The upside of such a situation is that it fosters a boom in all manner of providers. So customer organizations of all sizes in different markets can now take advantage of a truly virtual computing paradigm that cuts their costs and risks and lets them exploit powerful applications that many could not afford as installed solutions. The downside is that, because anyone can play in this game, some amateurs stumble into the fray, try to get rich quick, fail and disappoint their customers.

    Because ASPs received the unavoidable hype attendant on such accelerated growth, some entrepreneurs looking for quick profits launched ASPs with business plans that proved—or will prove untenable. By my own informal count, maybe 10 to 20 ASPs have gone under for various reasons like poor business plans, dried-up funding, a bad economy and increased competition. In the wake of 2000’s dotcom flameouts on NASDAQ, any new virtual e-business plan is receiving exasperatingly close scrutiny by venture capitalists. The same goes for new e-business ventures looking for stockholders at IPO time. And computing analysts and press tend, sometimes, to focus on the dramatic disaster—because it makes for a good story— than the relatively unexciting success—even though it makes for happy customers. The result is that the same media overexposure and vendor hype that unrealistically inflated customer and investor expectations for ASPs may now have unrealistically deflated them.

    I have followed IT segments like imaging/workflow, document management, knowledge management, wireless Internet access, videoconferencing, PDAs, ATM and others where the major players have not shown a profit for five years or more and whose stock performance has been dismal. But, when the market caught up with them, they could hardly handle all the business coming their way.

    I cannot emphasize this enough—such is the nature of a new IT market. Experts have documented that markets go through phases as they mature—they are born, proliferate, consolidate and stratify into leaders and laggards. The ASP market is not even three years old —it has not even finished the proliferation phase. It will inevitably consolidate and stratify into established major players and many other niche ones. In the meantime, do the math—of 1000 to 1500 existing ASPs, under 20 have had problems. In my view, that’s an incredible success rate. Indeed, compared to the average recent success rate of small businesses in the U.S.—about half fail—it’s phenomenal.

    Keep your eye on the long-term perspective. Gartner Group estimates that worldwide revenues of ASPs will be $25.3 billion in 2004. Meanwhile, IDC predicts worldwide revenues for the xSP market (ASPs, MSPs, MsecPs, etc.) will quadruple from $106 billion in 2000 to more than $460 billion in 2005.

    The mainstreaming of virtual computing is inevitable. As the ASP industry matures, market caps will boom, major players will buy smaller niche players, financially unstable players will go out of business or get acquired, and the industry will settle into the approximate form it will maintain for many years after. In the meantime, the challenging "pull" for you, the customer, is finding a solid ASP that will give you a good deal now and be around in five years. While the competitive "push" for you is choosing a viable ASP before your competition does and undercuts your value proposition by doing things like saving lots of money on hosted IT services and getting to market faster. This is particularly true for Small-to-Medium-Size Businesses (SMBs), many of whom till now could not afford any expensive installed enterprise systems like ERP and therefore competed at a disadvantage with Global 2000 firms that could.

    As with any new product, customers must perform due diligence when engaging an unknown vendor. I wrote this book to guide you through the process. I have purposely skirted granular current events like the stock performance of individual ASPs. I believe increased competition, the Darwinistic thinning of the ASP herd, and the inevitable merger and acquisition activity of major information technology and telecom vendors like Microsoft and AT&T with complementary ASPs who need cash will strengthen the ASP brand. If the big boys are smart, they’ll let their new partners do what they do best—innovate. If individual ASPs are smart, they won’t be unrealistically stubborn idealists and risk their customers’ and stockholders’ financial welfare by remaining independents with unstable cashflow. That said, I think your best buying strategy now is diligently educating yourself about ASPs’ business strategy and technology infrastructure and intelligently and exhaustively evaluating ASP candidates so you engage an ASP whose services best match your requirements and whose long-term success is most likely.

    If I had to choose fundamental criteria for an ASP’s success, they would be solid management, mastery of the technology and a respectable client base. At this early stage of the industry, profitability —while important—is of secondary importance to number of clients. If an ASP has oversold itself to win clients, then its references will tell the story. Whereas numerous satisfied clients translate to cashflow now— the number one preoccupation of any new business—and profitability and solid stock valuation later.

