NETWORK WORLD NEWSLETTER: JEB BOLDING on
APPLICATION SERVICE PROVIDERS
01/09/02
Today's focus: Closeness and trust

Dear Wincenty Kaminski,

In this issue:

* Physical proximity and branding are top selection criteria
* Links related to ASPs
* Featured reader resource

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Today's focus: Closeness and trust

By Jeb Bolding

It's becoming apparent that in the future users will choose
service providers based upon their physical proximity and the
level of trust they inspire.

Customers want to see and touch their service provider. No
doubt customers will want to take advantage of distributed
applications. However, they also want a representative of the
service provider to be local to them, so that they can have
someone on site if there is a problem or if some planning
within the enterprise needs to take into consideration the
relationship with the provider.

The level of trust is related to branding. Right or wrong,
service provider users are concerned with the viability of
their potential partners. Seasoned service providers that have
name recognition will have the upper hand against their lesser-
known brethren. Smaller service providers could potentially
offer better products, better features, better support, and
better service-level agreements than bigger providers. But in
the market today, that probably won't make much of a
difference.

Newer, smaller providers face the dilemma of spending money
that they don't have on marketing and promotions that they need
in order to acquire additional customers and funding.

In studies Enterprise Management Associates has conducted over
the past year, the key rationales behind choosing a provider
have shifted from monetary concerns to trust-based concerns.
EMA has found that name recognition is the primary criterion
used to select among service providers that offer relatively
equal sets of features - even at the expense of cost. Following
name recognition is a local presence maintained by the service
provider.

It's probably apparent that these key criteria are also the
same bases for choosing traditional outsourcing providers. This
is why I have argued that service providers that have either a
systems integrator arm or a channel of systems integrators have
a particular strength over competitors.

I expect, then, that over time we'll see either more direct
entrants into the provider market from IBM and others, or
indirect entrants from companies such as Ernst & Young. These
companies already have tight partnerships with one or two
service providers that have already spent the necessary
millions to build out their infrastructure.

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To contact Jeb Bolding:

Jeb Bolding is senior consultant with Enterprise Management
Associates in Boulder, Colo., an analyst and market research
firm focusing exclusively on enterprise management. Bolding has
10 years of experience in the network systems industry, most
recently with eCollege.com, an ASP for higher education, where
he was director of product development. He can be reached at
mailto:jbolding@enterprisemanagement.com.
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RELATED EDITORIAL LINKS

Lesson learned: Have a back-up outsourcing plan
Network World, 01/07/02
http://www.nwfusion.com/news/2002/128499_01-07-2002.html

Breaking ASP news from Network World, updated daily:
http://www.nwfusion.com/topics/asp.html

Archive of the ASP newsletter:
http://www.nwfusion.com/newsletters/asp/index.html
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FEATURED READER RESOURCE

Network World Fusion's The Edge site

Network World Fusion's The Edge is a resource devoted to the
advances in service-provider networks that are shaking up the
old telecom order. In classic Network World fashion, we focus
on the hardware, software and services coming to market - but
this time from the vendors targeting legacy carriers, new
alternative local carriers, ISPs and application service
providers. http://www.nwfusion.com/edge/index.html
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