ERP AS Application Service Providers (ASP)

Application Service Providers

Recently the Application Service Providers (ASP) business model is
becoming popular as a way to implement and operate your ERP applications. 

1. An application service provider (ASP) is a company that offers individuals
or enterprises access over the Internet to applications and related services that
 would otherwise have to be located in their own personal or enterprise computers.

2. Sometimes referred to as "apps-on-tap," ASP services are expected to become
 an important alternative, not only for smaller companies with low budgets for information
technology, but also for larger companies as a form of outsourcing and for many services
 for individuals as well.

3. Early applications include:

    * Remote access serving for the users of an enterprise

    * An off-premises local area network to which mobile users can be connected, with a
    common file server
    * Specialized applications that would be expensive to install and maintain within your
     own company or on your own computer 

4. While ASPs are forecast to provide applications and services to small enterprises and
individuals on a pay-per-use or yearly license basis, larger corporations are essentially
providing their own ASP service in-house, moving applications off personal computers
and putting them on a special kind of application server that is designed to handle the
stripped-down kind of thin client workstation.

5. This allows an enterprise to reassert the central control over application cost and
usage that corporations formerly had in the period prior to the advent of the PC.
Microsoft's terminal server product and Citrix's WinFrame products are leading thin-client
application server products.

6. Hewlett-Packard, SAP, and Qwest have formed one of the first major alliances for providing
ASP services. They plan to make Sap’s popular R/3 applications available at “cyber centers“
that will serve the applications to other companies. Microsoft is allowing some companies to
offer its BackOffice products, including SQL Server, Exchange and Windows NT Server on a
 rental, pay-as-you-use basis.

7. Oracle Corporation offers ASP model. They call it Business On-Line (BOL).Oracle launched
this service on October 1999.Oracle expected it to become a significant part of its future growth.
Oracle is perhaps disappointed that BOL has not performed as expected. They business may
improve in coming years though. Probably BOL will never create billions of dollars in revenue
for Oracle,  but it still might become a viable alternative for several customers.

8. In Application Service Provider model, a service provider is establed to host ERP applications.

ERP Applications are hosted in a centralized data center over an Internet/intranet connection.
 A monthly fee is charged.

9. Important considerations under this model are similar to the issues and concerns you would
 have with any outsourcing arrangement:
* You want to make sure the application implementation meets the needs of your business.
* The support expertise of the service provider must exceed the expectations of the users.
* Data center management must be better than your own data center.
* The ASP must provide an acceptable level of security and performance.
* Costs of the service must be reasonable.
10. When the economics of the ASP model is evaluated, you need to compare the monthly
charge per user of the system to the initial investment in software, hardware, support,
services, and the continuing costs of operating your own systems. 

11. Lets say you have 100 users at a monthly subscription cost of $500/user.
The ASP model costs might be $50,000/month and might grow or shrink proportionately
as the business changes. 

12. Compare that monthly charge with a $2 million up-front investment in hardware,
software, and consulting, and add annual direct operating costs of $300,000+ for system
administrator, support, and data center costs. 
Usually you must sign a multiyear deal for the ASP services. However you pay by
month.

Note: - Consider the following advantages and disadvantages when you evaluate
 companies as an Application Service Provider.

Next:

13. ASP - Application Service Provider



15. ERP is Online Transaction Processing (OLTP) software

16. Advantages of the ASP model ( Business On-Line)