Whenever I talk to small business people, I hear a similar refrain: “All I seem to do is sit at my desk sorting out problems,” then they tell me. “I never seem to have time to expand the company!”
A translation of this cry for help is that most small businesses spend more time than they want to fixing problems and dealing technical glitches, rather than forging ahead.
Technology is a common source of those frustrations and problems. And, of-course, the more complex the technology, invariably the more time spent sorting out problems with it.
Technology’s role as a source of frustration for businesses has seen the re-emergence of an idea called the “application service provider” (ASP) model of software delivery.
The idea is not rocket science: an ASP provides business applications that you access over the Internet, instead of the more traditional software model where the application is installed on your server or PCs.
A simple way to consider ASPs versus traditional software is with traditional you manage your software. Working with an ASP, they manage it.
By applications, I’m talking about programs like an accounting package such as MYOB or Quicken, a customer relationship management (CRM) program or even enterprise resource planning (ERP) package. All the stuff you need to run your business.
So how does an ASP work? One of the other names for the idea offers a basic explanation. Some say ASPs provide “Software as a Service” or “hosted” applications. Either description is useful because it describes the fact that all of the applications and the data you create are stored on the host company’s servers, which are very secure. You turn the software on and off as you would a tap.
Your power connection is another useful metaphor: you pay only for the electricity you use. The power company makes sure the network keeps running and you never need to worry about it!
ASPs are the same. You effectively rent the application from an ASP who look after all upgrading, maintenance costs, and the technical headaches. This can provide real total cost of ownership advantages compared to running your own kit.
Businesses can use the application from any computer with an Internet connection.
ASPs aren’t a new idea. The history of online applications and ASPs is one of much promise, big flops and until recently very little delivery.
However with a new emphasis on the small to medium sized companies, faster, more customisable applications and swift implementation the major ASPs are flourishing.
Their comeback has been helped by the easy availability of well-priced broadband Internet connections. As long as you have an Internet connection, you can access all of your data and use the system exactly as you would sitting at your desk.
The fact that some companies have decided to operate as ASPs from the outset helps too. The first wave of ASPs saw companies try to take conventional applications into online applications, a feat akin to turning a sedan into a four wheel drive.
Of course nothing is that simple. An online application needs to be developed from the ground up so that the businesses that use it can customize it in the same way they use it – over the internet – instead of having to make major modifications.
The result is that today’s ASPs offer software that offers really simple customisation that lets users change their CRM systems, for example, to reflect different marketing campaigns, with a few clicks. This just isn’t possible with in-house software.
The ASP model is also about economies of scale. ASPs operate a bank of servers that serves many customers. By simply sharing the cost, companies can have access to a more advanced and robust product for less the cost of purchasing a server for themselves.
This also means that ASPs only have to update one server – any changes to the application, affect all the customers. All software has bug fixes and needs to be updated. With an ASP this is part of the service, as opposed to something handled in-house. Any upgrades are automatically passed on to customers rather than the IT department. This means ASPs can react quicker than traditional software.
Perhaps the best way to tell that the ASP sector is hot is to look at vendors jumping onto the bandwagon. Just about every major player will have some form of hosted application in the market in the near future. Microsoft recently announced announce Office Live - an online version of Office - along with a hosted CRM application. SAP, Oracle, Sun Microsystems, Salesforce.com and NetSuite are among the other big name hosted application players.
For companies such as Microsoft this is a major shift from their established business model. After all Microsoft make the majority of their profit from selling discs.
Chris Dobson, general manager of digital marketing sales and trade marketing for MSN International, a Microsoft subsidiary recently described the change in Microsoft’s thinking. “All of a sudden you are entirely independent of that machine,” Dobson said. “The way that we see the future going is that wherever you are … whichever device you pick up as you leave the home, it will have everything you need on it. That’s a major, major change to the way that Microsoft does business.”
So, what is an ASP like to use?
Almost exactly the same as traditional software, thanks to recent advances in web browsers that mean pages can load quickly and you aren’t left with screens of white-space.
Broadband is one of the keys to successful ASP adoption. ASP vendors may tell you a dialup connection will work. Don’t go for it. If you are considering switching to online applications get the best broadband service you can.
Speed is everything to online.
Another concern companies have when looking to online applications is privacy and security. Both are essentially the same concern. How safe will my data be?
Simply, a good ASP will guard your data much better than you could ever hope to. It is their business to do so, just as it is your Bank’s business to store cash.
This isn’t to say that ASPs don’t have their own challenges. Broadband connections can fail, virtually leaving businesses stranded. There are backup options and off-line systems. However my advice is to negotiate a very good service level agreement with your ISP and ASP to make sure you feel comfortable working this way.
As with any software purchase, do your homework.
Another tip is to make sure your data is readily transferable should you want to change ASPs or move your data back in-house. A good ASP will have no problems with this.
One thing is for certain, the ASP sector is alive, well and growing. Whilst ASPs will not suit every business, they are definitely worth considering for most.
