Delivering ASP Profitability
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
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,
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 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
- 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
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
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
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.