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Lotus ASP Solution Pack: Ride the current, not the wave

Messaging and collaboration solutions are one of the hottest items being outsourced to ASPs today. Customers are trying to hand off these internal tasks to outside resources so that they can concentrate more on their mission-critical issues and applications. But is this just the latest trend? The site editors at SearchDomino.com and SearchASP.com recently spoke with two industry experts, Bill Bliss, director of hosted applications marketing at Lotus Development Corp. and Lew Hollerbach, senior ASP analyst at the Aberdeen Group, to discuss Lotus' latest announcement to offer its messaging and collaboration solutions to customers through the ASP model.

Editors: What type and/or size of organizations do you think ASPs will try to sell or market Lotus' ASP solution pack to?

Hollerbach: For this kind of an application, I think anywhere in the SME (small to medium-size enterprise) segment and up would be a good market, because it's an easy application to outsource. It's [groupware messaging collaboration services] usually one that has some headaches around it. It's a good candidate to outsource, and any company with groupware messaging collaboration would be a good candidate for this.

Bliss: I agree. I'd add that the service providers have been targeting the SMEs all along anyway.

Editors:How much customization can be done with new ASP solution pack? How much customization do you think end users want?

Bliss: It [the solution pack] does lend itself out to be customized. With the components of the service pack, the service provider can decide what technically they want to use from Lotus. For example, if they want to put up a service team and use Quickplace, they can do that. It's a bundle, and they can pick a la carte what they want to provide for their service. Most do want customization of the portal. We provide a wrapper for all the applications to be integrated for the customer. When the applications are rented to the community workplace and then to the storefront, that can be done. To sum it up, there are options for the service provider in terms of what they want to use for technologies and customization. We definitely look at customization as a requirement.

Hollerbach: Customization is one of these tricky areas for service providers. The more you customize, the less you have the one-to-many model. If all you are doing is customizing, that means you can't leverage that same solution across many customers. You need to minimize the amount of custom work you want done. You need to offer flexibility without shooting yourself in the foot. One solution is user self-service. Service providers should be able to offer their customers some kind of self-service option to a certain extent. Self-service allows the user to still keep some control and relieve the service provider from some burden. There can be a balance. User self-service will relieve the service provider from some of the customization work.

Bliss:I agree a lot with what Lew is saying. In the ASP solution pack, the bundle design goal is to offload some of the work and customization from the service provider to the end user.

Editors: For the end user that is accessing the solution pack through an ASP, what would be the most cost-effective pricing plan? Per user, per month or per transaction?

Bliss: The relationship, in general and thus far has been on a per-user, per-month basis. However, as different applications are coming online, we're seeing different pricing plans. In general though, we're seeing per-month, per-application.

Hollerbach: I'd say per-month, per-user is the norm. However, it depends on the application and more importantly, how people use them. One thing I have heard is the importance of keeping pricing plans simple. So much so that users are willing to pay more for a price plan that is easily understood and easy to grasp. I would suggest that message get down to the service provider. Keep it simple. If it means the user has to pay a little more, they are willing to do that.

Editors: Do you think the ASP solution pack is more attractive to an ISV or an ASP and why?

Hollerbach: I think the purpose is to make it [the solution pack] available to a service provider who in turn will make it available to their customers. An ISV is in the business of creating software. This offering is already built by Lotus, who is an ISV, and they will be able to make it available to ASPs who can make it available to their customers.

Bliss: I'd add that we have an SDK that ISVs can write to so they can host their applications. That is available for free to Lotus and IBM ISV partners. For an ISV, it's an additional channel for them to project out into the marketplace through ASPs.

Hollerbach: I disagree. I think users value functionality, not applications. The ISV can use this platform and build a business offering based on this platform.

Editors: :Lotus has offered its messaging and collaboration solutions for rent directly to vendors and end users in the past. What is the benefit now of offering these solutions to ASPs and ISVs for rental to end users? Doesn't that take away some of Lotus' business?

Bliss: Clearly, we've done this in the past. The announcements that we made a week ago were led around Lotus putting incremental investments in this space. It [the announcement] talked about things we have done in the past, the ASP solution pack, Quickplace and Sametime. The announcement was also around pricing models and licensing models that are easier to do business with, and the strategic changes within the partner organization. We have been doing the same business in the past for multiple business models out there. Now we're just making it easier for service providers and ISVs and ultimately end users. Is it a strategic move? Yes. Will it change our business? We plan to grow at the rate of the market or better. It's not significant at this time, but it's a strategic move.

