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June 19, 2000

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Application Service Providers:
Is There An ASP In Your Future?

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    That's why you'll want to choose an ASP that offers a set of applications that fills both your front- and back-office needs. Because of the ASP market's immaturity, tracking down these soup-to-nuts ASPs is difficult. And when you do find them, they're likely to have more business than they can handle. According to Lorenzo Martinelli, marketing VP for AristaSoft Corp., an ASP that specializes in services to high-growth IT equipment manufacturers, his company turns away 80% of its prospects.

    Our last two points will be the toughest to evaluate in your process of due diligence: Your ASP's integration capabilities and after-sale service are absolutely critical to its long-term success with you. Look closely at each ASP's track record and ask for details regarding its processes. Martinelli says that because AristaSoft has a highly vertical client base, it can implement ERP financials based on a client's response to just 12 questions. While one might wonder if some of those questions have multiple parts, Martinelli's estimate that 85% of his company's clients have common business logic is telling, nonetheless. There is significant value in choosing a vertically aligned ASP if one exists in your market.

    Most, though not all, of the highly aligned ASPs are targeting the high-tech market. But what if your business isn't in a sector so dear to the Nasdaq? Fear not. There are excellent ASPs, such as USinternetworking Inc., that align themselves horizontally, often based on business size and the general nature of sales and customer profiles. Rest assured that you'll have to answer more than 12 questions with this sort of ASP, but you can also be fairly certain that you'll get a better picture of these ASPs' track records. Horizontally aligned service providers are often joint ventures or subsidiaries of organizations that are accustomed to serving their chosen sectors of the market.

    After-sale service is also vital. Most ASPs will perform user administration for you, so you'll want explicit promises on time frames to add and drop users of an application. If you can't count on removing a user's access to your financials in a few hours, you have reason for concern; every now and then, an employee will depart on less-than-amicable terms, and when that happens, you'll want to know that access to the company jewels will be cut off by the time that person has cleaned out his or her desk.

    Most ASPs recognize this and are comfortable promising a quick turnaround for such requests. Harder to obtain are promises on time frames for business-logic changes. If you anticipate significant changes in your business, such as acquisitions by or of your company, this will be a hot button for you.

    Finally, there's the question of thin- vs. fat-client deployment. If outsourcing an existing application carries with it the requirement to maintain the full-blown desktop software, note that this is fine as a transition strategy, but the goal should be to learn to love thin-client access to your applications. Recall the reasons to consider an ASP in the first place: reliability, application-specific expertise, service, and access to applications.

    Nowhere in that list is a mention of outsourcing desktop support, and no ASP concentrates on building a proficiency in supporting desktop applications. Application upgrades will accompany the task of upgrading your desktops, and coordinating that effort flies in the face of the ASP model's efficiencies.

    While reliability and efficiency within your organization certainly constitute an important win, the real gold is in extending new services to your customers. Whether or not your current IT staff has the expertise to maintain front- and back-office applications, it certainly doesn't have the expertise to manage the deployment of front-office services such as E-commerce applications, or back-office functions such as customer-relationship management. ASPs are set up to handle these functions, but doing so efficiently is predicated on the use of thin clients.

    The thin-client model doesn't necessarily mean stripped-down functionality. Using an environment such as Citrix Systems Inc.'s WinFrame and MetaFrame, rich applications can be fairly easily exported onto the Web. Your ASP should be able to handle this if necessary. A bit trickier is the administration of users. Creating an authorization chain-from sales and customer support to your internal IT staff to your ASP-is inefficient, and you'll pay for that inefficiency in your monthly bill. Look for ASPs that offer, or plan to offer, methods for administering your customers' access (see diagram).

    Whether or not your applications require the use of load balancers on the front end or storage area networks on the back end depends on the size of your requirements, but these are the pieces that will make up your ASP-deployed environment.

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