Commentary: ASP initiative makes sense for GM

The application service provider model enables GM to capitalize on the IT technology and expertise it has spent much time and money to develop.

2 min read
By Thilo Koslowski, Gartner Analyst

Although a bold move, a plan for General Motors to become an application service provider makes good sense.

See news story:
GM's new vehicle for the future: The ASP
The application service provider (ASP) model would enable GM to offer other enterprises some of the IT technology and expertise it has developed for its own internal use at great expense over a long period of time. The pressure to capitalize on such assets has mounted as the global auto market has begun to contract, and automakers such as GM must cut production and aggressively seek cost savings.

Furthermore, GM is particularly well positioned in its industry to mount an ASP initiative since it has become a leader in using e-business to reinvent itself. Most visibly, along with other major automakers, GM helped to found Covisint, an e-market supporting the industry's supply chain. In addition, GM has worked with its dealers in the United States on a Web site to support sales, and it has done even more with consumer e-commerce in countries such as Brazil with looser antitrust restrictions.

After working on those initiatives with Oracle, Commerce One and many smaller IT vendors, GM has acquired much e-business knowledge and built a large stock of IT skills. Thus, using those resources to support an ASP initiative is a logical next step.

But will the market buy it? Most enterprises do not view GM as an ASP and may think twice before signing up. So GM will have to prove its competence by delivering the same quality of service as mainstream ASPs.

Alternatively, GM can offer applications that no one else provides. It can best do that by targeting its ASP services at other automakers since the industry as a whole needs help devising e-business methods for communicating with dealers, suppliers and customers. With this focus, GM would not wander far from its own auto industry expertise, and it would depend less on support from IT vendors. GM would have less chance for success offering ASP services in other industries.

(For related commentary on tips for selecting an ASP, see TechRepublic.com--free registration required.)

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