Hollerbach: The last part of the question is tricky. You need to be careful on how you define taking away from current business. Who will be monitoring Lotus? Wall Street tends to change its mind a lot. What's in vogue today may not be months from now. If that happens, it will be a short-lived perception, and it's nothing to worry about. You need to look at as many outlets and offerings as possible. What happens short term to finances? If there's a hit, it will be a short-term hit. I do believe this will be an important channel. It's like the difference between a wave and a current. A current is much more durable and long lasting. You need to look at the current, and not the wave.

Editors: :How would you comment on Lotus' timing to offer the ASP solution pack as a rental model to ASPs and ISV's? Too early, too soon or just right?

Hollerbach: I don't know how important this timing issue is. A lot of people over hype the timing. There are benefits of coming into the game later. The ASP industry isn't evolving as quickly as we thought. It makes more sense to listen to what users and partners want. You should trust the market, not the market research.

Bliss: I look at it like Lew does. It's an iterative process of listening to what the users, service providers and ISVs want and making those changes. We've been in the market of Domino instant hosting, and learned what technologies to provide and how to partner and price them. It's all about listening.

Editors: Is there anything that you think the ASP solution pack does not include, regarding messaging services, that would make Lotus' services not as marketable to the end user? Such as unified messaging?

Hollerbach: I'm not totally intimate with all the aspects of the offering. However, I would still look at what people need now. Have a plan in place with a core set of functionality for providing and offering augmented services as the market progresses. What is important is to come out with something useful immediately, with a plan to upgrade.

Bliss: We're already providing ready-to-use calendaring, e-mail, etc. As we move forward, these solutions can be used a la carte by the service providers. If there are things they don't need, there's nothing wrong with that. They don't' necessarily need to use the mail functionality in the ASP solution pack. We're planning on adding more functionality from Lotus, other parts of IBM and other Web application servers as we move forward.

Editors: A recent survey conducted showed that messaging solutions are now organizations' first choice for an application they would like to outsource. Do you think this statement is accurate? Also, do you think this trend will continue or die down over time.

Bliss: From our feedback, I'd agree with that statement. I think that the trend to outsourcing will continue. It [messaging solutions] has all the value propositions in moving to an off-premise option. I see no reason why it will change. The ties into other applications, like ERP and other enterprise apps � are not as intricate. The ease to outsource makes it one reason. There's just more experience from outsourcing in the marketplace. For years, it's been more of a known commodity for customers and service providers.

Hollerbach: I would agree with that. It's a good candidate for outsourcing. It's not mission critical and it's not an expertise you need to have in house. You can throw it over to an ASP. Internal people don't want to be involved with that anymore. It's not fun and there's no excitement in maintaining and upgrading it. However, I'm not sure if it would be the first choice application for companies to outsource. I've heard some other feedback that many companies would choose to outsource their T&E services first. That's a headache and involves a lot of procedures, etc. No one wants to deal with that kind of stuff. The order - what's first and what's second - doesn't matter. Does keeping the application in-house take up a lot of resources, add to the top line or subtract from the bottom line of the budget? Those are the questions to ask.

Editors: Where do you see Lotus going with this longterm? Do you think the ASP announcement will have a strong impact on Lotus's direction?

Bliss: It [the announcement] absolutely will have a long-term impact on Lotus' direction. We've already done some of this work and are now showing it off. I see changes in our partner organization, pricing and more work in this space. Strategically speaking, this is where we are moving. It's the current vs. the wave mentality. It's a significant change for the company. The ASP solution pack is also strategic, but it's just a piece of the story. We'll continue to make more applications available to service providers. We'll add more technology, such as billing and management software. We'll advance that platform forward. We'll leverage IBM as well.

Hollerbach: I think if Lotus didn't have a plan many years out � that would be far more telling. I see a lot of companies that come in and all sorts of companies make announcements. I'm interested in seeing paying customers, channels in place and sales training being developed. I want to talk to these paying customers and get their comments. Then I can take this seriously.

Editors: Any final thoughts you want to add?

Hollerbach: I would say that it is really important not to get too caught up in the ASP hype. It's easy to be the wave of the future. It's more important to communicate and respond to the customers and make it clear what you are doing. Customers define the business. That's the thing to focus on.

Bliss: It's about the customers and delivering collaborative services to them. There's a market opportunity out there, and we want to satisfy customers.

Dig Deeper on Domino Resources - Part 6

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