May 2000

BY ERIC TOPERZER

The ASP path is alluring. Service delivery tools such as service ware and broadband service nodes enable ASPs to build competitive advantages such as quality, differentiation, and simplification into their business strategies -- and help them travel the ASP path successfully. In today's tight-margin Internet service market, offering high-value IP services and applications is an alluring path to diversification, growth, and profitability.

But like a savvy hiker starting down a new trail, ISPs and other providers looking to become application service providers (ASPs) need to answer a key question: What tools and techniques do I need to traverse the new terrain successfully and profitably?

THE SERVICE DELIVERY CHALLENGE
Let's face it, ISPs are scrambling these days. Connectivity is a commodity, and service churn reduces margins even more. Along with the widening acceptance of the Internet, the growth of e-commerce, and the inherent value of leased applications, these market pressures are driving the accelerating growth of the ASP market.

When providers become ASPs, they immediately move up the value chain to become business and technology partners with their customers, reducing churn and increasing both revenues and profits. As appealing and rewarding as this transition can be, it requires foresight, preparation, and a marshaling of resources to ensure seamless, confidence-inspiring service. In a market that gets more competitive with each passing year, new ASPs have one chance to get it right with customers.

Currently, the provisioning and management of IP services is complex. Key challenges include ensuring end-to-end quality of service (QoS), managing subscriber data across multiple services, delivering applications and services to the market quickly, and simplifying service delivery.

Centralizing service delivery is also critical. ASPs will need to offer a single point of contact for customers, even if the business structure is complex, with partnerships and multiple vendors involved. And they need a centralized provisioning tool that lets them offer services customized at the subscriber level.

From a marketing perspective, providers must be able to differentiate their service from the competitor's, and compel the market to stand up and take notice. In addition to content, key differentiators will be reliability and quality. Whatever the service, users want the experience to be as reliable as picking up the phone for dial tone or flipping the light switch. Networking technologies and management tools such as service ware and broadband service nodes are available to ensure just this type of user experience.

The key for service providers is to provide premium value and best-in-class service relationships to business customers in the most simplified, efficient, quality-conscious, and customer-first manner. To do this successfully, providers must think about quality on an end-to-end basis, including network infrastructure, application servers, applications, and services.

DIFFERENTIATING SERVICE OFFERINGS
Providers have been differentiating themselves through low-price access, high capacity, or superior customer service in years past. But they need more than that. For ISPs, basic offerings such as dialup and e-mail offer few opportunities for differentiation. Even DSL, cable, and wireless access will soon be table stakes as users demand more bandwidth and mobility from all access providers.

Today, the real opportunities to separate from the pack come in new services and value-added managed applications -- ideally supported by service-enabling software. A key differentiator for ASPs is inherent in the ASP business model. Instead of just reselling off-the-shelf applications, ASPs enhance an application's intrinsic value to businesses by adding the power of the Internet. But differentiation doesn't end with this built-in value. ASPs can move flexibly into the application areas that they know well or that make the best business sense. Application offerings such as e-commerce and messaging can be bundled with IP services such as virtual private networks (VPNs) and managed firewall capabilities to offer complete technical and business solutions.

Internet telephony applications such as voice button and collaboration can be used to offer a complete, high-value, managed e-commerce offering. Instead of offering just the software required to create a storefront, a well-designed e-commerce offering can use these tools to bundle customer service, partner links, and a wide variety of content.

High-demand applications will be limited only by imagination and ingenuity, which has shown few limits during the Internet's meteoric rise. Initial applications for ASPs include: Unified messaging, data centers, data storage, Web site creation and hosting, IP VPNs, managed firewalls, content mediation, a wide range of vertical applications, managed e-commerce, workplace e-commerce, procurement, financial management and accounting, customer relationship management, sales force automation, office productivity, enterprise resource planning -- and countless more.

Now two new classes of service-enabling tools -- service ware and broadband service nodes -- are available to help providers meet service delivery challenges, differentiate themselves from the competition, and deliver managed applications profitably.

