The ASPs

1. The ASPs Value Proposition or Valueless Preposition? Paul Greenberg President, The 56 Group, LLC Author: CRM at the Speed of Light, 2nd Edition (McGraw-Hill 2002) 3rd Edition, May 2004

2. What is an ASP? • A snake. • Software provider. • A utility company. • Who the heck knows? N = 29 Cross-Tab Label 0 / 500

3. What is an ASP? • Application Service Provider (ASP) • More than one Variety • Net Natives a.k.a On Demand Utility • Hosted Solutions • Other Permutations • Hybrids • Both: Online/On Premise

4. ASP: The Rise & Fall • The hosted solution model failed miserably in 2001 after a brief, meteoric rise • Fears about data security – some real, some imagined • Hosted software, not a services model • Cost was still too high – paying for licenses and administrative fees and consulting • Lousy marketing strategy – spent lots of money before delivering anything real at all

5. ASP: The Fall & Rise • New business model intersected bad economy • Money was an object to most companies • CRM was still on the table • Traditional CRM had hit a brick wall with its “large enterprise” problems and slow ROI • Net Natives able to swoop in with great marketing and smart value proposition

6. ASP: The Model • Software As Subscription • Service oriented, multi-tenant architecture • Regularized, flexible fee structure (monthly, annual) • CFOs love this approach – low risk, amortized cost, little bit upfront

7. ASP: The Model • On Demand Services need SOA • Service-Oriented Architecture (SOA) • Collection of business components and IT functions driven by evolving business reqs • Web services (XML, SOAP, WDSL, etc.) • .NET or J2EE compliant platforms • Vendors vary (Netsuite J2EE; Salesnet .NET)

8. ASP: The Value Proposition • The Upside - CFO • Much lower TCO than traditional vendors • Approximately 20% of traditional • Pricing model is subscription fees • Per user per month • Can be flexible • Easy to plan for • Cost overruns not an issue

9. ASP: The Value Proposition • The Upside – CIO/CTO • No downtime during upgrades • IT personnel overhead outsourced to ASP – significant reduction of administration time • Much shorter deployment times • 30 days is not at all unusual • Compare to 4 to 18 months for traditional CRM • Customization is now configuration, though custom applications can be built w/provided tools

10. ASP: The Value Proposition • The Upside – VP of Sales (or Marketing) • Salespeople able to work offline, online or mobile – always up to date • Adoption rates high due to easy to use interfaces

11. ASP: The Value Proposition • The Downside • ASP claims are often excessive • While benefits great, just not as great

12. ASP: The Value Proposition • The Downside • Don’t provide strategic services • Change management • Value creation services • Other performance related benefits • Are a system and a technology, not a strategy and a philosophy – missing those pieces

13. ASP: The Value Proposition • The Downside • Competitive beyond Reason • Always sending out press releases on which client they’ve stolen from whom • Some will make unfounded claims about their competitors that under scrutiny aren’t true

14. ASP: The Myths • Security Myth • “My data is not secure, because I don’t have it” • Mythbuster • ASPs have multiple levels of security • Physical • Internet • Network • Operating System • Application Level

15. ASP: The Myths • Integration Myth • “Its impossible to integrate because the hosted services don’t integrate well with our on-premise systems” • Mythbuster • Use of web services makes integration less a chore, though issues will be there • APIs, service oriented architectures

16. ASP: The Myths • Functionality Myth • “The ASPs might be cool, but they don’t have anywhere near the functionality we want” • Mythbuster • The net natives and hosted services provide all the functionality you need • Not in all circumstances (manufacturing environments, etc.)

17. ASP: The Market • Growing Rapidly – Here to Stay • Aberdeen - $8.0 billion by 2007 • 28% CAGR • IDC – 65% interest in using “on demand utility” • Gartner Group – “in 2004, there will be increased acceptance of the hosted model for sales automation for all enterprise sizes, with an understanding of its limitations”

18. ASP: Who are Those Guys? • Salesforce.com • 8,400 customers, 120,000 users • One of two vendors providing end-to-end “value chain” services • Put “software as services” model on the map • On Demand Utility • Major force in changing CRM paradigm

19. ASP: ASP: Who are Those Guys? • Netsuite • Over 7,000 customers • The other end-to-end value chain provider • Even include modest Partner Relationship Management capabilities – uniquely • The only net native that is an Oracle-focused alternative

20. ASP: ASP: Who are Those Guys? • Salesnet • Easily the deepest sales functionality of all the net natives • First net native to understand the process-driven transformation of CRM • Uses business analysts to work with you to configure or customize Salesnet to your needs

21. ASP: ASP: Who are Those Guys? • RightNow • Deepest customer service functionality • 20 straight quarters of profitability • Unique selective upgrade capability

22. ASP: ASP: Who are Those Guys? • Siebel CRM OnDemand • Alliance with IBM OnDemand services • Aimed at mid-sized companies • Siebel did a 180° wheelie on hosted market after initial failure • Siebel CRM OnDemand: Upshot Edition • Siebel acquired Upshot in 2003 • Aimed at smaller business users within Siebel world

23. ASP: The Other Players • Hosted Solutions – Conservative Cousins • Corio, USInternetworking, Surebridge • Surebridge has best value proposition with hosted version of MSCRM 1.2 • Represents 40% of their revenue even though MSCRM out only a year

24. ASP: Protect Yourself • The Service Level Agreement (SLA) • Must be tightly binding and detailed • Consider • Scope of services • Performance benchmarks • Time to problem resolution • Security • Uptime guarantees • Credits for great performance, penalties for poor performance • So much more

25. THANK YOU For further information: Phone: 703-551-2337 Email: paul-greenberg3@comcast.net