And the Winner Is...

growing industry as well.

And chomping at the bit are ISVs, who, like Academy Award contenders, hope their names are inside ASPs' partner-of-choice envelopes.

"Every ISV wants an application hosting solution. I get about five calls daily from ISVs looking to host their applications," says Bob Johnson, director of ASP at Breakaway Solutions Inc., Boston. "You can't be everything to everyone. You have to focus."

Breakaway Solutions, along with USInternetworking Inc. (USi) and Corio Inc., last month emerged as the top three ASPs, according to a study from the Internet Research Group (IRG), Los Altos, Calif. Ranking was based on the number of contracts held, with a 36 percent market share for USi, 16 percent share for Breakaway Solutions and 9 percent share for Corio.

"If some of the leading companies falter, the whole market will follow," says Norvin Leong, senior analyst at IRG.

So it's more important than ever for ASPs to choose the right partners. Who are these ASPs voting for as their favorite ISVs, and why are they awarding them with their business? Read on. If you follow their lead, there may be some partnering opportunities for you.

CRM And ERP Solutions
Popularity and technology were two determining factors for USi, Annapolis, Md., when it was selecting a human resources (HR), financials and enterprise resource planning (ERP) software vendor. For its customers with revenue exceeding $500 million, USi chose PeopleSoft Inc. because of its market penetration. However, to get into the midsize market with a fully Web-enabled application, USi selected Lawson Software for customers with revenue below $500 million.

"We wanted to get into a new technology," says Jim Stalder, senior vice president of strategic development at USi. "Lawson has some vertical markets we're interested in, such as the professional services market and retail, where it had further market penetration than PeopleSoft."

Going forward, USi sees potential in professional services. That's why it is partnering with Niku Corp., Redwood City, Calif., which offers a fully Web-enabled professional services automation tool. "There's not a lot of market share there, but we know it's important for us to figure out new functionality that we want

to offer our customers," says Stalder. "Even though Niku is still a start-up, it is a market leader."

Corio, which also hosts HR, financials and ERP applications, also partners with PeopleSoft; for its customer relationship management (CRM) applications, it works with Siebel Systems Inc., San Mateo, Calif.

E-Commerce Applications
For Internet shopping, ISV BroadVision Inc., Redwood City, Calif., is the partner of choice for both USi and Corio. For its part, USi favors the one-to-one personalization found in BroadVision's product line.

BroadVision is an integral part of Corio's plan to deliver "e-business in a box" to customers, says Laurent Pacalin, vice president of business development and alliances at Corio.

"BroadVision integrates well with ERP back-end systems," says Pacalin. "Most of the Web sites in the past two years were built only with the customer-facing application in mind."

That spelled disaster for many sites during the past holiday season. "There was very little integration with the back-end order management and inventory systems," adds Pacalin. "A bunch of sites lost tons of customers and orders because they didn't know if they had the inventory or when they would have the inventory."

As a result, Pacalin says more customers are looking for a total-store system, which includes customer service, the storefront, integration with accounting, inventory, order management and fulfillment systems on the back end. "To do that, you need the best ISVs or services in every single component, and BroadVision fits the bill," says Pacalin.

Breakaway, however, prefers Vignette Corp. as its partner in offering the Internet shopping experience.

As part of a total e-commerce solution, a procurement application is required. While USi favors Ariba Inc., Mountain View, Calif., Corio favors Commerce One Inc., Walnut Creek, Calif. "Commerce One is better at connecting the process to the suppliers," says Pacalin. "Not only does Commerce One have the procurement side, but it has a total strategy that maps very well with the ASP model and what e-procurement is becoming."

Partnering Opportunities
If you're looking to partner with these leading ASPs, you're in luck, because they need your help.

"We don't develop customer Web sites. So, we're always looking for systems integrators who are anxious to do the development work, but don't have the capability or desire to do the ongoing management and maintenance of the applications," says Stalder. "If a systems integrator is developing a large Oracle or Microsoft database solution for a customer's complex environment, we'd be happy to help play a role in doing the ongoing management of that site."

USi has eight business units, one for each of the major software vendors USi partners with. Partnering opportunities will be made available separately from each business unit.

Moving forward, USi is considering additional managed Web hosting services such as document management, storage area network and online backup services. Stalder says USi is not sure whether it will buy or build these divisions.