In Shakespeare's "Antony and Cleopatra," Cleopatra commits suicide by holding a poisonous asp to her breast. After the recent collapse of many service providers, companies that decided to embrace an ASP know exactly how she felt.

The bite of many fallen application service providers caused, if not death, at least a lot of pain, especially for companies that relied on ASPs to provide core services such as ERP (enterprise resource planning) or human resources. Some ASPs proved to be deadly to themselves, choosing to offer applications such as office apps or data management that businesses weren't interested in outsourcing. On the other hand, service models that provide management and diagnostics while supplementing other systems may have what it takes to stand the test of time.

So how does an e-business gain ASP advantage without getting bitten? In eWEEK Labs' experience, several factors need to be considered when looking at a service provider. These include the viability of the provider, the importance of the task being outsourced, whether vital data needs to be transmitted outside a company network, and the actual cost of keeping the task in-house.

What has and hasn't worked using the ASP model? Well, one of the first and most successful examples is Web hosting. Hosting a Web site at a provider saves a business from worrying about maintaining and securing a site while sacrificing very little of the manageability of the site.

More recently, the MSP (management service provider) model has proved itself to e-businesses. MSPs often supplement internal IT systems, such as security and network management, by fulfilling functions including remote vulnerability assessment and performance monitoring.

Some of the biggest ASP failures were the providers that took the "application" in ASP too seriously. Just because it was possible to outsource traditional office and productivity applications didn't mean anyone wanted to. It's easier to provide these applications in-house.

So how should a business evaluate the viability of a service provider? This can be tough. If the provider isn't IBM or one of the handful of providers that look like they'll be around for some time, companies should probably avoid outsourcing core business apps such as ERP or human resources. Figure out how much it will hurt if the ASP fails. While losing security scanning or performance monitoring can be inconvenient, for example, it's not a life-or-death situation for your business.

It's also important to ensure service agreements will protect your investments. Is there protection for your company if the ASP goes under? Also, if the service must be available 24-by-7, can the provider include technology assurances such as redundancy, as well as contractual protection if the service becomes unavailable due to server crashes or other problems?

In addition, some of the best services mainly supplement internal systems. A company may have firewalls and intrusion detection running internally but will outsource vulnerability scanning. Internal network management systems control and monitor servers and other hardware, while an external service adds real-world Internet data to the equation.

Some of the oldest ASP advice still stands true. Security has always been a concern when outsourcing (even when the outsourcing of security has proved successful). Anything providing core business functionality should be tied to the outside world only via secure connections, such as a virtual private network.

In addition, many companies have no problem outsourcing the intensive work of analysing the huge log files that e-business sites generate. But if this data can be of use to competitors, outsourcing it should be considered only if the provider can provide guarantees that data will stay secure throughout the process.

Tackling a host of options

Attention, enterprise ASP customers: Do you know for sure who's managing your mission-critical data, and who's taking responsibility for making sure the applications you depend on are available when you need them?

These days, the answers to those questions are not so obvious. That's because more and more application service providers, rather than hosting applications and creating new managed services themselves, are instead contracting with other online providers for significant portions of the online services they offer to customers.

The good news, experts say, is that, as a result of this trend, enterprise IT managers will be able to obtain a wide range of hosted applications and managed services from a single ASP source.

The not-so-good news? Before signing on with an ASP, experts say, IT managers will need to do more research to understand where services are coming from and just how secure and reliable they really are.

"If you look at the ASP supply chain, there are a lot of moving parts, including data centers, power supplies, storage, IP infrastructure, monitoring, security and more," said Lew Hollerbach, managing director at Aberdeen Group. "ASPs are realising that you don't really need to own it all. They can partner for a lot of it."

So what are ASPs, in essence, outsourcing to other ASPs and MSPs (management service providers)? Anything and everything, starting with core infrastructure: data centres and networks. ASPs and independent software vendors becoming ASPs are turning to large outsourcing providers to host their applications. Sabre Holdings, for example, said applications from its eMergo ASP unit are being hosted by Electronic Data Systems. Similarly, ERP vendor QAD is using IBM to host its new ASP offerings.

Some ASPs are even repositioning to become hosting providers for other ASPs. USinternetworking, for example, has 34 ISVs in its AppHost service. They include a range of Web-based application developers, including eRoom Technology and Niku.

Many ASPs are also looking to partners for managed services that they can resell to enterprise customers. Elite.com, an online time and billing ASP for professional companies, for example, uses a hosted PKI (public-key infrastructure) serviceâ€"CerTrax managed PKI Service from Certia --to provide its managed security offerings. Similarly, IntelliServices, an ASP for health care providers, gets its hosted security services from Telenisus, a security MSP.

Experts say there are a couple of reasons why ASPs are turning to other ASPs and MSPs for core parts of their business. First, enterprise customers are increasingly demanding that ASPs provide customized, managed services, not just one-size-fits-all hosted applications. To meet that demand without going broke, Aberdeen's Hollerbach said, ASPs must partner for services rather than build them themselves.

Secondly, Hollerbach said, compared with just a couple of years ago, when ASP pioneers such as USi and Corio launched, ASPs today can easily tap into hundreds of hosted services from MSPs. A growing number of startup vendors are focusing on linking ASPs with third-party infrastructure providers. Techsar, Xevo, Computer Associates International's iCan and New Moon Systems, for example, have emerged as so-called ASP provisioners.

While enterprise customers are likely to benefit from the wider range of managed services ASP partnering will create, however, experts say that the trend will also place increased burdens on IT managers seeking to get the best deals from their ASPs.

"The temptation is to want to hand over all responsibility to the ASP, but that's not going to work, particularly in this very dynamic environment," Hollerbach said.

Juggling service providers How will enterprise customers feel about ASPs and other outside service providers partnering and integrating their offerings? They'll learn to love it, predicts a recent report from Forrester Research, because it beats the alternative: managing lots of service providers independently. Forrester predicts that what it calls Service Networks--groups of service providers partnering to integrate their various offerings--will evolve. Here's why Forrester said these networks will be common: Provider ranks are exploding. Forrester said the average enterprise today uses seven different service providers per business unit. That number will grow to 10 by next year. As those numbers grow, so does the complexity of management service providers. Cross-company projects proliferate. As enterprises collaborate with business partners to create things such as integrated supply chains, they all bring their own ASPs and other service providers to the table. Having those service providers already part of a service network would make it easier for them to work together. Adoption of process outsourcing accelerates. Business process outsourcers are service networks, integrating managed service offerings such as logistics and fulfillment from multiple providers. Source: Forrester Research

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