The firm's initial outsourcing offerings will include business-to-consumer direct marketing, supply chain management, and corporate purchasing services. Santa Clara, California-based USWeb/CKS is using server-based software from Microsoft as the plumbing for providing these services, and plans to integrate the company's customized applications to suit a customer's needs.
In addition to building and hosting a company's secured extranet, USWeb/CKS will now also manage a customer's online product catalog, financial transaction data, and shipping and supply chain information, for example. The company maintains data centers in Santa Clara and Herndon, Virginia.
The company also plans to outsource third-party applications for sales force automation, marketing, and call center management--though they have not yet announced any vendor partners. Both e-commerce and customer management application services will be available next month.
Applications hosting requires customers to farm out internal applications, such as human resources systems and intranet applications, from their own systems to systems housed at the provider's data center. The customer's users then can access the applications through a Web browser, and pay a monthly per-user fee for the service.
USWeb said Microsoft Exchange applications for customers, including email, document, and workflow management, and group scheduling will be immediately available. In addition, the company will manage Web-based presentation applications, setting up communities as well as managing interactive meetings online or videoconferencing among corporate customers.
Other server-based offerings, including enterprise resource planning tools, will be available later this year.
USWeb/CKS is the latest in a chain of IT services companies, start-ups, business software vendors, and Internet service providers to jump on the applications hosting bandwagon. However, analysts say the USWeb/CKS outsourcing strategy differs from its rivals, with its background in e-commerce and building Web-based businesses.
Though the Application Service Provider (ASP) market is new, it is expected to grow quickly, driven by small to mid-sized companies that lack the IT staff--or money--to invest in large-scale projects. Analysts say hosted Internet applications have the potential to change the IT industry by lowering application entry costs, shifting support to outsourcers, and creating shared application environments.
However, outsourcing still poses risks and hidden integration and support costs, said Stan Lepeak, analyst at the Stamford, Connecticut-based Meta Group.
"I think it's a neat idea but it's very premature," he said. "What happens if you have to terminate these agreements? What about support? I see this as becoming a viable service but I think [the vendors] are glossing over the problems."
For example, what if a customer is unable to use the system to check an order status? If the problem is a crashed legacy application, the client will need to determine who needs to fix it.
"This is a scenario that is ripe for creating customer dissatisfaction," Lepeak said in a recent report about the emerging ASP market.
And while a stand-alone Web-based package can be easy to install, it's much more difficult and expensive to tie that software to multiple legacy applications, Lepeak added.
But compared to other start-ups, USWeb/CKS is best positioned to do necessary integration work--though not on the scale expected of the larger services giants, like Electronic Data Systems and Computer Sciences, said Ben Tanen, analyst at Cambridge, Massachusetts-based Giga Information Group. Besides, he said, many companies aren't even at the point in their Web strategy where they're integrating legacy systems to Web applications.