ASPs are moving beyond their original model into managed services. ASP Advisor hed: An ASP by any other name … dek: ASPs are moving beyond their original model into managed services.
From time to time in past columns you’ve seen me refer to MSPs, as well as the better-known term ASPs. Just where the heck did all this MSP stuff come from? What is an MSP and what makes it different from a good old ASP? The answer involves a big bowl alphabet soup lane.
Originally, ASPs were service providers that handled a few specific applications. You could outsource specific applications (like e-mail, database hosting, payroll, Web hosting, etc.) to an ASP who would run these applications for you on the ASP’s hardware and network. You gained access to these systems via the Internet. This model has had its successes and its failures. Now the industry has grown beyond simple application hosting to the point where providers are now actually hosting and managing complete business processes for their customers instead of just an application or two here and there.
This has led to the industry inventing new abbreviations on an almost daily basis. There’s quite an interesting mix of abbreviations out there to pick from now. You’ve got the original ASP, then the MSPs (management or managed service providers), AIPs (application infrastructure providers), MIPs (management infrastructure providers), SSPs (storage or security service providers) and a new one with the remarkably useless name of BESP (Business Enabling Service Provider). The term ASP is now commonly replaced by the term xSP-at least when referring to the market segment as a whole.
While all of that looks like a lot of confusing alphabet soup, the case can be made that things are actually simpler then they first appear. Basically there are ASPs and there are MSPs. Most of those other abbreviations fit under one general category or the other. What is important is that you need to know how to tell them apart. You need to figure out what each one of these types of provider does so that you can determine if a provider is the right solution for your company’s outsourcing needs.
What’s in a name?
The term MSP has been bandied about pretty loosely lately. The labels ASP and MSP are often used interchangeably even though there are distinct differences between an ASP and an MSP. To help sort things out you think of the difference in this way: ASPs target business processes associated with the applications they provide; MSPs, on the other hand, focus on operational processes. Seems straightforward, doesn’t it? But the lines between the two types of provider often gets blurred because many ASPs are adding extensions that resemble MSP services to their service offerings-for example, host monitoring and backup. The main difference is that an ASP offers these services only in relation to the application it’s providing.
Roughly speaking, MSPs can be categorized as fitting into one of four main categories.
The first type, the Utility MSP, provides a utilitarian service for a specific capability, such as Web site performance monitoring or site traffic analysis. These vendors augment a company’s in-house IT staff, and the product they provide is typically a report. Common utility MSP varieties include performance-monitoring companies, such as Appliant.com and content-delivery networks, such as Akamai Technologies.
The next type of provider, the turnkey MSP, provides end-to-end systems management of a specific function. Typical turnkey MSP services include backup and recovery, change management, content management, security management, and device maintenance. These vendors provide not only the hardware and software needed, but also the personnel and the management processes to pull it all together.
Targeted MSPs, a third type of MSP, are similar to turnkey MSPs in their offerings but provide services with a much narrower focus. This focus is probably best illustrated by the SSPs, providers who offer security and storage related services. Security service providers tend to specialize in specific areas, for example, in supplying managed virtual private networks (VPNs), intrusion detection (ID) systems and firewalls. For the most part, large vendors like AT&T, Sprint, and Genuity dominate this space.
Storage service providers (the other SSP entity) target the high cost of storage hardware and maintenance. They provide a pay-as-you-go fee structure whereby the vendor maintains responsibility for managing and supporting the storage infrastructure, typically a storage-area network (SAN) located at a central data center. As a client company’s data storage needs expand, the company can simply provision more SAN capacity through its SSP rather than having to purchase and manage expensive storage hardware.
The last type of MSP is known as a management systems MSP. It generally offers traditional management technology, with the vendor deploying and maintaining the management tools but leaving every day use to the company. These vendors get management applications up and running quickly, while enabling companies to control the technology in-house. Having an outside vendor take on the responsibility for deployment and maintenance of such systems can be an attractive proposition.
What’s the catch?
As you can tell, this market is now very fragmented, with vendors slicing IT functions into various service offerings.
This can be both a good thing and a bad thing. It can be good in that you, as a customer, can have multiple vendors to pick from for each aspect of your business operations that you wish to outsource. In other words, you can avoid placing all of your eggs in one vendor’s basket, so to speak.
It can also be bad having different aspects of your business processes spread across multiple vendors. Consider this scenario: An e-commerce company outsources to an ASP for its storefront application and uses a payment services center and a B2B exchange for product delivery. Another provider does network security and yet another provider hosts the actual site. Your company’s very existence is dependent on all these separate entities performing their jobs well and making sure that all of their systems and services are compatible with each other. Worse yet, your whole operation can be shut down by the failure (or bankruptcy) of any one of the involved providers. And then there are the liability issues. Imagine those credit-card numbers for your e-commerce operation being shared (and stored) across multiple vendors’ systems. Scary thought, isn’t it?
To be fair, many of these specialized service providers have formed strategic alliances with other providers specifically to deal with these issues. They combine and coordinate their technologies in order to offer their collective customers a cohesive solution with some peace of mind thrown in, too.
In the end you have to keep in mind that many companies call themselves MSPs, but you have to be able to tell the real thing from the wanna-be. The distinguishing mark of a true MSP is a business model based on narrowly targeted and tightly focused services. At least that’s what it is right now. Remember that the only constant is change-and the xSP marketplace is no exception to this rule.