SERVICE WARE
Service ware enables providers to manage their offerings and deliver services on a per-user, per-application basis -- a key to providing service level agreements (SLAs), end-to-end service level management, policy management, and other quality-ensuring practices. With service ware, ASPs can transform the provider/customer relationship by building a reliable, high-performance infrastructure and offering services that inspire confidence. To work seamlessly in today's complex network, service ware must also be open and standards-based. A robust service ware solution encompasses a broad range of capabilities, including:

• Service activation -- providing a comprehensive view of the network for rapid service integration.
• Service control -- providing real-time command of network resources for the creation and management of customer services, including customer self-service.
• Service assurance -- providing multi-technology, multi-vendor, carrier-grade network management.
• Customer care and billing -- providing managed customer/peer interaction and accounting/billing capabilities.
• Policy services -- providing efficient management of user profiles, solutions tailored to individual requirements, and the management of QoS policies on an end-to-end basis.

BROADBAND SERVICE NODES
In addition to the many benefits of service ware, ASPs will require a service management tool built for the broadband access requirements at the IP network's edge. The broadband service node (BSN) offers specialized management capabilities tuned to the IP environment, ensuring that stringent quality and service delivery requirements are met -- both now and in the future, when even more bandwidth-hungry applications become common.

Today's advanced BSN is both a service-enabling gateway and a powerful subscriber provisioning and management tool. It replaces many types of single-function hardware elements, which are often difficult and costly to deploy, manage, and upgrade. A powerful mix of hardware components and application, provisioning, and operating system software, BSNs enable ASPs to deliver services and applications over an IP infrastructure with high levels of efficiency, quality management, simplicity, scalability, and cost control.

BSNs offer universal aggregation, enabling ASPs to provide efficient access to tens of thousands of subscribers across multiple technologies -- including digital subscriber line (DSL), dialup, cable, and leased line. Moving beyond aggregation, broadband service nodes also provide a high-performance IP service delivery infrastructure, enabling ASPs to centrally provision customized IP services on a per-subscriber basis.

This new class of service delivery tool is highly flexible and subscriber-centered. It lowers the cost of service deployment and empowers subscribers by allowing them to auto-provision their own services by customizing their own service profiles. Services include IP VPNs, managed firewalls, traffic engineering, and content mediation services, such as content filtering. With BSNs, these services are now made available in the network, resulting in additional revenue for the service provider and removing the management burden from the subscriber's shoulder.

THE PATH TO PROFITABILITY
Using both service ware and broadband service nodes in their network, three key values -- quality, differentiation, and simplicity of service delivery -- spring from a managed services approach, giving ASPs a competitive advantage.

Quality. Both service ware and broadband service nodes offer built-in QoS mechanisms. Full-featured service ware provides end-to-end quality assurance. The robust broadband service node adds IP QoS-based traffic management capabilities and support for SLAs at the edge of the network.

Differentiation. Service ware and broadband service nodes enable providers to differentiate themselves by efficiently and seamlessly bundling applications and services, and by combining voice services with new high-value applications, such as collaboration.

Simplicity. The resources that ASPs offer to businesses can be pulled in from many sources, with multiple providers partnering to enable a complete, high-value offering. The primary ASP must be able to reduce this complexity and present a single face to its customers. Both service ware and broadband service nodes can offer the provisioning, customization, SLAs, customer care, and billing capabilities to deliver application/service packages seamlessly -- giving business customers the feeling that the package was built from ground up as an integrated offering.

RAISING THE VALUE OF THE INTERNET
The Internet has reached a critical juncture in its development. While filled with promise and potential in the last decade, it has also been associated with slow performance, marginal content, shaky security, and a generally unstructured, unreliable operational environment. Many have viewed the Internet as a recreational medium -- not quite ready for prime time.

Now, at the start of the new millennium, the Internet is becoming more than a way to pass time. It is poised to radically alter the landscape of the global economy within the next few years. With dramatically higher levels of performance, QoS, security, service richness -- and the service delivery values to bring solutions together, it is fast approaching the mature phase predicted by the futurists of the 1990s. In this context, service delivery tools such as service ware and broadband service nodes are key enablers in the push to advance these new values in a way that is profitable for ASPs and brings high value to businesses, giving ASPs the keys to a new global economy.

Eric Toperzer is senior manager, ASP product marketing, for the Carrier and Service Provider Networks line of business at Nortel Networks. Nortel Networks is a global leader in telephony, data, eBusiness, and wireless solutions for the Internet. For additional information, visit the company's Web site at www.nortelnetworks.com.