    With that in mind, this book is written for C-Level executives and managers who are considering leasing hosted services from an ASP. It introduces you to the telecom and computing climate and players that spawned the ASP movement, explains the ASP business model, and tells you in pretty fine detail what technology, security, service level conditions and customer service and tech support you should require of an ASP. I also define, and provide examples of, different types of ASPs—like Pure Play ASPs and Full Service Providers—as well as xSPs—like Infrastructure Service Providers and Management Service Providers—whose services might best suit you. I also explain the various pricing models of ASPs and suggest which ones are best for certain types of organizations according to the activities they will be performing. And I discuss the ramifications of ASPs on the traditional IT reseller channel as well as explain the new channel that ASPs offer as an alternative. I also make some educated guesses about winning and losing ASP strategies and about business and IT trends that will affect the ASP industry in the next few years.

    That’s in the chapters themselves. The Appendices offer selected ASPs that I’ve organized according to what kind of xSP they are, what vertical markets they serve and what applications they host. I’ve also included a list of ASP organizations and publications that host exhaustive ASP Directories and offer current news and analysis as well as invaluable information about standards and the ASP state-of-the-art.

    I would also implore you to address the pertinent questions in Appendix E, Defining Your ASP Requirements. I created these questions as a checklist you can go through with your ASP candidates to guarantee that the ASP hosted applications you will lease—as well as things like value-added services—are exactly what you need at the price you want to pay. But they also are designed to get the ASP to open up about its business partners, market strategy, channel development and other factors that will ensure their long-term success.

    In fact, if I were consulting for a client who wanted to hire an ASP, I would suggest the decision-makers use the book in the following way. First, read Chapters 1-13 to make sure you understand your ASP candidates’ market positioning, ASP or xSP Type, Price Model and so on. Once you understand the industry terms, baseline features and functions and competition, you can intelligently assess each ASP’s value proposition and comparatively shop among various candidates. Next, peruse the appendices of ASPs by type, application and market. I selected these ASPs because they had a certain visibility and geographic diversity, but that is my only bias. This will give you a few vendors to call to get your feet wet. Then I’d suggest you look through the ASP directories at the various organizations and portals I list in the appendix on ASP organizations and publications. These offer an array of ASPs of every stripe that you can research to your heart’s content. I have a similar database of ASPs culled from numerous sources, so contact me if you like. Finally, go through the pertinent questions in Defining Your ASP Requirements with your top ASP candidates. This is the most important step in your selection process because at least 95% of anything you need to know about a potential ASP partner will be elicited from them by asking these questions. What you don’t know you don’t know usually comes back to haunt you later—that’s why I’ve been so comprehensive in creating this checklist.

    It’s been my experience that, when a buying team uses such a methodology, it becomes very clear very quickly which candidates are untenable. Your only problem then will be how to choose the best of the best. I think you’ll agree that getting to face that dilemma is worth the price of the book. I wish you the best of luck.



    AboveNet, 218
    Access control, 106, 108–109, 115, 118
    Accounting, 110
    Achieve Online Services (AOS), 94–95, 231
    Acquisition, innovation by, 11, 214, 224
    ADSL Lite (G.Lite), 72–73
    Advanced Encryption Standard (AES), 108
    Agiliti, 94–95, 231
    Aguiar, Eric, 156
    Alliances, Telecom service provider, 10–11
    Alternate site testing, 56
    Application expertise, 24–27
        horizontal productivity, 227
        implementation of, 152–153
        security of, 135–136
        user policies on, 159–160
    Application servers, 16, 36
    Application service provider (ASP), 1–14
        alliances and, 10–11
        competition and, 7–9
        defining requirements for, 245–270
            ASP varieties, 251–254
            channels, 269–270
            coalition, 245–246
            customer service and technical support, 262–266
            data center, 247–249
            enabling technologies, 266–269
            future of, 270–271
            hardware platform, 246–247
            network, 249–251
            pricing models, 261–262
            security, 254–257
            service level agreements, 257–260
        ecosystems, 100–101
        enabling technologies. See Enabling technologies
        implementation model that prepared the way for, 4–5
        industry growth, 13
        in major vertical markets, 235–238
        market for, xv
        mergers and acquisitions and, 9–10
        network infrastructure that prepared the way for, 3–4
        new value proposition and, 11–13
        offering major types of hosted applications, 239–244
        organizations and publications, 273
        outsourcing model that prepared the way for, 5–7
    Application SLA, 125, 126, 127, 134–137
    ASP application aggregators (AAA), 91–93, 209
    ASP coalition. See Coalitions
    Asymmetric DSL (ADSL), 72–73
    Asynchronous transfer mode (ATM), 4, 20, 75
        Frame Relay interworking, 68–69
        traffic management and shaping, 67–68
        WANs based on, 64, 65–69
    AT&T, 22, 218
    Audits, 110, 117
    Authentication, 106–107
        user-level, 173–174
    Automated disaster recovery test, 56
    Availability, 52
        application, 134
        of data center, 48
        network, 127–128

