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DSL: An ASP enabler - Industry Trend or Event

This month we will describe enterprise application hosting services that we think can flourish in the near future, by leveraging digital subscriber line (DSL) services. Rythms, Covad, and Northpoint are examples of DSL providers. We believe that high-speed access is an excellent foundation upon which successful enterprise services will be built.

For example, Rhythms NetConnections is building a national network capable of supporting companies that want to securely link teleworkers, remote offices, and others to their enterprises, with minimal installation and management overhead. Over a DSL connection, Rhythms can deliver Internet access, in conjunction with virtual private network (VPN) connectivity, to a corporate computing environment.

DSL is creating an entirely new opportunity for third-party service providers. To this end, Rhythms is working with channel partners who include long-distance carriers, ISPs, integration firms, and VARs eager to incorporate "ASP" into their businesses. With partner companies focused on discrete hosted applications, Rhythms can build a robust network service consisting of broadband access, enterprise connectivity, and other applications.

While DSL can enable a number of enterprise applications, which ones are best-suited for high-speed campus, remote office, and telework environments? This is a key question within the industry today.

Initially, one group of ASPs has been focused on the integration of enterprise IT, on the full applications outsourcing model, including support and integration for potentially multiple applications. These providers are integrating complete workflows to support business processes. Workgroup software, scheduling and project management, contact management, supply-chain integration, file sharing, unified messaging, and other integration-heavy suites come to mind as perfect fits to the telework scenario.

But let's put the brakes on for a minute. The near-term offering enterprises buy may not be so comprehensive--they are more likely to provide data integration and other incremental support functions, rolled into a network services "bundle."

Be on the lookout for ASPs that offer very basic network services, combined with IT functions that actually improve enterprise integration and business process management, without dicating an outsourced model. We predict that a services company like Rhythms will increasingly seek to pair up with specialized applications vendors for offerings that leverage the core value of the Rhythms network and drive traffic levels up.

One demonstration linked from the Rhythms corporate Web site shows a partner-delivered video-feed service provided for "small business" retail providers. The partner, Everything (www.cEverything.com), is another network-based provider. The service basically lets managers look over the shoulder of restaurant employees, in "eye-in-the-sky" fashion, together with cash register data feeds. This lets companies avoid the "seven-days-a-week" floor-manager syndrome. But, for any retailer, the value of this type of information, correctly utilized through other applications, can be indispensable--for example, in managing inventory. There is a unified-messaging interface in the demo--mail and fax features. The "Internet" service portions are free; the feeds cost money.

Enterprise applications, in the literal sense, may not be of the greatest value for the ASP customer. But the data integration--supporting the enterprise IT transactions--may, in fact, be most important. Most enterprises, including large and small ones, will initially want to keep control over applications in which they have already invested.

Witness new ASP startups like eALITY, a corporate-forms gateway service that uses Internet connectivity to support file formats for small to midsized business accounting programs that are commonly in use today. eALITY isn't taking a "whole hog" approach and requiring an enterprise customer to outsource the actual application. Instead, eALITY has created a true value-added service that gives corporate managers forms-based integration and a way to remotely review expense reports and time-off requests, for example, and approve or deny system entry.

Does this sound like the Internet hosting model? It should. Internet hosting companies continue to add features--like storage and recovery--that form a bread-and-butter services business upon which we can all rely. Because managed networks offer more dynamic control over the actual performance a given user experiences using applications, the DSL-services bundles Rhythms and its many competitors offer create a platform for other services to the enterprise customer.

In the long term, a winning ASP will create bundles that reduce the complexity of managing multiple services together. DSL promotes this model not only because it is a bundle of applications but because it also facilitates the bundling of additional applications.

Next month, we will address the long-term vision for ASP: voice services integration. Although the revenue picture for this development is rosy, and the availability of unified messaging platforms makes this possible, we're leery of voice service integration scenarios that make it sound simple.