Jamcracker Business Model

Jamcracker business model was based on the ASP (Application Service Provider) concept, though it wasn’t itself an ASP. It cooperated with ASP partners to combine application services through its enterprise IT management platform (Jamcracker Enterprise), into comprehensive offerings, including technical support and appropriately billing each functionality availed. This business model was worth pursuing because at that time there not much companies that leveraged the web to deliver IT services. Moreover, Jamcracker was not actually operating the application services (ASP partners were doing that), the company did not have to make large capital investments in developing and operating applications, but made modest investment in hardware required to authenticate users to ASP partners and for necessary billing. One of their key strategies on which Jamcracker operated was the Network Effect. Few of the benefits of ASP model were-

 Speedy Implementation- Setup time for services acquired via the model was much shorter than the time required to setup similar IT capability internally.

 Cost Reduction- Due to serving many customers, the ASPs could realize economies of scale in service delivery that was not available to individual customers.

 Favorable cash flow profile- Reduced the risk for large, front-loaded, risky investments as only a modest set up fees was required. Also a facility of ‘Subscription based’ ASP was available.

 Support for 24x7 business operation- Web-based business, so operated round the clock, across different locations.

 Help in dealing with the shortage of skilled IT workers- Outsourcing to an ASP reduced the firm’s liability of having an internal skilled IT staff.

 Support for mobile workforce- An authorized user could access the software functionality irrespective of his location.

Jamcracker moreover had the benefit of being the first mover and also they provided with ‘ASP aggregation’ function which had other benefits-

 It helped reduce customer acquisition costs and made it possible for them to focus more on operations.

 It freed ASPs to specialize operationally while integrating with other ASP applications to solve a larger outsourcing problem for customers.

 It facilitated data sharing, even though ASPs were in different locations.

Some of the challenges faced by Jamcracker-

 The Timing issue- Jamcracker was not only proposing a new product, but also an entirely new market mechanism for distributing IT services. The burden was to educate the customers about the details of new approach.

 Technical