It's more than three years since the Application Service Provider bombshell was dropped on the IT industry, yet the fledgling Australian market has been slower getting off the ground than a stuffed turkey. Despite having surpassed the Acropolis in print column inches since their conception, ASPs are still lying low and living with an identity crisis.
"If you talk to people and ask 'What's an ASP?' you'll get 20 different answers from Active Server Pages, to people saying it's a bureau with a mouse or it's applications on tap," said Richard Duffy, Australian e-business product manager for solutions provider Great Plains.
Indeed, as Atlantic Research director Sam Inks told PC Week: "I can't remember anything in the IT industry that defied description more than ASPs."
However, the ASP has turned and this trend looks likely to change with a series of high-profile players joining the rush into the market, vying for position amongst the energetic start-ups. Following ASPCON earlier this month, Sydney alone plays host to its second event in a month-ASP Summit (March 28-29)-as the industry shows increasing interest in the model.
According to the ASP Industry Consortium (ASPIC), an ASP is essentially a supplier who makes applications available on a subscription basis-a business partner that provides choices regarding how software applications are managed and delivered.
Application service providers host software from centralised data centres, renting access over dedicated, high-speed networks or the Internet.
At their best, ASPs should enable organisations to gain real-time pay-as-you-go or subscription access to best-of-breed software without the risks, costs and complexities of maintaining these applications themselves.
"If you look at ASPs and what that's all about, from our perspective there are two or three models why organisations want to go ASP," said Duffy.
"Some want to look at ways of reducing their capital expenditure, others want to reduce infrastructure costs-they don't want to go ahead with hiring an IT manager and people and a third reason is making sure they are keeping on top of the latest technologies."
This scenario might sound ideal-a shot in the arm for overworked IT departments-and figures suggest the industry will be worth AU$21 billion by 2001, but outside the United States there has been little concrete evidence of a change in software distribution patterns.
There are several reasons for the slow uptake. For one thing, many decision-makers are uncomfortable about delegating the upkeep and hosting of mission critical data to sources outside the company. There is a "what if" unknown-not dissimilar to giving your passport to an unknown, unshaven concierge for safekeeping whilst holidaying in Cuba. It's an invitation for your superiors to say "I told you so," or "What were you thinking?" when the waste material hits the ventilation.
ASP evangelists point out that specialised hosts offer superior security and redundancy to most IT departments, but to outsource material that will impact upon the very existence of an organisation takes a quantum leap in trust. Only time and a track record will break down these perceptions.
Bandwidth issues have also thwarted the rise of the ASP. Despite all processing occurring at the server, data-heavy communications must still pass between the host and the customer-leading to potential delays during heavy traffic.
Experts believe the recent increase in DSL, ISDN and other infrastructure improvements will soon condemn bandwidth black spots to history, a development that advocates say will only help the ASP industry.
For all the highfalutin' possibilities, another very plausible reason for the delay from concept to combat for the ASP is that, according to Sydney-based start-up Peakhour, it is fundamentally difficult.
Many Microsoft applications are designed for single users, and thus don't like operating among multiple ASP customers and there are several methods for delivering the ASP, and these sometimes don't talk to one another.
Citrix has generally been the behind-the-scenes engine of choice since the hosted service came to the fore, but Solution 6 and Centrum are using a Java-based solution, while many Californian companies are looking to an HTML request-form model that uses less data.
"The thing that we're discovering is that most shrink-wrapped applications today have not been adapted for the Citrix model," said Troy Cox, CTO for Peakhour.
"Most work to an extent, but with things like MYOB it makes much more sense to do them in HTML through your traditional Web browser."
Cynics in the industry have also proposed that one reason IT departments have been slow to adopt the ASP is another aspect of the model's redundancy features.
If companies outsource the majority of IT operations, do they in fact need to retain a large department? Despite the hurdles, ASPs have finally arrived in the market place. BDO SynergyIT, Peakhour, Centrum, Oracle and Great Plains are all offering hosted applications and have begun accepting clients. Recruitment agents SDI Executive Search is using a Citrix-powered model from Great Plains, BDO SynergyIT has implemented a similar model for marketing consultants RH+.
PC Week Australia tapped into the experiences of these companies to provide a rundown of the benefits of using ASPs:
Access to top-end software Most ASP literature to date has focused on renting MS office and other Windows applications. As a result, some observers feel this is the main purpose of the ASP model, when in fact, its reach and implications are much broader.
There are many serious UNIX applications that have previously been out of reach of many organisations. Top end accounting and business applications and CRM and ERM tools are too expensive for many medium-sized organisations.
"Many small or medium companies could never afford one of the large ERMs, and they would never use it fully," said Duffy. "With an ASP, they do not have to pay for the whole system, only what they need, as and when they need it."
