Business Hosted Services
The Internet was awash with application service providers that would allow consumers and businesses to perform tasks, even in the very early days of the commercial web. After a few years and a burst of the Bubble, most of the companies that provided online services disappeared, leaving only a very few winners. This was true across horizontals, where only a few of the many related companies survived, and verticals, where only a few types of solutions did.
A great many dot-coms got busted because of incompetence of the management team, because of poor choices (in hindsight) as to deployment, cost structure, growth plan, because of the sudden drying up of funds (yes, some really good ideas died just because of the general panic). Some dot-coms though died because their business plan didn't work out, despite early hopes.
# Where Did ASPs Fail?
The standard ASP business model consisted in offering otherwise installed software in a managed, remote fashion. Instead of buying, say, 20,000 licenses of, say, SAP, an enterprise could *rent* those very same licenses from an ASP. This would allow BigCo to reduce the impact of licensing expenses, eliminated the need to have supporting IT staff, and allowed the enterprise to deploy faster than if it had to find resources for the long haul. An additional benefit was the ability to change to a different and better solution without spending one extra cent later on.
The ASP would make money by charging companies for the licenses it bought on an ongoing fashion. Assuming the licenses could be used over a long stretch of time, the rent vs. buy equation would invariably turn in the ASP's favor. The startup cost was very high, of course, requiring extensive capital resources in the form of cheaply available venture capital.
An ASP would be mostly composed of Sales and Marketing staff, selling a commodity product against an unbelieving market. On the technology side, the bulk of the staff would be IT, ready to keep applications available at all times, and fighting security holes, software bugs, and downtimes.
The surprising thing is that there was nothing wrong with this business model. Indeed, it could and should have continued as a possible and rational option for enterprises to this day. So what went wrong?
In one word: **customization**. In those days, the assumption was that everyone that would buy enterprise software would customize it to make it work in their case. The software itself was built around customization, and a lot of the energy of the development team went into making the application flexible, so that IT staff could customize it.
The problem now is that the original model had a clause: in the rent vs. buy equation, the renter must be kept for a period of time long enough to cover the cost of the product, otherwise there wouldn't be enough money to pay. The more customization the ASP provided, the longer this time period was, and the end of the bubble forced ASPs to lose customers and sit on incredible amounts of customized software that wouldn't work for anyone other than the original customer who no longer could afford to pay for it and easily walked out of the contract.
# After the Bubble
In 2003 things got slowly sane again, and the Internet started a new period of expansion. Business hosted services (the name ASP was so tarnished, a new one was direly needed) were the slowest to gain momentum, but with the advent of **Salesforce.com** this last barrier to growth finally fell. Salesforce's success was directly related to its decision not to offer anyone else's software, but to create an application from scratch that would be easily customized.
The extremely successful IPO of the company led to a keen interest in other business hosted services, and a new category was born out of the ashes of an old failure.
Trying to avoid the failure of the ASP, modern Business Hosted Service (BHS) providers do not rely on customization of enterprise applications. Instead, they focus on applications built in-house (or outsourced), typically on commodity hardware and using open source software to keep the cost of development low. Since customization is not an option, typical BHS providers tend to verticalize their solution, making it attractive to a specific market segment much smaller than those reached by typical software solutions.
Continue readingSnow in the Bay Area
Who would have believed? The snow that fell on Saturday is still covering Mt. Ham in the South Bay! I am tempted to go and take my snowboard there, to experience a unique thrill. I would take a picture, but the mountain is too far from the house and all I see is a white dot in the landscape.
Switched to Joomla
A new era for content management on this site: I switched from Mambo to Joomla, the new open-managed fork of the old CMS of choice. (I like the *open-managed* moniker.)
The transition was neither hard nor easy. I decided to try the copy instructions: copy the site to a new location, copy Joomla on top of it, then deal with all the problems.
Mostly, I had to retrieve files I had changed (like sef.php or the custom image on top). A little extra time went into debugging: I had to change the configuration to go to a different directory, and then revert back.
So far, the only issue I cannot figure out is the fact I have lost the ability to do rich edit: somehow the editor mambots are not firing. Otherwise, I particularly like the Administration interface, where they finally added sorting to the Content items. What a nightmare it was when you just wanted to publish an article, and there was no way of telling Mambo to please sort by date.
**NEWSFLASH:** I finally figured all I had to do was to set the variable $mosConfig_editor to the value of my favorite new editor, JCE, and all worked from there on.
IM Virus and Yahoo! ID harvesting
I got to work in the morning and found an IM from a colleague with a link in it. It went to a geocities page that requested my Yahoo! account information, and in the morning daze, I entered my information. As it didn’t proceed anywhere, I realized someone was spoofing my information. A panicked run to my Yahoo! account information page, change password several times (to make sure it still worked), sigh a worried sigh of relief.
Continue readingSteaming, smoking, hot
JP’s class this morning. The usual hard workout, high speed, high intensity, lotsa sweat. I was put in the front row (JP wants me there), with the sun shining from the back and the windows open. I sweat, I run, I chase, I sweat.
It’s time to stretch and slow down, and then the unexpected happens: steam starts rising from my body. The sun plays with it, and the whole class stares at me, the steaming, smoking hot man in red bib short…
Jumping!
Given that we have plenty snow-crazy people, we decided to have an offsite in SLT last weekend. Eight of us went, including three pretty good boarders, and we had a blast!
The snow was not all it was said to be – no 11" on Saturday, for instance, but at most 5" – but who’s complaining? All of us improved our skills, the beginners, intermediate, and advanced snowmen and women, and we had fun with each other.
Continue readingRecord time
The Hawaiian flight from Honolulu to San Francisco made it in record time: 4h 19m! This was due to a generous jet stream that gave us an excellent tail wind.
How unfortunate that said tail wind and jet stream were causing a major storm in San Francisco that forced a shutdown of the airport… In the end, the whole flight took 5 hours, as usual, and I made it home in time to be deprived of sleep by the wind.
Continue readingIt's heaping up!
The webcam says it all: it’s dumping snow in South Lake Tahoe! Great news, since it appears part of a system that will take us into the weekend, which will be devoted once more to snowboarding. This time the company sponsors an offsite, and that means Monday is included again (and again, I won’t be able to snowboard one day because I am going to be assisting beginners).
Hooray! I almost thought this snow season was beyond saving!
Late, late, late
Just came back from Ninole, with a day-long flight that managed to be by far the fastest I have taken. The plane made it into the Bay Area from Honolulu in 4:19, and then had to park due to heavy winds for 40 minutes (sigh).
The house is well, with the tile work in progress and the electrical close to rough-in. That means we still have a few weeks to go, but then it’s final inspection and I can my refi done. That’s going to be a huge thing for me, finally to be out of the strictures of a construction loan!!!
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