ASP model deserves attention

Small firms stand to gain huge e-business benefits from using ASPs

Small firms stand to gain huge e-business benefits from using ASPs Hype has always been endemic in the IT industry. We’ve all seen the media frenzy surrounding business computing developments such as client-server, thin client, e-commerce and ERP. IT vendors constantly contort descriptions of their products to fit the latest trend and IT media devote pages of copy to them. But a new phenomenon has arrived on the scene which I think is worth all the attention it’s getting. The advent of application service providers (ASPs) is likely to change the way software is distributed, paid for and used worldwide. ASPs lease software applications to customers via the Internet or IP networks. So if you’re a small or medium-sized company (the market in the ASP cross-hairs) you don’t have to hire and retain specialised staff trained in whatever application you use; implementation, support and maintenance is left to the ASP; hardware compatibility issues disappear; support overheads disappear; and downtime is reduced as any ASP worth its salt would do a much better job ensuring 24x7 availability than its customers would be capable of achieving on their own. For the software vendors it’s an entree into the SME (small to medium-sized enterprise) market; they get lowered distribution costs; software piracy is nil as users don’t download the software so they can’t copy it; the use base is consistent because everyone is using the same version; monitoring usage gives a greater understanding of user interaction with the product and the revenue stream is constant. On the flip side software vendors are used to receiving lump sums up front and will have to accept a new revenue model; some churn out products so bloated with features that there is no hope of them running across the Web; customers will have to trust ASPs with their data and aspects of their business processing and the model may not be suited to mobile and offline workers. Technology such as encryption, thin-client computing, replication and Web-enabled software will provide solutions to some of these hurdles. Others such as human resistance to change and adjustment of revenue models will have to be worked through gradually. What is exciting is that the ASP model offers small companies that can’t afford to invest in e-commerce the opportunity to lease high-end Web-enabled applications which they can use to stake their claim in the global territory of e-business. As yet, it is early days in New Zealand with only a handful of ASP offerings on trial but I know of at least a dozen jockeying for position to launch next year. It’s an avalanche waiting to happen. Andrea Malcolm is Computerworld’s News Review section editor. Phone: 0-9-377 9902. Send comments to Email:

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