So far, consultants unaffected by hosted SFA providers

Despite hosted SFA providers' pledge to reduce implementation and customization expenses, most experts agree that consultants have yet to experience lowered demand for their services.

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While applications service providers (ASPs) and even a handful of CRM strategy consultants say the outsourced enterprise systems model would negatively impact systems integrators, industry analysts believe it just hasn't happened.

Since ASPs first appeared on the IT landscape, they've promised lowered consulting expenses for customers as one of their greatest benefits. By eliminating costly implementation fees, cutting down applications customization, and ceding maintenance to third-party vendors, ASPs have contended there would be little to no need to enlist the help of integrators.

With the increase in popularity of ASPs in the sales force automation (SFA) market, some experts have predicted systems integrators and consultants would soon begin to feel the pinch of this shift in demand.

For example, Chris Selland, a former research analyst turned managing director at strategy consultants Reservoir Partners Inc., Cambridge, Mass., says that the impact of ASPs' rise in the SFA space will soon impact Big Five integration firms.

"For all that's been said about Salesforce.com hurting the CRM market leader Siebel Systems, growth of ASPs will hurt systems integration consultants even more," Selland said. "All of the Big Five consultancies, and firms such as IBM Global Services CSC, will be hit by this."

Selland said he believes strategists will remain in demand to help make SFA and other enterprise-technology buying decisions, but he said users will increasingly move away from high-priced integrators in favor of outsourced services.

However, most SFA industry analysts feel that ASPs make up too small a portion of the overall market to significantly hurt consulting businesses.

Ronni Marshak, senior vice president and principal consultant at Boston-based Patricia Seybold Group, said that when ASPs increase their industry presence, it may eventually impact consultants but, thus far, larger SFA customers have not bought into the outsourced model.

Other analysts seem to agree.

"Since ASPs won't ever make up a significant piece of the SFA market as I see it, I doubt consultants have much to worry about," said Tom Topolinski, vice president of worldwide software applications at Stamford, Conn.-based Gartner Inc.

Topolinski said enterprise customers' preference to keep proprietary data in house would likely keep ASPs from ever growing to occupy more than one-third of the SFA market.

According to Steve Bonadio, senior program director at Meta Group, Stamford, Conn., even if ASPs were able to pry a larger portion of the SFA market away from more traditional applications providers, it wouldn't necessarily mean consultants need to worry.

"Customization is only one piece of the picture," he said. "Consultants would still fill a necessary demand for application extension, and making SFA fit into a user's larger infrastructure."

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