Looking to prove that the application service provider model can work for large as well as small companies,Hewlett-Packard has snagged one of the largest banks in North America as its first ASP client.
Canadian Imperial Bank of Commerce has plugged into HP's computing power plant for 42,000 messaging-on-tap e-mail seats, thereby serving as a guinea pig in HP's quest to prove the ASP model can suit small and large companies, which have been the most reluctant to adopt it.
A December 1999 Forrester Research survey of 50 large businesses found that 71% didn't outsource any applications, and that 65% wouldn't consider doing so within the next three years.
That doesn't faze HP, however.
"There's nothing in the ASP economic model that means it should only fit in small to medium enterprises," said Frank Barker, general manager of computing utility services at HP.
"Our goal is to prove the model by delivering mission-critical applications straight into the enterprise, and then open up the marketplace for ASPs to come in. Banks are a good target market for us, because we're focused on financial services," Barker said.
By kindling the ASP market and setting down stakes, HP hopes to win a few new customers among medium- to large-size ASPs for its operating systems and services.
For CIBC, the move is intended to stem the proliferation of messaging systems at the Toronto-based institution, including Microsoft Exchange, Lotus Notes and a mainframe-based system-all legacies of its years as a holding company, when each business maintained its own e-mail system. "When we made the decision, we had a lot of people still on mainframe mail who were slated to go to cc:mail and then a ton of people on cc:mail and a smaller number on Exchange," said Tom Strong, senior vice president of operations and technology at CIBC.
"When people started to exchange documents and spreadsheets, the whole thing became a nightmare," he continued.
"We just weren't doing a good job with it. We're a bank, and the mail is just another layer of change and challenge and resource commitment we don't need."
The arrangement will save CIBC an estimated $5 million a year in hardware and software upgrades and other hassles, Strong said.
"I believe we save another $5 million in having a clean, reliable mail system."
Although messaging is mission-critical for most enterprises, the challenges of self-managed messaging are daunting, according to HP. Maintaining flexibility without jeopardizing security and speed is a monumental task. And it's getting worse, with messaging volume doubling every year.
HP's messaging-on-tap service is akin to a utility in which companies pay according to usage-the same way they pay their electricity, gas and phone bills. "We want it to be like the phone service," said CIBC's Strong.
Hewlett-Packard touts the service as a fully-supported messaging solution that combines utility convenience with mission-critical assurance.
The messaging architecture-which HP implements, owns and operates-is based on Microsoft Exchange.
When customers subscribe to the service, HP quickly connects them and offers guarantees for mailbox availability, message delivery and security.
The base service includes a 50 MB Microsoft Exchange mailbox for each user, guaranteed 99.9% availability, and five-minute worldwide message delivery.
Standard features also include management of global directories, dedicated servers, mobile user access, virus checking and Internet gateway security.
To help customers administer their messaging on the fly, HP provides Web-based moves, adds and changes to speed mail-user changes. It also provides continual worldwide access to messaging experts who can answer questions about the Messaging-on-Tap service, and monitors and reports on service level agreements regularly to track availability, end-user satisfaction and quality.
To protect messaging assets, HP synchronizes with legacy mail directories, ensures send-receive capability with the legacy environment and migrates legacy mail messages from servers and clients to the messaging utility.
CIBC, which has outsourced in the past, would consider doing so again on an ASP basis, but only for nonstrategic applications, such as human resources.
"We've outsourced proprietary apps on things that we've written," said Strong. "For standard apps, it makes sense, but for applications that give a strategic advantage, you want full control."
Applications he'd want to keep in-house include anything pertaining to consumer advice, calculators and customer relationship management. "But it's no longer a competitive advantage," he said, "to have unique systems for a lot of the basic banking work."