InformationWeek

But what happens when a company starts deploying multiple hosted apps? Does that mean maintaining relationships with dozens of ASPs--or can multiple ASP offerings be combined into a single, integrated business service? Newcomers such as Jamcracker Inc. and Agiliti Inc., as well as mainstream software developers such as Candle Corp. and Onyx Software Inc., are offering a variety of approaches to solve the problem.

Jamcracker is probably making the biggest noise in this new market. Launched by Exodus Communications Inc. co-founder K.B. Chandrasekhar, Jamcracker acts as a sort of ASP clearinghouse--offering a single point of accountability for the online services provided by its ASP partners. Jamcracker customers get a single sign-on for each user for multiple application; one invoice, one phone number to call for tech support; and one place to shop for additional services.

Mark Terbeek, Jamcracker's VP of corporate development, says there are logistical benefits of ASP aggregation, in addition to the administrative convenience of a single point of contact. "Fifty percent to 70% of trouble tickets involve a password problem," Terbeek says. "By using our single sign-on, you eliminate the need to have a separate password for every ASP you're using."

Jamcracker customers pay a monthly fee for each service, Terbeek says. Basic services such as single sign-on and support are priced at around $15 per user per month, before volume discounts are taken into account. Support for Microsoft Office applications such as Exchange is another $35 per user. In addition, the rental of individual applications, which include Employease HR software and WebEx online meeting and collaboration tools, ranges from $5 to more than $25 apiece per user per month.

Terbeek says once an IT manager has established a relationship with an ASP aggregator such as Jamcracker, it's easier to activate services or applications for short-term needs. "Sometimes a department only needs an application for a specific project, or someone might want to just try an app for 90 days," he says. "Our solution gives them the ability to set up and tear down apps quickly, without getting involved with a lot of provisioning hassles."

Jamcracker also encourages its technology suppliers to provide integration between their applications, either through their own developmental efforts or by leveraging a set of Extensible Markup Language (XML) definitions that Jamcracker has created for this. From the ASPs' point of view, Jamcracker acts as a value-added distribution channel. In return for the customers Jamcracker brings to the table, these ASP partners allow Jamcracker to take a margin on the service it sells.

Agiliti is also aggregating multiple ASP offerings under one roof. But unlike Jamcracker, this startup is building its own reseller channel to sell and service customers on a local basis. "We're working exclusively with partners such as systems integrators, Web developers, and accounting firms that already have strong relationships with the small to midsize businesses that are most in need of what the ASPs have to offer," executive VP Mike Thomas says.

Agiliti's business plan closely resembles the two-tier distribution model widely used in PC and network hardware sales--essentially "drop shipping" online services, rather than computer equipment, to the ultimate customer. Agiliti handles all the provisioning, front-line support, and billing for its resellers, who take a margin of about 10% on the deal. Agiliti can also set up customized E-services Web sites for its resellers, from which the resellers' customers can select and activate ASP offerings.

Rave Sports Inc., a $5 million sporting-goods manufacturer in Minneapolis, is an example of how Agiliti's business model works. Rave had a relationship with the Woodburn Group, an integrator and Web-site hosting company. When Rave Sports' CFO Pat Golden began considering an upgrade of his company's financial applications, he realized that the cost of buying and supporting a high-end accounting platform would be prohibitive. Instead, Woodburn suggested, he could rent Great Plains Software Inc.'s accounting software on an ASP basis through Woodburn.

By leveraging Agiliti's multi-ASP engine, Woodburn was able to deliver Siebel Systems Inc.'s customer-relationship management software at a reasonable cost, too. "The great thing about working with Woodburn," Golden says, "is that they can bring technologies to our attention as they become available, and we can try them out at a pace we're comfortable with, without having to build a big IT staff ourselves."

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