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Business software leasing growing more uniform

By using "template-based" packages of software and services, so-called application service providers can get new customers up and running more quickly, Cyber.Solutions Chief Executive John Charters says in previewing the company's plans.

LAS VEGAS--In the growing market for leasing business software services, a common mantra seems to be: One size fits most.

Qwest Cyber.Solutions, a private joint venture between Qwest Communications International and consulting giant KPMG, may begin offering industry-specific software packages later this year for "vertical" markets such as health care, Cyber.Solutions Chief Executive John Charters said today.

By using "template-based" packages of software and services, so-called application service providers (ASPs) can get new customers up and running more quickly, Cyber.Solutions' Charters said. "We've already gone through the headache of figuring out what is best for you given [certain] parameters," he said.

Numerous companies, including Qwest Cyber.Solutions, Corio and Futurelink, are hosting software applications and managing the upgrades and technical support for companies unable or unwilling to do so themselves through a high-speed connection. In some cases, ASPs also lease the software to their smaller customers on a monthly payment plan.

Large and small, ASPs are increasingly trying to win business by offering pre-packaged bundles of software applications intended to meet the common needs of the majority of businesses in a specific industry. Although they've settled on their strategy for different reasons, both large and start-up ASP company executives say their customers get benefit from speedier service at the outset of the contract.

The recent trend toward outsourcing, coupled with a tight labor pool for information technology (IT) workers, has lead to a huge market opportunity for ASPs, according to analysts. Market research firm Dataquest recently forecast that the ASP market will be worth nearly $23 billion in 2003.

Cyber.Solutions expects to announce a partnership with a supply chain management software company shortly after Thanksgiving, Charters said, adding that the impending alliance could lead to an industry-specific service targeting the retail or government sectors.

Other companies are targeting industries in order to carve out a niche market for themselves. Start-up Astralink, for example, is an ASP serving the high-tech equipment manufacturing market. The company hopes to gain the business of other start-ups such as networking equipment makers Redback or Juniper Networks.

Astralink executives say the knowledge and experience that comes with an industry-specific approach will give them a competitive advantage against other ASPs. Executives hope to take what they've learned by offering ASP services to high-tech equipment makers and eventually apply that to other industries.