    B2B environment
        enterprise portals in, 184, 185, 222–223
        virtual trade exchanges in, 222, 223
    Background checks, 117
    Backup and recovery, 48–51, 52, 118
        ASPs’ need for, 61
        Internet’s shortage of, 2, 3
    Battenberg, Jim, 133
    Billing, 165–166
    Biometric recognition system, 118
    Brick-and-mortar (BAM) companies, 8, 197
    Bridge, 69
    Broadband networking, 3, 18
    Business impact analysis, 50
    Business model, 16, 139–140
    Business service provider (BSP), 101

    Cable modems, 72
        data, 113
        web server, 40
    Call centers, 150, 151, 164–165, 167–168
    Capacity, network, 20–21, 62
    Capacity on demand (hardware), 42
    Carepanion e-Commerce System, 155–159
    CareTouch, Inc., 154–159, 232
    Categories of ASPs, 79–80. See also specific types
    Categories of service, 66
    CD-R, 176
    Cell, 186
    Cell relay, 65–66
    Channel (reseller), 195–211
        alternate ASP, 198
        consolidation of, 196–197, 210–211
        defining requirements for, 269–270
        “direct ship” phenomenon, 195–196, 208
        double ASP, 198–202
        “first-string,” 209–210
        hardware vendor ASP strategies, 205–207
        high-margin/recurring revenue dilemma, 199
        ISV ASP strategies, 207–209
        rebranding and, 209–210
        SI ASP strategies, 202–205
        tech/touch dilemma, 199
        traditional, 196
        value-added, 209–210
        winners and losers in, 210–211
    Checksums, 106
    Cisco, 214
    Clients, preparation of, 153
    Clustering, value-added, 44
    Coalitions, 7, 15–33
        ASP-enabling software platforms, 31
        defining requirements for, 245–246
            characteristics of, 17
            platform, 15–18
            provider types, 18
        infrastructure service providers, 27–31, 32
        market and application expertise, 24–27
        networks, 18–23
            characteristics of, 19–22
            platform components, 18–19
            providers, 22–23
        software, 23–24
        value-added services, 31–33
        community-based, 185
        tribal, 222–227, 228
    Commerce service provider (CSP), 101
    Common Object Request Broker Architecture (CORBA), 221
    Community-based commerce, 185
    Compaq, 206
    Competitive local exchange carriers (CLECs), 3, 5–7, 10, 18, 22, 210
    Compression, data, 175
    Concentric outsourcing, 7, 22
    Confidentiality, 106, 110, 114
        data, 38
        types of, 116–117
    Conglomerate communities, 222–227, 228
    ConnectSite.com, 208
    Consolidation, ASP industry, 214–215
    Continuity, Inc., 29–31, 231
    Conversion, data, 160
    “Coopetition,” 11
    Copper wire transmission, 70
    Corio, Inc., 26–27, 121–122, 231, 232
        network service-level, 130,
        application service level, 136
    Critical Technologies/FilesOnTheNet.com, 88–90, 231
    Customer network link to WANs, 71
    Customer application administration, 136
    Customer relationship management (CRM), 7–8, 80, 166–167
    Customer service, 80, 149–170. See also Technical support
        application implementation, 152–153
        client preparation, 153
        customer relationship management (CRM), 7–8, 80, 166–167
        customization, 152, 153–154
        data conversion, 160
        defining requirements for, 262–266
        general expectations, 166–169
        going live, 162
        maintenance and upgrades, 162–163
        outsourcing of, 151
        platform preparation, 153
        system sizing, 152–153
        testing and quality assurance (QA), 161
        tiered, 168
        training, 161–162
        up-front, 151–152
        user policies, 159–160
        virtual, 150, 168
    Customization of hosted -service, 152, 153–154
    Custom pricing examples, 146–148

