What should you know about ASPs before you use their services?

2.7.1 What should you know about ASPs before you use their services?

ASPs (Application Service Providers) are the latest wrinkle in web services. Although the acronym "ASP" is new the concept has been around for quite some time. In the past we called this type of service "Time Sharing." Like the Time Sharing services of the past an ASP hosts software on their computer and charges a company for the privilege to use this combination of hardware, software, service, and support. In the past, this model was used for sharing of expensive resources such as accounting applications that ran on IBM mainframes.

ASP solutions are popular this year (2000) because developers have concluded that because of the Internet, all computer resources could and should be shared. These developers are trying to extend the time-sharing concept to software and services as common as word processors. There are two areas that ASP solutions have been showing up. The first are corporate applications, the second is end user applications. The features, benefits, and downsides of ASP solutions for these two areas are similar.

Corporate applications
As businesses move online, new and increasingly sophisticated applications have been developed so they can provide their customers, distributors, and employees with web services. These service include e-mail management tools, web page customization, eLearning course delivery, and online marketplaces. Most of these new solutions are being implemented using sophisticated (expensive) databases. To lower the barrier to entry to these new applications, developers (and business-people) are bundling their software, hardware, service, and support, and are selling the package for use over the Internet. The benefit of this approach is that it is not necessary for every company to purchase the hardware or software to run these applications, nor fund the IT manpower necessary to support these applications. Additionally, since many of these applications are new (i.e. they have not been fully debugged), company IT can avoid dealing with all the problems, fine-tuning, and integration necessary to run these complex applications.

The business model for ASPs is as follows: Most ASPs charge a monthly fee for the use of their software, hardware, service, and support combination. They also charge based on the number of users (both internal and web visitors.) Costs for the ASP solutions, therefore, can add up quickly, so it is best to figure out the real cost of bringing these applications in-house as opposed to leasing the application on the ASP's servers.

A big drawback for the ASP approach has to do with access to your company's customers and intellectual property. The ASP's database system will need to hold all the necessary customer, product, and service information so that your customers can be served from their site. It is therefore a good idea to clearly understand who owns, controls, and benefits from the dissemination of this information. Before signing with an ASP clearly understand how easy it will be to change ASP's (i.e. move to another service provider should you be dissatisfied with your current one.) For example if it takes a six man months to set up and populate the ASP's application, and the decision is made to change services, how difficult will it be to move this information to a system located internally or to move to another ASP? Are you willing to walk away from your affrontwork? Also look at the ASPs business model, can you purchase their software and bring it in house at some point in time? Do they have services that support the transfer of your data from their systems to your systems? Some ASPs consider themselves ".com" companies, not a software developers. This means that their software is not for sale - you won't have the option of moving the application in house at some point in time.

When reviewing ASP solutions make sure they are providing services that increase the viability of your site - not theirs. Be wary of ASPs who's business model is to have brick and mortar companies send customers and content to their site. What they are aiming to do is to become your distribution channel, take your customers, and then offer other services to your clients. It is your responsibility to ensure that the solution you choose is advantageous to your company.

Good ASP solutions can be seamlessly integrated with your web site thereby providing your web site with added features at a fraction of the fully burdened cost of hosting these applications at your company. For example if you want to provide your customers with eLearning (on-line tutorials) you can choose from a number of eLearning companies that will host your courses and provide students with services like tutored support and chat rooms. However, you will want the courses to appear as though they are being delivered from your site, i.e. they should have your corporate look. Alternatively, you may want to host the eLearning on your own site, so that you keep the customers in your domain. Below is a list outlining the advantages and disadvantages of a corporate ASP solution.

Corporate (In-House) Application

ASP solution

End user applications
Similar to corporate applications there has been a growth of end user applications running centrally. For many years, software companies and IT departments have been trying to get end users to use centrally managed software. The advantage of a centrally run application is control/maintenance of the application and the content produced by the end user. The down sides are the expenses of a centrally administrated system and that centrally run applications don't have the same flexibility and easy user interface as applications sitting on the users' PC, and end users feel like they have lost control of their content.

The ubiquitous user interface available from web browsers has re-ignited the movement to centralize applications that currently run on end users PCs. The benefit is that your IT department does not need to set up and maintain the application on each computer - The user accesses the application through the Internet. However, because both data and the portions of the application have to be transmitted back and forth between the server and your computer, there are several problems:

As with corporate applications, before using an end-user ASP application clearly understand who owns and controls the intellectual property being created. You might find a great tool on the Internet where you author some cool content only to find out that you have lost control of your Intellectual property to the ASP. Or, you may own your intellectual property but are now sending your customers to the ASP's site making their site sticky instead of yours. The matrix below outlines some advantages and disadvantages of end user applications that run stand alone and via an ASP.

Tradeoffs between stand-alone applications and ASP solutions are presented in the following list.

Stand-alone Application:

ASP solution

In summary, ASP solutions can be a benefit to companies who are embarking on advanced Internet web sites. They provide relatively easy and low cost access to complicated applications. The down side to ASP solutions is that you might be paying to have some ".com" company make their site sticky with your intellectual property and your customers. Before choosing and ASP solution make sure the solution truly benefits your company.

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