This selective process means, in theory, that businesses can construct a best-of-breed package that fits their requirements.
"We now have a bolt-on IT department which helps us keep up with technology while limiting our costs and giving us peace of mind," said RH+ managing director John Holland. "We have access to a level of functionality we could never have afforded or supported on our own."
Low capital outlay ASPs are seen as particularly advantageous to start-up businesses and enterprises that anticipate rapid growth. Instead of spending valuable capital on IT infrastructure, companies can divert their development dollars into areas that will benefit the core business.
"I wanted to have a predictable IT budget so that I knew during my business planning how much I could expect to spend each year," said Bruce Ebert CEO of SDI Executive Search.
The pay-as-you-go access also means less capital risk for the start-up because entrepreneurs do not need to invest thousands of dollars in technology.
Core business focus SDI's Ebert also confirmed another much-publicised benefit for growing companies. While capital is vital to a growing company, its "human equity" is equally important. It is not beneficial for business planners and senior management to spend their working hours trying to understand and establish a suitable network or Net presence.
"We started talking in August and it was clear to me that I didn't want to build infrastructure for this organisation," he said. "I wanted to focus on driving a successful business. I didn't want to have all my capital tied up in infrastructure."
Staff turnover With IT staff as valuable as stakes in a Packer-backed ASX IPO, finding the right employees for an IT department can prove a lengthy and expensive process.
Using an ASP, converts say, saves the business time and money in the hunt for technology professionals. "Part of the predictability I wanted from my IT costs was bodies," said Ebert. "In my experience, IT professionals tend to wander after a couple of years-the platform becomes stable, they get bored and move on. I didn't want to have to worry about that."
Using an ASP, he can let Great Plains worry about walkabout workers.
Scalability A key selling point for the ASP model among smaller companies is the scalability provided. Depending on contracts and licensing issues, an organisation's IT infrastructure should be able to grow quickly by extending service agreements.
This means companies that anticipate rapid growth will be impeded by neither overworked hardware nor the high costs of replacement.
"We were coming into a new marketplace as a small/medium business and I wanted to work in this environment because it provided the functional environment I like and had the ability to match the needs of the business as it grew," said Ebert, his views common among ASP fans.
"BDO SynergyIT maintains our systems in peak condition, updating applications as required and providing a high degree of security and virus protection," said Holland.
"As we grow, it's a simple matter to extend or amend our arrangement, even for short-term projects or special marketing initiatives.
"Our exposure to new technologies through this solution has also enabled us to incorporate e-mail and Web response options in some of our marketing campaigns, further improving our ability to service our clients," Holland said.
Redundancy While many small businesses remain sceptical regarding storing and accessing important files outside the company, ASP advocates say the data is safer in the hands of experts, whose core business involves systems care.
"Our organisations and others of this size can only afford a certain level of investment and if it falls down-you're stuffed," said Ebert.
"What we're buying is the redundancy that exists in the datacentre. You've got swags of top-line file servers in there replicating each other and you've got 60 to 70 technicians managing it."
Put simply, Ebert says, let the experts with the hardware capabilities take care of the nuts and bolts.
"I felt more comfortable about that side of things simply because of the scale of what they had to offer, the savings in the ASP model are largely in the infrastructure."
Accessibility Another by-product of the Internet-based ASP model is the ease of access to company databases and software tools. Mobile workers, through the Web, can work remotely in the same way they normally work in the office.
The system also means that companies with more than one office can synchronise data in one central location. This not only means further reductions in infrastructure costs, but also less confusion.
"We have an office in Melbourne using the same ASP," said Ebert. "What I like is that when we are talking about a certain customer, we are working from the same database, so they're exactly the same."
The model also appeals to small business people who want constant access to their data. With no paid holiday or temporary staff, sole traders can work from the beach, or the back of a boat.
Productivity One key ASP bonus is the ability to monitor which applications staff-or students-are using at any given time and for how long-potentially saving man hours that might otherwise have been spent surfing the Web or playing arcade games.
When desktop hard drives are replaced with thin clients, personal use of company resources is restricted. "We only have one hard-drive in the organisation and that's only in case we want to download a floppy, but everything else is completely offsite," said Ebert.
"If you have an operation onsite that has an engine on each desktop you have people loading all sorts of stuff up and there are too many working parts to go wrong.
"The other thing I like is that I've got a business productivity tool now whereas before I had an environment where it was like people had an entitlement syndrome, where they thought they could have their own screen savers and float around on the Internet however they liked. It sort of stops them.
"I can easily restrict or set standards around what happens. If a secretary doesn't need access to the Internet, she doesn't get access."
Not only does the ASP save on human resources, moving all the large boxes off site also frees up office space and makes the desktop environment less congested.
