Is The Retail Market Ready For ASP?

In the fast-paced world of technology, two years can be a lifetime. At the NRF Show in 1999, Bob Delaney, the retail marketing manager for Sun Microsystems, first introduced me to the concept of application service providers (ASPs). Sun Microsystems was pushing its newly acquired Microsoft Office clone, Star Office. Delaney explained that Sun was going to host this software and allow companies to access the applications over the Internet. The ASP model was part of Sun's new strategy that included the introduction of thin client terminals. Delaney argued that the ASP model was ideal for the retail market because it gave retailers more control over the applications in their stores. Although a new concept, it seemed pretty logical to me.

ASPs: What Didn't Work
At the same time SAP and Intel's joint venture, Pandesic, an ASP specifically designed for e-tailing, was gaining popularity in the market. Pandesic offered a number of hosting services from retail enterprise applications to e-commerce. However, Pandesic's customers were required to pay the ASP with a percentage of their sales. Many retailers committed to this payment structure. But to me, it seemed like a lot for retailers to swallow.

We all know what happened to Pandesic. The pricing structure wasn't the reason for Pandesic's demise in the spring of 2000. A number of factors led the ASP to shut down operations. One could be that Pandesic jumped into the ASP market before customers were fully ready to adopt this technology strategy.

ASP: What Is Working Today
In the last two years, ASPs have garnered a lot of press attention and slowly, but surely, have made their way into a number of industries. And, major technology players like IBM, Microsoft, Oracle, and Sun have made large commitments to making the ASP model part of their offerings. At this year's NRF Show, Jan. 14-17, in New York City, it appeared that ASPs are gaining momentum in the retail market.

Web-based retail solution provider Tomax announced an ASP partnership with IBM. IBM's hosting infrastructure will deliver Tomax' RETAIL.net solution to customers. Tomax, with the help of IBM, has already delivered an ASP-hosted solution to customers like The Nutrition Club and Thin Millionaire. And, Tomax is not alone in this offering, as a number of other technology vendors unveiled new ASP strategies at the NRF Show. So, despite ASPs' false starts, we just may see this technology service take off in 2001.