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April ASPnews Top 20

Last April, ASPnews began publishing two Top 20 lists for the ASP and Web services industry. The headline list has been the Top 20 ASPs, while the other listing has named equally important industry players. The Top 20 Infrastructure Providers has spotlighted the most influential industry enablers, including top-tier vendors such as IBM, Microsoft, Oracle and Sun.

This month, ASPnews is relaunching both lists in a new format that reflects the continuing evolution of the industry that we cover. The headline listing becomes the ASPnews Top 20 Providers. The change of name emphasizes two key factors:

  1. These are companies that provide services directly to end-user enterprises (i.e., to businesses that are not themselves providers).
  2. The ASP/Web services model today is used to deliver not just applications, but also business services, information and systems management.
Other criteria for inclusion in the Top 20 remain the same, in particular the requirement that companies must be pureplay providers. This means there are no Top 20 companies that gain the majority of their revenues from off-line activities.

The second listing is renamed the ASPnews Top 30 Enablers. The change of name better conveys the original intent of this listing, which has always included influential software vendors as well as hosting and telecom providers. At the same time, we have enlarged the listing so that we can include a broader range of industry players, particularly innovative smaller companies.

Both listings collectively become the ASPnews Top 50. With a single overall name for the feature, we'll have more flexibility in the future to segment providers and enablers into more specific listings that recognize emerging industry trends.

How We Define the Industry
In the report, 2002 ASP Industry Insight: The Rise of the Provider Web, published Winter 2001, ASPnews described a four-layer model of the industry, as shown in the diagram below. The blue arrow emphasizes that all four of these layers are delivered to the end user, often by different providers. It also implies that there are components at each layer that never touch the end user.

Layers of the Provider Web
The ASPnews Top 50 effectively divides this diagram into two halves. The Top 20 Providers are the companies that offer finished services to end-user businesses (the right-hand half), while the Top 30 Enablers are companies that provide the building-block components for creating those services (the left-hand half).

Criteria for the ASPnews Top 20 Providers
Candidates for inclusion in the ASPnews Top 20 Providers come primarily from the upper layers of the industry models discussed above. Although some providers at the infrastructure and network levels focus on end-user connectivity, most also have substantial investments in backbone infrastructure and are therefore more appropriate candidates for the enablers listing.

ASPnews, of course, also retains a bias towards the core ASP industry, since this is where we have our roots. Therefore, we look for companies that include a substantial element of network-based software automation in their offering. However, a major change from our previous stance is that we will treat revenues from activities such as the online provision of business services, content and systems management as being complementary to the core business. Previously, we disregarded that revenue. On the other hand, we now take a less favorable view of offline activities such as consulting and systems integration. In particular, we disregard those related to on-site installation and customization of traditional packaged applications.

In summary, the new criteria for inclusion in the ASPnews Top 20 Providers listing are that companies must:

  • Have the provision of network-based applications and/or services as their core business
  • Have a substantial and active end-user customer base for those services
  • Be able to demonstrate proven revenue streams
  • Be innovators in the online delivery of software-based services
  • Be recognized as a leader by others within the industry

Criteria for the ASPnews Top 30 Enablers
Enablers fall into two main categories: Either they operate the infrastructure on which providers run their services, or they supply the software and hardware components and platforms from which providers create their offerings. A final ingredient is that enablers must actively support, encourage and promote the online delivery model and have strong partner programs for providers.

Candidates for inclusion in the ASPnews Top 20 Enablers come from three main sectors:

  1. Application software vendors — Vendors that develop applications for online delivery by providers.
  2. Platform vendors — Vendors who develop the software infrastructure products that enable the creation, deployment and delivery of online services, and manufacturers of the computer and networking hardware on which they operate.
  3. Web services infrastructure operators — companies that provide software, hosting and network services to the providers of online services.
For inclusion in the ASPnews Top 30 Enablers listing, companies must meeting the following criteria:
  • Have a substantial and active customer base of providers
  • Be active in their support and promotion of network-based applications and services
  • Invest in innovation in the online delivery of software-based services
  • Be recognised as a leader by others within the industry

Make Way for 12 New Entrants
A total of 12 newcomers join the Top 50 listing, ten of them due, of course, to the expansion of our enablers list from 20 to 30 companies. The other two are due to replacements in the listings.

The Top 20 Providers list has two new entrants, reflecting growth of the list's scope to include managed service providers (MSPs) and business service providers (BSPs) alongside core ASPs. Both are names that many of you may already have been expecting to see here, even before this month's reorganization.

ASPnews Top 20 Archive
»  March 2002 Top 20 
»  February 2002 Top 20 
»  January 2002 Top 20 
»  December 2001 Top 20 
»  November 2001 Top 20 
»  October 2001 Top 20 
»  September 2001 Top 20 
»  August 2001 Top 20 
»  July 2001 Top 20 
»  June 2001 Top 20 
»  May 2001 Top 20 
»  April 2001 Top 20 
From the ranks of MSPs, comes Loudcloud. Its agreed acquisition of Frontera had already made it a prime candidate for joining in any case, since it will increase the ASP content of its revenues. Our relaxation of the criteria on MSP revenues has removed any remaining obstacles.

Employease is the BSP entrant. The company has always been a strong contender for inclusion in the Top 20. Now that business services revenues are clearly included in our criteria, there was nothing to hold back this established industry pioneer from joining the providers list.

One of the two departures is Digital River. Although its business continues to grow, it has now reached a temporary pause in its winning streak of the past six months and has recently downsized its revenue projections. The other departure is Jamcracker, which simply shifts across to the Enablers list, reflecting its role as an integration platform provider.

The one departure from the Enablers list is ADP, which no longer meets our revised criteria for inclusion, despite its work to distribute solutions by a number of ASP partners.

Meet the Enablers
The 11 companies joining the Enablers list fall into several different categories. There are two MSPs, Avasta and SiteLite. They join as Enablers rather than Providers because they provide services to providers on a private-label basis.

Two other private-label providers are Trellix and DigitalWork, each a market leader in its field in enabling portals and ISPs to offer hosted small business services.

Interliant is a returnee, having been originally featured on the Top 20 ASPs list in the first month that it was published. It subsequently restructured and now has a leading role as a private-label provider of hosted small business solutions to PC manufacturers, ISPs and other leading brands. It also has a substantial hosted messaging business.

What is the ASPnews Top 20?
All entries in the Top 20 Providers and the Top 30 Enablers lists are drawn from the ASP Industry Global 200 Directory.

The companies are selected based on several factors. Sheer size is just one parameter, which is weighted along with more qualitative assessments, such as respect among peers and talent to innovate within the ASP model.

Web services are featured more strongly in this list than in the previous version. In addition to Trellix and DigitalWork, whose services use a Web services architecture, there are three additional Web services infrastructure entrants. One is Jamcracker, moving across from the Top 20 ASPs list. The other two are BEA Systems, which is catching up fast with larger rivals as a platform vendor and also has a strong enablement program, and Grand Central Communications, a startup that has already gained significant mindshare for its Web services integration network.

Two vendors whose software products are popular platforms for delivering hosted services are Miva, whose ecommerce software is almost the industry standard for hosted Web store functionality in the small business market, and e-learning platform vendor Saba.

The final entry to the enablers list is Verisign, which has a commanding position both in online security infrastructure services and as the leading domain registrar. It completes a line-up that now emphasises the burgeoning small business Web site hosting sector as much as the enterprise infrastructure and applications market.