Application service providers could be the magic formula ensuring the survival of growing companies at risk of falling behind larger rivals technologically. What can today's ASPs do that your company can't?
Never buy software again. For many companies, that phrase has the perfect ring. The cost of purchasing, customising, maintaining, integrating, and supporting software can be overwhelming for midsize and smaller businesses. It can run into the hundreds of thousands of dollars, sucking much-needed money away from day-to-day operations.
Yet at the same time, growing companies have to take advantage of the same advances in technology as their larger counterparts if they are to avoid slipping farther behind. They can't put off developing a new data-mining application or designing a way to share files remotely or creating a Web-based customer support tool, even if the price tag is woefully out of reach.
Is success for a growing business a Catch-22? Not exactly. There's actually a clear option: an application service provider, or ASP. Essentially a way to outsource software, ASPs have been around for a few years, but they've become much more sophisticated--and much more useful--lately.
Where ASPs once housed basic software applications--like email, for example--today's breed of ASP goes a lot farther, providing Web development, customer relationship management (CRM), collaboration, data management, enterprise resource planning (ERP), management information systems (MIS), and networking and telecommunications services. One indication that the activity among ASPs has gotten heated is the gaggle of acronyms spawned by these applications outsourcers. You'll hear terms like MSP, NSP, AIP, ISV, and SLA; the list goes on and on. Don't worry, they're not as alien as they first sound; use our glossary as a guide to the abbreviation inflation.
And there is an increasing number of ASPs, and interest in what they have to offer, as IBM Australia/New Zealand's country executive for its Net generation business, Peter Hreszczuk, points out. "We are seeing that Australian customers are very advanced in understanding what is available--that's demonstrated by the high Internet penetration here."
Hreszczuk says businesses may also look overseas for service delivery as well. "One of the beauties with the ASP model is that it's virtual."
This is backed up by research from Gartner earlier this year, forecasting that 30 percent of Australian organisations will host a quarter of their business applications with an ASP by 2005.
Simply put, with ASPs a company can pick and choose the software it needs--from the simplest email program to a sophisticated customised database that tracks, for instance, the daily change in your company's sales figures by store or post code, and delivers this information to wireless laptops anywhere in the country. And for a monthly fee, these service providers will handle the management of the programs and the network.
Huge capital expenditures for applications development and software acquisition, as well as overhead in the form of labour and maintenance, are virtually eliminated. Instead, using an ASP, you're left with a more manageable--and often smaller--monthly expense item.
