ASP - Application Service Provider

most of us know what an ISP is (Internet Service Provider), but what's an ASP?

The concept is simple. Applications software is, in the future, to be provided as a service, not a product. An Application Service Provider would be a business that leases access to software applications to your company. Access to these applications is over the Internet, and maintenance of the applications is done by the ASP, not your own IT staff.

This is a very attractive possibility to many companies, especially those that are undergoing rapid growth or other changes. Rather than purchasing and deploying all those software applications to individual PCs, a contract would be signed for the needed capabilities and the PCs would get their applications as needed over the Internet.

Actually implementing this concept is not so easy. Fortunately there are some successful examples, as Web hosting and e-mail services can be considered to be ASPs. The big problem is that most of the desktop applications businesses use run on individual PCs. It can be difficult to get them to run in a more distributed environment.

Sun Microsystem's main purpose in acquiring the Star Office productivity suite was to get the Web enabled version designed to be served over networks. Some startup ASPs have already adopted Star Office, since it won't be as easy to deploy Microsoft Office as an ASP service. Star Office has now been released as Open Source software under the name Open Office.

Microsoft has long drooled over the concept of software as service to keeping revenue flowing without having to develop "upgrades" all the time, but they didn't see it happening quite this way. They have announced they will be the ASP market leader (to discourage others), but it remains to be seen how well they can adapt their single user PC based software to this new environment.

Software that is not Web enabled can be served up over the Web using products like Tarantella and Citrix Metaframe. Both will soon release versions aimed specifically at ASPs and their unique needs.

One of the first major markets being set up for ASP is ERP (Enterprise Resource Planning) software. This sort of software (provided by SAP, Baan, PeopleSoft and others) is extremely expensive and difficult to deploy. If it can be implemented as an ASP service, many more companies would be able to take advantage of it.

Expect to see ASPs promoting their services to small business (and even individuals) in the very near future. Use caution in adopting their services, nobody knows how this is going to work yet.

A major downside of the ASP concept is that, should you get in trouble and fall behind on your ASP payments, your business software and data will be held hostage. If the ASP cuts you off.

Another downside is the posibility of ASPs selling information extracted from the business data they host. There is evidence this is already being done. Since it would be extremely difficult to prove, and since the ASP model has not yet proven profitable, it is a strong temptation for the ASP to make use of your data.

Security is also a significant concer. Will your ASPs keep your data secure from outside raiders, and what will be the liability be if their security fails?

What happens to your business if an ASPs you depend on folds up? We already have the case of a major e-commerce design and hosting service, Pandesic which created and ran on-line stores for many mid-size retailers. The service had the financial backing of two industry heavyweights, Intel and SAP, so it had the full trust of its customers. Then the backing companies decided the profits weren't going to be high enough so they just shut it down.

If an ASP shuts down involuntarily, your business data may be seized by creditors as part of the assets of the ASP. In cases like this it can be months before the courts release assets to their proper owners. Will your business still be alive by then.

All in all, we can see the logic in using ASP services for a startup or very fast growing company where setting up and expanding in-house IS services would be a serious destraction. You can get a lot more a lot faster from the ASP. Trusting ASP services for the long haul is a lot less logical in our opinion.


Next:

12. ERP Disadvantages for organisation or company

14. ERP AS Application Service Providers (ASP)

15. ERP is Online Transaction Processing (OLTP) software