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Investing in Alternative Solutions for Delivering Technology




Feb 17, 2001


Mario Morino

Vince, thanks for some great insights and, also, to Daniel Ben-Horin and Carlos Manjarrez for their subsequent good points as well. I'd just like to chime in with some additional thinking. All of this discussion is, of course, relative and applies to different size organizations in different ways. And, like anything in technology there is no all universal truth, all or nothing position, but rather what ends up is a blend. Several quick thoughts.

My first observation is that much is not understood about what ASP/MSP and other alternative solutions are and can be -- and I include myself in this group of not knowing enough of this emerging, rather new field. First, the ASP/MSP models are having a much harder time catching on in the commercial world than was originally envisioned. I think there are a number of reasons for this.

#1 It is a daunting solution and I don't think many businesses, and hence nonprofits, are going to entrust their IT processing to a relatively small organization, in a situation where economy of scale will be very important. It's one of the reasons that some of the early ASP-based firms went after the large capital infusions, for they understood that they would need large processing centers, high-grade security, effective redundancy and backup, and so forth, all the things that were true of the predecessors to the ASP/MSP world going all the way to time-sharing systems in the late 1960s, early 1970s.

#2 The technology has proven harder to get worked out than some had assumed and this hurt the field and still plagues some of the players.

#3 The market's reluctance to "give up" control is still a large psychological barrier to overcome for many, but ironically, less so for start-ups and new organizations.

All of this underpins a recent study we were able to see that explained why the ASP/MSP field has not gained the traction many thought it would have achieved by this time -- and after hundreds of millions in investments. But in defense of the ASP/MSP models, a few counters to some of the comments voiced.

#1 -- ASP's can be fast. In fact, the system that Don Britton mentioned enjoys a faster response time on a 56k line that we do on an ethernet LAN. The reality is simple in that the underlying technology functions to only send/receive what has changed on the screen, versus the content of the whole screen. In fact, an ASP can be highly efficient and quick.

#2 -- Comparison to the Network Computer is a less than effective metaphor. The ASP model is very different, in my mind, than the network computer Oracle espoused. The ASP model does not imply or require a special form of client and can use multiple types of clients, allowing a hybrid approach of "dumb" terminal to fully functional PC and combinations in between. Again, the system Don Britton refers to can make their services available on a desktop, laptop, or a PDA -- basically, any device that can support a browser. Such pervasiveness has great implications for broad based deployment of ASP-based systems.

#3 -- Analogy to a "dumb terminal" is not necessarily bad in all cases. There are many users today, just as in the corporate world, who just want to get their work done and could care less about the technology platform they have to use to do it. These are folks who are at least one step removed from IT-types, who see this very differently than these users do. For this segment of the population, the dumb terminal can be an effective metaphor for service delivery. All I'm pointing out is that there are a range of user profile needs and that various delivery methods apply differently and with varying value to these different types of groups.

#4 -- That being ASP-based may limit what one may learn or do. This is not true from my experience. Again, I've been deeply involved in all of the technologies from time-sharing, to facilities management, to outsourcing, that are the precursors to ASP/MSP models. The reality is that the users of these services were just as adept in designing data bases, developing reporting systems, and the like, as those that had in-house IT functions. This may be much more a mental block in the minds of many who've not had this type of positive experience. The experience shows that when the core-technology is outsourced, learning and innovation cease. But, again, this depends on who you are considering. If it's the IT types, you bet things are constrained, for their jobs have been either eliminated or significantly reduced. On the other hand, for the rest of those in an organization, whether the service is provided in-house, outsourced, or via an ASP/MSP delivery should be of little concern, offer little constraint, and, if the service is provided well, probably opens up the innovation and application for the rest of the organization.

#5 -- Finally, I applaud Surdna's focus in this area and their support of ASP development, and Vince knows our respect for their work. My only word of caution is that I see the economics working against the development of quality technology solutions without substantial financial support and high-level of management and technical talent -- typically the scale of which is much larger than what the nonprofit world has faced. For those with experience in the software industry, what I'm about to describe is relatively well accepted, but for those who've never been on the "provider side" of the fence, it is not at all intuitive.

The actual development of a system or software -- the design, coding, testing, roll-out, etc, such as that which would be required for any development, including an ASP/MSP solution, proves to be the least expensive aspect of the effort. The real cost comes in the constant research and work to update, refine, and maintain, to support a growing base of customers (even nonprofits), and to have the architectural design and technical sophistication to allow for rapid adaptation to new technologies.

As Daniel and I have discussed, even the funding to support a Web site with the value of TechSoup may be endangered in the long-run if there are not new ways to raise the dollars required to "feed the system." And these needs only grow with time as the competition for the level of talent you need is unrelenting and expensive and the field of technology is in a state of continual innovation, requiring a continuing stream of re-investment.

My bottom-line point is that the nonprofit sector has to do all it can to leverage the developments of the for-profit software and services industry, and when it does vary to do "its own," it is going to need to amass significant capital and a list of strategic partners from industry -- in the end, when it comes to ASP/MSP solutions, just as it has with all other aspects of technology, access to capital and access to talent have a lot to do with their eventual impact and success for those they serve.

Hope these comments add some value to what were a great set of insight you've all shared. Thanks for sharing these insights. The knowledge they display and the experiences of those on this online discussion continue to illustrate the complexity of the issues and how much many of you know and care.


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