Everyone wants a piece of ASP

By Adam Gifford

There's a lot of talk around about ASP. It's not the snake that bit Cleopatra, but application service provision - the idea that companies will rent the applications they need and access them remotely over the internet or private networks.

Software and hardware vendors, telecommunications companies and consulting firms are all lining up with ideas on how to take a chunk of this new business.

Peoplesoft has just signed with consulting firm KPMG as an ASP outsource partner, the first such arrangement outside the United States.

Richard Outten, Peoplesoft Australia's director of strategic alliances, says some customers will want to outsource their entire business function, others just want to outsource the application management and will continue to run that application or business function in-house.

There is also a potential market among smaller firms who want to use applications like Peoplesoft but cannot afford the infrastructure costs.

Peoplesoft New Zealand manager Frank Anderson says ASP "is not a straitjacket, five bob a week, one size fits all sort of deal.

"This is a fluid offering which recognises the market is diverse, even in a small economy, and the requirements of the people we are talking to are all different."

The first customer to benefit from the partnership is electricity generator and retailer Meridian Energy, which bought Peoplesoft financials and asked KPMG to run the application for it.

KPMG partner Grant Dennis says that when Meridian started work on April 1, it wanted a working system immediately. It also chose not to continue with the Oracle financials ECNZ used.

"Meridian decided financial accounting was not a core competency. Its core competence is generating electricity, managing the wholesale risk and marketing it.

"Those back office functions such as legal, tax and accounting are important but do not give it any competitive advantage, so it went to market and we won the tender for full business process outsourcing of the financial functions.

"Meridian holds the Peoplesoft licence but we do everything for them: installation, support, train the people.

"They have three finance staff in the whole business. KPMG do all the accounting using Peoplesoft, so Meridian doesn't even see the application," Mr Dennis said.

Meridian uses Gentrack for its retail billing and an internally developed application, Midas, to bill large customers like Comalco. KPMG also manages Maxima, Meridian's asset management system.

"The trick is managing the grey area, because it has outsourced the physical asset management to other vendors and contractors, and it wants us to look after those relationships as well."

The Meridian system is managed across Meridian's wide area network, either directly or through a dedicated ISDN line from KPMG's Christchurch offices.

Mr Dennis says Peoplesoft is fully web-enabled, so it can be managed over the internet by a dial-up line.

He says KPMG is taking over the management of an existing Peoplesoft customer's applications, and plans to have at least five Peoplesoft ASP sites by the end of the year.

"We see this as a key annuity business for KPMG. Consulting is a one-off project type business. Our aim is to have long-term relationships with key clients. This is a way of improving value to those clients."

KPMG sees its ASP business as being larger than New Zealand, and the team here could support clients in Australia and Asia, he believes. Another New Zealand customer is to be announced soon.

In the United States, KPMG has formed a joint venture, Qwest Cyber Solutions, with new-generation telecommunications company Qwest to promote ASP. It has also sold 20 per cent of its services company to networking infrastructure manufacturer Cisco.