        backup and recovery of, 48–51, 52, 118
        cached, 113
        eradication of old, 110
        integrity of, 109, 114
        mirroring of, 50
        security issues
            risks, 50
            theft of, 106, 114–115
            VPN and, 173–174
        theft of, 106
    Database servers, 16, 36
    Data centers, 19, 42, 47–57
        alternate site backup, 56–57
        availability of, 48
        backup and recovery, 48–51, 52
        defining requirements for, 247–249
        disaster recovery plans, 55–56
        environmental control, 57
        future, 216–217
        natural disasters and, 51–52
        responsiveness of, 52–55
    DataCert.com, Inc., 131–134, 232
    Data compression, 175
    Data confidentiality, 38
    Data conversion, 160
    Data encryption standard (DES), 108
    DataQuest, 181
    Dedicated provisioning, 36–37
    Delay, network, 130
    Dell Computers, 196
    Denial of service, 106
    Denial-of-service attack, 114
    Dense wave division multiplexing (DWDM), 3, 70–71, 75, 217
    Digex, Inc., 18, 29–31, 231
    Digital signaling rate, 62
    Digital signatures, 110
    Digital subscriber line (xDSL), 3, 72–73
    Digital virtual display (DVD), 176
    Direct-access storage device (DASD), 176–177
    “Direct ship” phenomenon, 195–196, 208
    Disaster planning, 118
        updating and testing recovery plans, 55–56
    Disasters, natural, 51–52
    Disaster Recovery Tests, types of, 55–56
    “Disruptive” technology breakthroughs, 1, 213
    Distributed Component Object Model (DCOM), 221
    Documentum, 98, 208
    Dornadula, Prasuna, 155–156, 158
    Dotcom companies, 8–9, 11–12, 197, 214
        e-business infrastructures for, 228
    Double channel, ASP, 198–202
    Downlink, 186

    E1 lines, 62
    E3 lines, 62
    Earthquake protection, 57
    eBay, 190–192, 232
    Ecosystems, ASP, 100–101
    80% application services, 23
    Electronic Data Interchange (EDI), 132
    e-mail, outsourcing to ASPs, 183
        viruses in attachments, 109
    Enabling technologies, 2–3, 171–193
        defining requirements for, 266–269
        encryption, 107–108, 173–174
            firewall-based, 174
            PC-based, 174
            router-based, 174
        enterprise portal interfaces, 184–185
        networked storage, 176–184
            network-attached storage (NAS), 177, 179–180
            providers of, 181–184
            reasons for leasing, 180–181
            SAN + NAS + HSM, 180
            SANs’ value proposition, 178–179
            storage area networks (SANs), 3, 39, 42, 177–178
        virtual private networks (VPNs), 2, 23, 75, 171–175
            types of, 173–175
            value-added characteristics of providers of, 175
            VPN-specific boxes, 175
        wireless, 4, 186–192
            analog, 186
            digital, 186
            SSPs and, 183
            third-generation (3G), 187–188
            WASPs (wireless ASPs), 188–190
            Wireless Access Protocol (WAP), 187–188
    Encryption, 107–108, 173–174
        firewall-based, 174
        PC-based, 174
        private key, 108
        public key, 107–108, 109, 110
        router-based, 174
    End-to-end SLA, 126, 127
    Enterprise information portals, 184–185, 222–223
    Enterprise JavaBeans, 206–207
    Enterprise portal interfaces, 184–185, 222–223
    Enterprise resource planning (ERP), 7–8, 80, 143, 145, 160, 201–202. 204–205, 207–209
    Entitlement management system (EMS), 122
    Environmental control, 57
    Equipment, network, 128–130
    Elfman, Eric, 133
    “e-sourcing,” 12
    Ethernet, 65

