AS/400 Promotes ASP Model to ISVs

• 09/18/2000

“Obviously, it’s gonna happen whether we like it or not. We might as well get our fair share,” Kiscaden says.

The Prime Solutions Center which Kiscaden directs is the most elaborate symbol in IBM’s campaign to promote AS/400 as the best-choice platform for a growing number of Application Service Providers. Launched last October, the program is designed to educate ISVs on what the ASP market is and assist them in making their products work within that model.

“We’re very focused on helping our current ISVs become ASPs,” Kiscaden says. “They have the solution, they have the expertise. And, the ASP model being very interesting in terms of attracting small businesses, ... I have worked with our partners on transitioning to client/server, network computing, and I’ve never seen excitement like I have over this model.”

According to Kiscaden, by the end of’99, 18 AS/400 business partners were marketing ASP solutions, and by July more than 60 were on board, with 50 more in the process of pursuing an ASP solution.

Laurie McCabe, vice president and services director at Summit Strategies (Boston) says IBM was slow to pick up on the value of the ASP trend for AS/400, but recent efforts indicate a stronger commitment to the growing market.

“IBM itself kind of ignored the AS/400 for a while in terms of its market strategy ... but I think in the last six or nine months the ship has kind of steered itself around to recognizing that – they weren’t sure if this ASP thing would catch on – but I think they’ve come around.”

McCabe says she thinks that IBM executives in recent months have chosen to embrace the ASP market. In going directly to their ISV business partners, she argues, they have also chosen the right strategy. McCabe believes the predominant use of UNIX and NT among ASP is not a reflection of some particular feature which makes them uniquely suited to the ASP model. Rather, she says, it is because most ASPs were once ISPs who traditionally used those platforms. And as in any market, she says, “you use what you know.”

However, there are a significant number of ASPs who started out not as ISPs, but as ISVs, and here, McCabe says, is where the potential lies for AS/400 to gain a strong foothold in this growing market.

“On the software development side of it, the AS/400 comes from a stronger position,” McCabe says. “IBM can’t really compete with UNIX and NT – and they really don’t have to. What IBM should do is they should go into their ISVs and say, look, this is where the market is going, customers are gonna be looking for this service.”

Adopting a version of this theory, the AS/400 division has decided to try to stake out a position in the market by entering from the ground-up. Rather than trying to convert existing ASPs to AS/400 from some other platform, IBM is working to make the idea of becoming a new ASP seem as attractive as possible to its existing business partners.

For instance, in addition to offering consulting and education services through the Prime Solutions Center, IBM has also begun a program of partnering with Wholesale Service Providers (WSP), who are often enlisted by ASPs to handle the management of their infrastructure. Currently, IBM has a list of 19 WSP business partners that they recommend to ASPs. Being able to refer ASPs to these service providers has helped to reassure companies about the move to the ASP model, according to Kiscaden.

“The express purpose (of the WSP program) was to find people who know AS/400 and know how to run a data center,” he says. “As we worked with the partners we saw very quickly, within a week, two weeks ... they were saying to us, ‘I don’t want to run the data center.’ It’s a high cost operation, even for the ASPs.”

Despite IBM’s emphasis on its existing ISVs business partners, Kiscaden says he does believe the hardware itself offers features which should prove valuable to ASPs industry-wide, including those not already familiar with the platform. In addition to the often-cited benefits of reliability and scalability, Kiscaden says the development of LPAR technology, for instance, offers advantages particularly relevant to ASPs.

“We’re really going after this model of shared resources across multiple customers, which is really unique in the industry,” he says. “With an ASP running off UNIX or NT, you need a server for each customer. ... This is a made-to-order model for the AS/400. We look at the product requirements for this market, we don’t see much that we don’t already have.”

Amy Wohl disagrees. Wohl, president of Wohl Associates (Narberth, Pa.), says to promote any platform for ASPs strictly on the merits of the hardware is unlikely to produce significant results, because ISVs will want to develop on familiar platforms. Instead she says, AS/400 should continue to concentrate on those industries and product areas in which they already have a strong presence.

“If IBM’s trying to sell AS/400 for ASPs based on hardware, they’d have to explain to me why that’s a good argument,” Wohl says. “I don’t think an ASP is gonna wake up and decide they want to use an AS/400 because as a hardware platform they think it’s ideal. The only way you know about AS/400 is you have a customer who says, ‘I would use your application, but it has to run on the AS/400, because that’s the platform I use.’ We’re gonna see that happen more and more in those industries – and there’s a lot of them – where AS/400 has been an extremely successful platform.”

Essentially, McCabe says, that analysis goes to the core of what to expect for AS/400’s future and future direction in the ASP market. However, she says, IBM can improve and expand its market position if they make an effort to market AS/400 as leading-edge platform, to try to debunk the widely-held conception that it is an outdated system.

“I think that’s kind of a hidden weapon that they have all these loyal developers who are using the AS/400. They may not have a lot of press, but they have a lot of customers,” McCabe says. “. ...Off the record everybody will say we love the AS/400; on the record they say they don’t want to be quoted. It’s just not the ‘in’ thing. They do have these interesting little pockets. But that’s not enough. They’re gonna have to get more mainstream. I don’t think it’s gonna overtake UNIX or NT, but I think it’s gonna be a credible player and do well in the market, if they do some of these things.”

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