Magazine Article | July 1, 2000

ASP — Friend Or Foe?

Source: Field Technologies Magazine

Are ASPs' (application service providers) promises too good to be true? No. Can they help a budget- and IT-strapped company? Yes. Does this model warrant scrutiny? Absolutely.

Integrated Solutions, July 2000

There are times when I miss living in an apartment. Someone else was responsible for cutting the grass and fixing the leaky faucet. All the while I concentrated on my core competencies – professional and personal development.

That all changed when I bought a house. Time that I spent on professional and personal development was suddenly consumed by mowing the lawn and unstopping drains.

There are clearly advantages and drawbacks to both renting and home ownership. It really comes down to the unique needs of the individual making the choice. The same can be said for companies that are deciding between implementing an in-house system or outsourcing the entire project.

Number Of ASPs Swells
The "lease or own" argument is now being debated throughout small- to mid-sized companies around the world. And, the discussion will soon reach the ranks of the Fortune 500. What's causing a stir is whether or not to enlist the services of an ASP (application service provider). These ASPs manage and deliver application capabilities to multiple customers from data centers across a wide area network. This allows customers to use complex applications without having to obtain and implement them. An ASP promises all this for only a monthly fee and an annual contract.

There's no shortage of ASPs to choose from. Throw a dart at a list of trade shows – no matter what show you hit – you'll likely find ASPs in attendance. This was surely the case at Spring Internet World and AIIM 2000. In fact, the ASP Industry Consortium ( now boasts more than 400 members after launching in May 1999 with 25 initial member companies.

Get Out The Notepad: The Pros And Cons Of ASPs
The ASP industry is clearly hot, but is this type of outsourcing the best course of action for your company? Just like buying versus renting, there are good points to be made on both sides of the issue. Here's a news flash: IT talent in small- to mid-sized markets is hard to come by. ASPs allow companies to use applications that they otherwise would have trouble managing with in-house personnel. Also, a monthly bill from an ASP is far less intimidating than cutting a fat check for acquiring and implementing a complex system. Then there's the issue of core competencies. If your goal is to make better widgets, then do you really need a dedicated staff that scans and archives documents? You can refocus this staff by outsourcing its function to an ASP.

Sure, the pro-ASP argument has some strong points. But, renting means relying on the landlord to fix problems. Instead of taking matters into your own hands, getting your problems fixed is at least one phone call away. Just like landlords, not all ASPs are equal. Look at the growth in membership of the ASP Industry Consortium. Not every new ASP will survive. You'd better hope you don't have a contract with an ASP that is a casualty of a shakeout. Like any company, ASPs are susceptible to IT turnover. You know the pain of losing a couple of IT gurus at your company; imagine if you're trying to manage applications for 10 companies.

Ultimately, the choice to use an ASP is left to each company. Sometimes, however, companies don't have a choice. A scarcity of funds or IT talent – or both – may force your company to seek the services of an ASP. When you do, evaluate ASPs like you would an apartment. Check out the other tenants (read: customers). Check out the plumbing (read: infrastructure). Check out the door locks (read: security). And, above all, make sure you have a stable landlord (read: ASP) who is attentive to all your needs. It's a big decision – choose wisely.

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