    Fast packet-switching technology, 64–65
    Fiber optic network, 70, 175
    Fiber-channel network, 177–178, 180, 182, 184
    Financial organizations, security concerns of, 115
    Fire suppression, waterless, 57
    Firewall-based encryption, 174
    Firewalls, 111–113
    “First-string” ASP channel, 209–210
    Flat/flat pricing, 140, 141, 143, 144
    Flat/tiered pricing, 140, 141, 142, 143, 145–146
    Frame Relay, 64–65, 68–69
    Full service providers (FSPs), 82–84, 228
    Future for ASPs, 213–230
        data centers, 216–217
        defining requirements for, 270–271
        human factor, 228–230
        industry maturation dynamic and, 213–216
        Microsoft’s impact on, 219–222
        tribal commerce within ASP conglomerate communities, 222–227, 228
        value-added Internet, 218–219
        wide area storage, 217–218
        winning and losing ASP strategies, 227–228

    G.Lite (ADSL Lite), 72–73
    G2000 companies, 8, 9, 183
        tribal commerce and, 226
    Gateways, 69
    Generic application services, 23
    Geosynchronous earth orbit (GEO) satellites, 186, 187
    Glossary, 275–287

    Hackers, 106
    Handoff (wireless), 186
    Hardware, 35–45. See also Servers
        characteristics of, 17
        components, 36
        defining requirements for, 246–247
        load-balancing, 40, 41
        platform, 15–18
        provider types, 18
        provisioning, 36–38
        server clustering, 38–39
    Hardware vendor(s)
        ASP play by, 98
        channel strategies of, 205–207
    Harris, Bob, 94
    Healthcare industry, 154–159
    Hewlett-Packard, 18, 98, 207
    Hierarchical storage management (HSM), 176, 180, 182
    High-margin/recurring revenue dilemma, 199
    HomeBanc, 200–202, 232
    Hosted Applications Development Community and ASP Certification Program (Microsoft), 221
    Hosting SLA, 125, 126, 127
    Human factor in ASPs’ future, 228–230

    IBM, 18, 206–207, 219
    IBM Global Services, 154–159, 232
    Independent Software Vendor (ISV), 84–85
        ASP variety and, 87–91
    Independent Software Vendor (ISV) ASPs, 98–101, 131–134
        channel strategies of, 207–209
    Infrastructure service providers, 27–31, 32, 209, 228
    Initial Public Offering (IPO) valuations, 214
    Innovation by acquisition, 11, 214, 224
    Integrators, 196–200
    Integrity, data and application, 106, 109, 114
    Intelligent load-balancing software, 40, 41
    Interliant, Inc., 131–134, 232
    International exchange carriers (IXCs), 3, 5–7, 10, 18, 22
    Internet, value-added, 218–219
    Internet service providers (ISPs), 3, 6, 10, 22, 210
    Interstellar Outfitters (fictional e-commerce company), 216–217
    Interworking (network), 67, 68–69
    Intrusion detection software, 110
    IP, 74–75
    ISDN, 71–72

    J.D. Edwards, 204–205
    J.R. Abbott Construction, 204–205, 232
    Jasper Design, 156
    Java, 2
    Juhn, Peter, 155, 158–159

    Kaiser Permanente, 154
    KPMG, 100

    Label-based switching (MPLS), 219
    Latency (in wireless networks), 73–74
    Lawson Financials package, 201
    Leasing rates, 139–148
        custom pricing examples, 146–148
        flat/flat, 140, 141, 143, 144
        flat/tiered, 140, 141, 142, 143, 145–146
        issues addressed in, 140
        other fees, 143–144
        per-click, 141, 142–143, 145, 146, 166
        real-world examples of, 144–148
        variable/tiered, 141, 142, 143, 166
    Level3, 208
    Life care industry, 154–159
    Load balancing
        network, 62
        packages for, 40, 41
        Web server, 53
    Local area network (LAN), 19
        ASP server connections through, 60
    Local loop, 60, 71–73
    Logical functionality, 16–17
    Logs, security, 117
    Lotus, 98, 207
    Low earth orbit (LEO) satellites, 186, 187
    Loyola University, 88–90
    Lucas, Jeff, 156
    Lucent Technologies Worldwide Services, 54–55, 231

