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JDE Returns to Channel-Only ASP Model

ERP software vendor JD Edwards has abandoned direct sales of its applications as an ASP, in favour of a channel-only ASP strategy, it revealed to ASP-News today.

JD Edwards switched from its previous partner-only strategy at the beginning of this year, when it launched its in-house ASP unit. See related ASPnews.com story, JD Edwards becomes an ASP, Jan 6th 2000. Rival enterprise resource planning (ERP) software vendors Peoplesoft and SAP subsequently also launched in-house ASP divisions.

Now JDE has become the first to abandon the idea of having its own direct ASP offerings, and will revert to a channel-only ASP model. "We have decided to get out of the direct programme. We will be concentrating more on strengthening our partner channel," JDE's director of global ASP channel, Dee Kellogg, told ASP-News earlier today.

Kellogg formally assumed overall responsibility for JDE's ASP strategy this week. Her expanded job role replaces that previously held by VP of JDe.Sourcing Gayle Sheppard, who left in July. JDe.Sourcing had acquired two customers since its launch in January. Those accounts are now being transferred to partners, Kellogg said.

"They were large customers and they were challenging for us - which was good, because we learnt a lot about the [ASP] model," she added.

JDE will now concentrate on its core strengths of developing and supporting software and managing its partner channel, Kellogg told ASP-News. "Our partners are very, very successful and doing a great job. We realised we needed to really focus our energy and strengthen that partner channel," she said.

But she did not feel JDE's decision sent a message that other vendors should also adopt a channel-only model for the ASP market. "Every software vendor needs to come to its own conclusion on that," she said.

JDe.Sourcing's future was put in doubt in May, a month after JDE's founder and chairman Ed McVaney had swept back from semi-retirement to replace departing CEO Ed Massingill. McVaney was interpreted as saying in a conference call that operating as an ASP was "not our cup of tea." Company officials claimed at the time that his comments had been misunderstood. See related ASP-News story, JDe.Sourcing Denies Premature Demise, May 23rd 2000.

But McVaney, who had personally initiated the vendor's original ASP programme almost four years ago, had always seen it as a partner-only offering targetting vertical markets, Kellogg told ASP-News today. Its first ASP pilot had started in 1997, through Seattle WA-based WTS, a solution provider targetting the construction industry. See ASP News Review extract, IBM's application rental journey: JD Edwards, Nov 1998.

While the direct arm has made little market headway, JDE's partner channel now numbers 22 providers spread across 18 countries worldwide. A further 55 prospective partners are working their way through the accreditation process, and the vendor receives over 40 applications every month to join its programme, added Kellogg.