BUSINESS COMPUTING

Case Study 2: Jamcracker

JULY 17, 2001

SECTION C - GROUP 5
Sumedha Gupta IPM01064
Ananya Bk IPM01080
Hitesh Chhatani PGP13106
K Shanmugam PGP13110
Kshitij Amit Shah PGP13123
Lalduhsaka Chawngthu PGP13126
Naincy Pahariya PGP13146
Question 1)
What is an "Application Service Provider"? What factors drive their emergence?

Answer 1)
An application service provider is an enterprise that delivers application functionality and its
associated services across the network through the internet to multiple customers in a rental
pricing model.

Factors that drive their emergence:

• Speedy implementation: The time required to set up services via ASP is much shorter
than that required to set up the IT services internally.

• Cost reduction: As ASP was able to provide the services to multiple customers, it could
realise the economies of scale in their service delivery.

• Favourable cash flow profile: Services acquired the ASP model, and required little fees
with additional payments due after service delivery called a subscription-based model.

• Support for 24x7 Business Operation: Web-based business model expected to operate
around the clock. Whenever customers face issues, experts are likely to be available
99.999% to resolve the issues.

• Help in dealing with the shortage of skilled IT staff: ASP is the web-based model and
they are having pools of IT experts to provide services and resolve the issues of their
customers.

• Support for the mobile workforce: To get the services through the ASP, location does
not matter as it operates through the internet and web.

Question 2)
How does Jamcracker fit in the ASP space? How would you explain the Jamcracker
business model in 30-seconds or less?

Answer 2)
Jamcracker's business model was based on the idea to provide the services of the application
functionality through the web-based model. However, it is not the ASP itself, but it worked
with the ASP partners to combine the application services through its IT management platform
enterprise. A customer could pick the application from the menu of the virtual “ASP cafeteria”.
The customer would maintain a single contractual relationship with Jamcracker. Jamcracker
would guarantee services and provide a single point of contact for technical support.

Jamcracker`s Approach:

• High Customer Acquisition Cost: By providing an indirect sales channel for ASPs,
Jamcracker can reduce the customer acquisition cost and focus more on the operation.
 • Conflict between the breath of ASP offering and scale economies: By aggregating the
application of many ASPs into a package, Jamcracker integrates with other ASPs
applications to solve a larger outsourcing problem for customers.

• Data Sharing: Jamcracker facilitated to transfer the data from one ASP to another ASP
irrespective of their different locations to avoid reluctant data entry.

Question 3)
Identify two or three critical challenges that Jamcracker must address to create a credible
and sustainable business model. What must they prove? Will they succeed?

Answer 3)
What are the challenges:

• Timing: It was the early 2000s, and the markets had just witnessed the dot com crash.
The industry of Application Service Providers (ASP) was very new and was considered
emerging. The dot com crash had led to many investors changing their outlook towards
tech companies, and although many investors remained optimistic about the future of
ASP, their customers were facing the aftermath of the dot com crisis and that became a
concern for the industry. As said ASP was an emerging industry, but Jamcracker wasn't
into the industry of ASP, they were ASP aggregator, and rationally it was considered at
a more nascent stage than the ASP industry. There was a confusion to go after
customers or ASPs, because neither would come if they didn't have the other one.

• Technical challenges: Jamcracker, being an ASP aggregator, had to undertake the task
of integrating the different ASPs onto their platform. The industry didn't have any
standards yet, so each ASP was very unique and to integrate onto their platform took a
lot of time since they couldn't create Standard Operating Procedures, due to the unique
nature of the ASPs. This became very inefficient and led to an increase in the cost of
onboarding ASPs.

• Customer perception: The industry was new and the customers had a lot of concerns
and uncertainty about the service levels, security and privacy. The customers were
entrusting their data, which might be sensitive in some cases, with Jamcracker or other
such service providers. Any crisis which might occur may shake the whole industry,
which hasn't established itself. Any shortfall may lead to them losing out on many
prospective customers.

What must they prove?

Their business model is highly dependent on multiple players in the industry, and the company
must pay a lot of attention is building and sustaining these relationships because as a product
Jamcracker is a collection of multiple different ASPs and it is also depending on Accenture to
cater to the top players in the industry. Their service model, which includes setting up the initial
system, involves professional services for data transfer. They have multiple parties that they
depend on. They must prove that they can move forward by keeping these relationships intact
and can create a sustainable ecosystem in the ASP space.
Will they succeed?
Jamcracker has the first mover advantage in the ASP aggregator space, and is under the
leadership of an industry expert. The investors have optimistic outlook for them even after the
dotcom crash, and are even ready to provide additional capital as and when they require. They
have made multiple relationships in the industry and are focused on what they need to do.
Considering that no big player has taken the on ground initiatives to enter the space and the
projections for the industry are good, Jamcracker can establish itself as a powerhouse in the
space.