    Madeiros, Todd, 191
    Maintenance (and routine upgrades), 162–163
    Managed Security Providers (MSecPs), 119–122, 126, 228
    Management policies for backup and recovery, 50
    Management service providers (MSPs), 53, 126, 228
    “Man-in-the-middle” security breaches, 109
    Market evolution, 215–216
    Market expertise, 24–27
    Massive scalability (of ASP hardware), 17
    Maturation dynamic in ASP industry, 213–216
    m-commerce, 188
    Mediation (billing and), 165–166
    Mergers and acquisitions, 9–10
    Microsoft, 207, 219–222
    Microsoft Network (MSN) Explorer, 220
    Microsoft Visual Studio.NET, 220
    Middleware, 23
    Mirroring, data, 50
    Mobile broadband wireless Internet access (m-commerce), 188
    Mobile devices, 73. See also Wireless -technology
    Modems, cable, 72
    Monitoring (and reporting), 163–164
        of application, 136
        of network, 130
    Multiprotocol label switching (MPLS), 219

    Natural disasters, 51–52
    NaviSite, 54–55, 231
    “near sourced”, 5
    netASPx, 200–202, 232
    Netegrity, Inc., 121–122, 232
    Network(s), 3–4, 18–23, 59–77. See also Local area network (LAN); Virtual private networks (VPNs); Wide area networks (WANs)
        characteristics of, 19–22
        customer LAN-to-WAN -section of, 71
        data center LAN-to-WAN section of, 60–63
        defining requirements for, 249–251
        fiber optic, 70, 177–178
        IP, 74–75
        load balancing of, 62
        local loop, 60, 71–73
        overview, 60
        platform components, 18–19
        providers, 22–23
        service level agreement, 125–134
        wireless, 73–74, 186–192
    Networked storage, 176–184
        network-attached storage (NAS), 177, 179–180
        providers of, 181–184
        reasons for leasing, 180–181
        SAN + NAS + HSM, 180
        storage area networks (SANs), 3, 39, 42, 177–178
            value proposition of, 178–179
            “WAN-ing” of, 217–218
    Network-level firewalls, 111–112
    Network capacity, 20–21, 61
    Network peering arrangements, 130
    Network quality of service, 21, 66
    Network reliability, 19–20
    Network scalability, 21
    Network service providers, 22–23
    Nonrepudiation, 110

    Open Text, 100, 208
    Operating systems, 23
    Optical storage, 176–177
    Oracle, 98, 207, 219
    Organizations, ASP, 273
        application (planned and unplanned), 137
        network (planned and unplanned), 131
        concentric, 7, 22
        of customer service, 151
        of e-mail, 183
        as model for ASP, 5–7
    “Overhead” information in -network data packets, 64

    Packet switching, 64–65
        cell relay, 65–66
    Partner coalitions, 7
    Passwords, 107
    Peering network, 130, 218
    Per-click pricing, 141, 142–143, 145, 146, 166
    Performance, 129
        of application, 135
    Permanent virtual circuits (PVCs), 64–65
        background checks on, 117
        security, 118
    Physical security, 118
    Platform of application, 135
    Portal interfaces, enterprise, 184–185
        custom (examples of), 146–148
        defining requirements for, 261–262
        usage-based, 165–166
    Pricing models
        flat/flat, 140, 141, 143, 144
        flat/tiered, 140, 141, 142, 143, 145–146
        per-click, 141, 142–143, 145, 146, 166
        variable/tiered, 141, 142, 143, 166
    Private key encryption, 108
        application, 136
        hardware, 36–38
        network, 131
    Proxy servers, 113
    Publications, ASP, 273
    Public key encryption, 107–108, 109, 110
    Pure-play ASPs, 81–82, 121–122

