J.D. Edwards & Co. has exited the direct hosting business, opting instead to transfer clients from its fledgling ASP (application service provider) division to other outsourcing companies.
The Denver-based software company decided to stop hosting its own applications in October to focus instead on its core competencies as a software developer, said Victor Chayet, a company spokesman. The news comes just weeks after the company announced slower than expected sales in the first quarter and a projected loss for the period.
“It involves a different set of infrastructure physically … as well as for servicing clients,” Chayet said. “It’s not that we have abandoned the ASP model, we’ve only discontinued providing a direct ASP solution.”
Although the company was initially successful with the ASP offering, it found it was diluting its core efforts, Chayet added. It now will sell its solutions indirectly through 20 ASP partners, he said. The company has renamed Jde.sourcing, its ASP division, to J.D. Edwards ASP Solutions.
Analyst Greg Blatnik, vice-president of Zona Research, in Redwood City, Calif., said the move was a wise decision for J.D. Edwards because the company can turn over the costly maintenance of data centers, connectivity, and other support activities to its ASP partners.
“They’ve had some difficulties with their overall momentum,” Blatnik said. “Their growth has slowed down. They’re having difficulty being profitable. This is certainly a step to help the company become more focused on its core business. It’s certainly an effective way to deal with partners and channel participants.”
