Application Service Providers (ASPs)

What you can find on this page: What is an ASP? Why should you consider an ASP? What issues need consideration? Features & Benefits Leading New Zealand Solution Providers Case Studies Relevant Reading

What is an ASP?

For many organisations owning technology has served as a distraction from core business imperatives and proven a costly and time-consuming exercise.

Owning technology requires constant management, maintenance and upgrades and ensuring IT skills remain current. Unless you can easily offset the cost against competitive and operational benefits, the chances are, creeping system costs make it difficult to know what your return on investment is.

When the application service provider (ASP) model first raised its head in the late 1990s  skepticism was tempered with a sigh of relief from those who prefered to get on with the business they were passionate about rather than become IT experts as well.

Initially larger organisations led the charge and began reaping the benefits but it was clear there were major advantages for smaller businesses typically unable to afford the latest enterprise type technology.

ASPs allow businesses to access applications that are housed, maintained, upgraded and supported off-site, typically by an organisation that is expert in all things related to that product. For a fee (often monthly), companies gain access to the software they need over a virtual private network (VPN) or wide area network (WAN) connection using a Web browser. 

In early 2000, at least about 24 companies in New Zealand announced plans to launch ASP offerings but the applications were immature, the pricing model wasn’t geared to local expectations and the market wasn’t ready. 

Most businesses weren’t prepared to bet their technology on a new model without some proof of the benefits - those who did experiment made it an optional extra rather than requiring all users to participate.

Initially there was some fallout in New Zealand, largely through lack of commitment from clients but companies who had expertise in systems integration and outsourcing eventually led the way taking the ASP model mainstream by re-purposing their specialised software so it could be hosted on-line.

Why should you consider an ASP?

As the ASP hype died down the practical realities, including efficiencies and long term cost savings began to make more sense. A new breed of vendors focusing on small to medium enterprises (SMEs) began to emerge, among them mid-market enterprise resource planning (ERP) companies offering hosted modules from financials through to e-commerce, supply chain and distribution.

Companies with anywhere from 20-100 employees who are feeling the pressure of having to move their in-house technology up to the next level to cope with growth and the need for more complex software to run their business are ideal ASP candidates.

The benefits include savings through not having to invest in the latest best of breed software, infrastructure and upgrades, greater security and flexibility and less requirement for IT expertise, maintenance and in-house training. 

What issues need consideration?

Check the credentials of your on-line hosting operation to ensure they have the financial, back-up, quality of service and in-house resources to grow with the market and keep you at the forefront of technology.

For many organisations access over the web is simply not good enough – they need virtual private networking to ensure capacity, security and point-to-point management.

According to research firm IDC companies that use ASP services benefits range from a return on investment, peace of mind, clearer focus and a better work environments. IDCs Financial Impact of Application Service Providers report released in October 2001, claimed half of the those surveyed had reached payback for ASP use within six months.

Last year the Aberdeen Group predicted the global ASP market would grow at a 52 per cent compound annual growth rate through to 2005 with spending increasing from $US3 billion to $US 16.1 billion over the next four years. The survey focused on seven ASP market categories: e-commerce, ERP, collaboration, communications, human resources, financial and education and training.

The ASP model is seen as an integral part of the overall trend to re-position software as a service and is likely to become fundamental to the way business will be done in the coming years. Ultimately it’s likely the ASP model will evolve into something akin to a utility where you simply plug in to provide industrial strength access to the software you need.

• Cost:  Typically SMEs have fewer financial and personnel resources to purchase, install and support expensive ERP applications.  By hosting, maintaining and supporting these applications and delivering modules to a Web browser vendors have been able to remove many of the overhead costs. Savings of up to saving 30% or more are considered typical.
  
• Predictability: Technology is moving so fast it seems as soon as you’ve installed the latest version the next one’s ready for market. New business applications often cannot run on old infrastructure. Rather than massive in-house investment renting via an ASP gives access to the latest technology, addressing growing performance and security challenges and reducing the risk of loosing face with customers and loss of revenues.
  
• Accessibility: Businesses are now competing in more geographical markets and off-site locations with many more trading partners, customers and employees than ever before. Delivery of  process-supporting applications over the web from a centralised source has become the most effective and economical means of achieving this.
  
• Speed to market: The time taken to deploy applications determines how quickly the business benefits.  With in-house roll-outs taking up to a year or more plus the global shortage of IT skills the ASP model becomes increasingly attractive.

Leading New Zealand Solution Providers

Unisys
provides both infrastructure hosting, as well as packaged application rental. Applications available include Microsoft Great Plains, CRM solutions Splashnet and WebWorks, OrderWare online commerce solution and business intelligence tools: e-validates and UBD Insight. The focus is primarily on mid- to large-size enterprises for the financial and CRM solutions.
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Synergy
Synergy specialises in the delivery of professional business consulting, software development, creative web and multimedia design and intelligent technology solutions. We provide strategy and planning through to technology development, implementation, integration and support.
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