    Quality assurance (QA), 161
    Quality of service, 66
    Qwest, 98, 207, 218

    Rebranding, and the ASP channel, 209–210
    Recovery, data, 48–51, 52
    Recovery Time Objectives (RTOs), 47, 50
        of application, 135
        in environmental control, 57
        network, 54, 128
    Redundant Array of Inexpensive Disks (RAID), 177
    Regional ASPs, 227
    Regional bell operating carriers (RBOCs), 3, 5–7, 10, 18, 22
    Reliability, network, 19–20
    Repeatable solutions, 4–5, 12
    Reporting, monitoring and, 163–164
        application, 136
        network, 130
    Requirements for ASP, defining, 245–270
        ASP varieties, 251–254
        channels, 269–270
        coalition, 245–246
        customer service and technical support, 262–266
        data center, 247–249
        enabling technologies, 266–269
        future, 270–271
        hardware platform, 246–247
        network, 249–251
        pricing models, 261–262
        security, 254–257
        service level agreements, 257–260
    Responsiveness of data center, 52–55
    Risks, security
        determining, 104–105
        types of, 105–106
    Roaming (wireless), 186
    Robustness of hardware, 17
    Rolling upgrade, 42
    Router-based encryption, 174
    Routers, 69, 111
    Routing equipment, 69

    SAP, 98, 101
    Satellites, 186–187
        of application, 135
        capacity on demand and, 42
        expandability and, 42
        of hardware, 17
        of network, 21, 130
        of software, 24
        of stand-alone vs. clustered servers, 38–39
        of Windows 2000, 216–217
    Secret key security techniques, 108
    Security, 103–123, 129
        access control, 106, 108–109, 115, 118
        of application, 135–136
        appropriate, 114–115
        auditing and accounting, 110
        audits, 117
        authentication, 106–107
            user-level, 173–174
        background checks, 117
        charges for, 144
        confidentiality, 106, 110, 114
            data, 38
            types of, 116–117
        customer responsibility for, 104
        data, 38
            risks, 50
            theft of, 106, 114–115
            VPN, 173–174
        defining requirements for, 254–257
        encryption, 107–108, 173–174
            firewall-based, 174
            PC-based, 174
            private key, 108
            public key, 107–108, 109, 110
            router-based, 174
        in financial organizations, 115
        firewalls, 111–113
        integrity, 106, 109, 114
        Internet, 2
        Managed Security Providers (MSecPs), 119–122, 126, 228
        physical, 118
        policies, 116–117
        proxy servers, 113
            determining, 104–105
            types of, 105–106
        routers, 111
        in small to medium-size businesses, 115
        tiers of, 115–116
    Security logs, 117
    Server farms, 98
        ASP, 16–17, 36
            characteristics of, 41–44
            clustering of, 38–39
            flexibility and expandibility of, 42
            LAN connection to, 60
            provisioning of, 36–38
        proxy, 113
    Service bureau ASPs, 86–95
    Service level agreement (SLA), 56, 125–138
        application, 125, 126, 127, 134–137
        component services addressed by, 125
        defined, 125
        defining requirements for, 257–260
        end-to-end, 126, 127
        general practices, 137
        hosting, 125, 126, 127
        network, 125–134
    Service-level corroboration
        application, 136
        network, 130
    Service providers(s)
        commerce (CSP), 101
        full (FSPs), 82–84, 228
        hardware, 18
        infrastructure, 27-–31, 32, 209, 228
        ISPs, 3, 6, 10, 22, 210
        Managed Security (MSecPs), 119–122, 126, 228
        Management (MSPs), 53, 126, 228
        storage, 181–184
            network, 20–21
    Setup fee, 143
    ShareDoc/LEGAL, 132
    Shared provisioning, 36–38
    Signatures, digital, 110
    Simple Object Access Protocol (SOAP), 221
    SiteMinder, 121–122
    Sizing of system, 152–153
    Small office home office (SOHO), access to ASP WAN, 71
    Small to medium-size businesses (SMBs), 4, 7–8, 11
        access to ASP WAN, 71
        competition faced by, 8–9
        data conversion needs of, 160
        double channel and, 199
        Microsoft’s focus on, 220
        security concerns of, 115
        SI ASPs and, 228
        SSP use by, 182–183
    Smith, Eric, 133
    Software, 23–24
        ASP-enabling platforms, 31
    Solbakken, Art, 204–205
    Solution centers, 4–5
    SONET, 63
    Staff dependencies on backup and recovery, 50
    Stand-alone servers, 38–39
    Storage. See also Networked storage
        charges for, 143
        wide area, 217–218
    Storage area networks (SANs), 3, 39, 42, 177–178
        combined with NAS and HSM, 180
        value proposition of, 178–179
        “WAN-ing” of, 217–218
    Storage centers, 182
    Storage Networks, 217
    Storage service providers (SSPs), 181–184
    Sun Microsystems, 3, 98, 206, 219
    Support. See also also Customer service; Technical support
        application, 137
        network, 131
    Switched virtual circuit (SVC), 65
    Switches, 69
    Switching, label-based, 219
    Systems integrators (SIs), 22, 23, 24
    Systems integrator (SI) ASPs, 95–98
        channel strategies of, 202–205
        small to medium-size businesses (SMBs) and, 228
    System sizing, 152–153

