No doing it ASAP?

Neha Kapoor

LAST year, an IDC study on the Application Service Provider (ASP) market in India had revealed that there was ''significant awareness'' about the ASP model amongst corporates - 33 per cent for SMEs and 68 per cent for large organisations.

And eWorld, quoting the study, had questioned whether this ''awareness'' would translate into business for service providers.

We may just have the answer today...

Current scenario

The hype and hoopla notwithstanding, the ASP market in India has experienced flat growth this year with experts blaming it, among other things, on the ''inability of Indian businesses to change their mindset.''!

Says Gaurav Dua, Senior Analyst, IT Practice, Frost & Sullivan (Delhi), ''The ASP market has not witnessed the growth which was anticipated earlier, primarily because of companies being unwilling to change their mindset and shifting on to an ASP model. Also, in one way or another, the market has been affected by the general economic slowdown, the global tech meltdown and closure of many B2B companies.''

For Eastern Software Systems Ltd's Sanjay Agarwala, the unchanged mindset of Indian companies is a serious issue. ''Most of the companies are used to having their data sitting in files right under their noses. Shifting this data to a computer itself is a big problem, so moving it onto a remote server is quite serious!''

Ravi Trivedy, Director, IT Strategy and eBusiness, Pricewaterhouse Coopers, adds, ''Trust, the business model, confidence in service and the ability to deliver a business solution are major hurdles that ASPs will need to overcome. The other issue is that the ''one fits all'' generic solution concept has not yet been accepted by clients.''

What about areas such as security and infrastructure? According to Dua, ''There are security solutions available - firewalls, digital certificates etc. None of it has taken off in India.

''Also, lack of infrastructure is an irritant. There is a lot of talk of optic fibres and bandwidth but the fact is that bandwidth availability is constrained. And if you are going to download applications like ERP or CRM, you need adequate bandwidth,'' he adds.

Slowdown is spur?

Agarwala doesn't see these as ''constraints'' as much as ''problems''. He proclaims, ''I don't deny that security and infrastructure are issues but I don't think they are constraints that will stop a determined company from achieving what it wants. What is of primary concern, though, is the mindset of people; unless companies feel the need for an ASP model, the market will not take off.''

''And the slowdown will do precisely that. When pressures on margins increase and a company is forced to cut costs, they would consider migrating to an ASP model. Most of my clients are clearly examining this option,'' says Agarwala. Trivedy agrees that an ASP model is a great option for a company during a slowdown. He, however, says, ''One has to remember that there are substantial initial costs and that returns are only seen in the long run (once application and environment have stabilised). Thus in a slowdown this initial hump is a deterrent. The other issue is the intangible cost of risk...which is where most companies are dithering.''

ASP or MSP?

According to Dua, ''even though the year has been bad, the market will still be able to achieve the target of $43.6 million by 2002 as estimated by a Frost & Sullivan study released earlier.''

Agarwala agrees with the target but says the growth will be in the area of Managed Service Provider (MSP), not ASP as we know it.

MSP? Agarwala explains, ''MSPs are service providers which host application on a remote server which is dedicated to a single organisation or community with uniform needs. This is a more defined form of ASP as we knew it when it first came in i.e. hosting applications for multiple people with multiple requirements. Here, for example, one large manufacturer would provide funds for infrastructure, applications etc and control its use by other players. In this case, the fundamental applications remain the same - ERP, CRM etc - only their structure is different.''

How different is different then? ''ASP or MSP, its just a play of semantics! I can give you twenty terms used to describe an ASP model. It doesn't matter what you call it,'' claims Dua.

''As long as it is an application hosted remotely, provided on the Internet on a rental basis, it's ASP.''

Even so, he says, it will take at least six months for a model where a few players share a system to really take root here.

''This ASP model is popular in countries such as Australia but we are generally 8-10 months behind Asia-Pacific countries in terms of adopting technology. So, it will take time,'' he adds.

In the meantime, Dua says, ASPs will have to work their way through providing low-end applications such as messaging and e-mail, which are quite popular now, to enterprise solutions such as ERP and CRM and accounting and HR. ''These applications are easier to provide as the processes are more or less streamlined. Four or five years later, though, they can think about high-end services such as datawarehousing.''

The final word then is that the ASP market will pick up once the slowdown et al wear off. Says Dua, ''The market, like all other sections of the technology industry, has been affected by these environmental factors. But it will pick up once things are normal.''

Trivedy says, ''There is very low market penetration today but ASP is more of a future bet.''

Until then.

nehak@thehindu.co.in

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