Application Service Providers (ASPs) - Guide to Cloud Computing for Business and Technology Managers - page 238

11.7 Private ASPs
It has been well established that the largest cost component in an applica-
tion's life cycle is the effort expended on maintenance and upgrades, and
this is valid even in cases of packaged software implementations by reason
of the customizations that are indispensable. The key idea underlying the
private ASP is that the high cost of maintenance and upgrades (and operations)
is spread across the boundary of the enterprise to include the associated ecosystem
of at least the exclusive suppliers . The viability of this business model can
be illustrated from the fact that the customization requirements for imple-
menting enterprise systems (ERP, SCM, CRM, etc.) at General Motors's
partner/subsidiary Delphi Electronics are going to be similar to or will be
heavily influenced by the customization requirements of General Motors
itself. From there, it is not very difficult to see that there will be major
advantage in combining the implementation projects and teams, training
programs, testing centers, rollout projects, IT centers, disaster recovery
centers, and so on.
We will describe this concept by taking Ford as the hypothetical exam-
ple. A private ASP is an extended ASP service, managed and operated by a
major player like Ford for itself and its partners—both customers and ven-
dors. All customization and upgrade issues are dictated mainly by Ford,
unlike in the case of a traditional ASP where they may have to customize
for each customer independently, which basically makes the traditional ASP
model unviable .

( )

Private ASP CM CRM like SAPNet Markets on ASP basis for = + +

Ford and its participating partners

None of the partners need to be compelled to join the private
ASP. Ford, however, must mandate that such partners need to
integrate and be compatible with its private ASP at their own
cost. Licensing issues are simplified in that all software licenses
are owned via the private ASP instituted jointly by Ford and/or its
partners.
The composite value proposition for Ford and its partners involves
the following:

1. Easy to add/integrate new vendor partner.
2. Value proposition of a NetMarket—Ford can service an
enlarged base of vendors for more competitive bidding but
within the class of these preferred partners/vendors.