    T1 lines, 62, 71
    T3 lines, 62
    Tabletop tests disaster planning, 56
    T carrier leased lines, 62
    Technical support, 163–166. See also Customer service
        billing and mediation, 165–166
        call centers, 150, 151, 164–165, 167–168
        complexity of, 150–151
        defining requirements for, 262–266
        monitoring and reporting, 163–164
        virtual, 150, 168
    Technology Services Group, 208
    Tech/touch dilemma, 199
    Telecom companies (as network service providers), 22–23
    Telecommuters, 71–72
    Testing environments for hosting applications, 161
    Theft, data, 106, 114–115
    Thin client computing model, 219
    Three-tier computing architecture, 36
    Throughput, network, 128, 129–130
    Thunderstorms, data and, 51
    Tiered customer service, 168
    Timing out computer sessions due to inactivity, 107
    Token Ring, 65
    Trade exchanges, virtual, 222, 223
    Traffic management and shaping, ATM, 67–68
    Training, 161–162
    Train-the-trainer strategies, 161–162
    Transactions, virtual, 53
    Tribal commerce, 222–227, 228
    TripleDES, 108
    Trusted business advisors (TBAs), 25
    2Roam, 190–192, 232

    Unisys, 216–217
    Upgrade, rolling, 42
    Upgrades (and routine maintenance), 162–163
    Uplink (wireless), 186
    Usage-based pricing models, 165–166
    Usage tracking, 166
    User ID, 106–107, 109
    User-level authentication, 173–174
    User policies, 159–160

    Value-added channel -(partners), 209–210
    Value-added clustering, 44
    Value-added resellers (VARs), 4, 196–197, 199
    Value-added reseller (VAR) ASPs, 84–86
    Value-added services, 31–33
        pure-plays and, 82
        SI ASPs and, 96
        FSPs and, 82–84
    Variable/tiered pricing, 141, 142, 143, 166
    Vertical ASPs (VSPs), 101–102
    Vertical markets, 227, 235–238
    Vertical Networks, Inc., 26–27, 231
    Virtual communities, 185, 222, 223
    Virtual computing, 197
        mainstreaming of, xv–xvi
    Virtual private networks (VPNs), 2, 23, 75, 171–175
        types of, 173–175
        value-added characteristics of providers of, 175
        VPN-specific boxes, 175
    Virtual technical support, 150
    Virtual trade exchanges, 185, 222, 223
    Virtual transactions, 53
        in e-mail attachments, 109
        in scripts, 109

    Wave division multiplexing (WDM), 70–71
    Web servers, 16, 36
        caching of, 40
        load balancing of, 53
    WebSphere Commerce Suite, 157
    Wide area networks (WANs), 19, 60–71
        ASP broadband link to, 60–63
        ATM-based, 64, 65–69
        customer broadband link to, 71
        Frame Relay-based, 64–65, 68–69
        leased shared, 171–172
        wave division multiplexing (WDM), 70–71
    Wide area storage, 217–218
    Windows.NET, 220–222
    Windows 2000, 219
        scalability of, 216–217
    Wireless Access Protocol (WAP), 42, 187
    Wireless networks, 73–74, 186–188
    Wireless technology, 4, 186–192
        analog, 186
        digital, 186
        WASPs (wireless ASPs), 188–190
        Wireless Access Protocol (WAP), 42, 187–188
    WorldCom, 218
    World Technology Services (WTS), 204–205, 232
    Write Once Read Many optical disk (WORM), 176

    xDSL, 3, 71–73
    xSPs, 233–234

    Year 2000 (Y2K)
        conversion platform, 161


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