Extending the Reach of Applications

In order to be competitive, enterprises are being forced to redefine their business strategies. As a result, Application Service Providers (ASP) are quickly taking root as an active channel for delivering applications ranging from group-ware applications, enterprise resource management (ERM) solutions, customer relationship management solutions (CRM) and e-commerce applications.

Similar to telephony, ASPs are changing the IT application deployment paradigm, delivering applications as a service to any enterprise for a subscription-based fee, and minimising the risks, costs and complexity of an in-house deployment. According to the ASP industry consortium, an ASP "manages and delivers application capabilities to multiple entities from a data centre across a WAN".

Soon, access to software applications will be as easy and ubiquitous as the telephone system. The ASP infrastructure will include the software, hardware and network connections to deliver service-based applications on a per user, per month or per transaction basis.

So, how should an enterprise select an ASP? Firstly, identify an ASP that offers services that matches the enterprise business needs. Secondly, one should examine the service provider's service level agreement (SLA) for specific quality and performance levels which details the nuts and bolts of day-to-day services such as response time, ownership of data, bandwidth, and application as well as data backup services.

Many of the reliable, scalable and high performance Unix servers, business applications such as the CRM and ERM, and high end security and redundancy have been out of reach for many small and medium enterprises (SME). This is because they are too expensive to acquire and need specialised skills to customise and deploy. Further, enterprises are faced with the need to upgrade the hardware and application every 12-18 months.

The ASP hosting model extends predictable, controllable and scalable cost structure to SMEs due to per-user or transaction monthly fee structure while requiring no up front capital investment for acquisition, deployment and change management. Thus, SMEs subscribing to ASPs can quickly achieve parity with larger competitors.

In selecting an ASP, enterprises should look into the following:

One of the key aspects of ASP is the transition to the thin client environment and server-based computing where the desktop hard drives will be replaced by thin clients such as the Sun Ray clients from Sun Microsystems. These thin clients can be driven by powerful Unix or NT platforms. Thin clients also ease the hassle of desktop and application deployment management and therefore reduce the need for MIS resource.

Time to deploy application will determine the ability of an enterprise's time to market its goods and services. However, ASP hosted applications require significantly less time to deploy and can be easily scaled to meet business expansion. In essence, ASPs enable organisations to:

One of the early entrants to the ASP market was FutureLink, a pioneer computer utility company. In partnership with Onyx Software, FutureLink allows enterprises to outsource the deployment, operation, maintenance, training, technical support and IT staffing for Onyx's ERM solution.

Another example is Malaysia-based BizTone.com, which delivers its BizTone Express Financials, an entry level Web-based financial and accounting solution for SMEs, through an ASP model. In Singapore, SpaceDisk, powered by Sun's high-end servers, provide the infrastructure for application hosting while enterprises such as Wiz Office, ABi Asia and Symix are also positioning themselves as ASP players.

However, the take-up rate of ASPs service outside of the US has been relatively slow. Management is uncomfortable about delegating the upkeep and hosting of sensitive corporate information to outside sources. ASP proponents argue that the data is safer in the hands of experts who know how to manage high redundant datacentres.

Others argue that ASPs are too far ahead of the infrastructure and network bandwidth and that the data intensive communications between the central host and the network of customers can lead to potential delays during peak hours. This is a valid observation. Nevertheless, advances in telecommunication technologies like DSL, ISDN and other infrastructure improvements are quickly reducing bottlenecks in the network.

Another perceived fear of outsourcing is that IT departments may become redundant but taking into account the global shortage for IT skills, ASPs would more likely serve to alleviate the skills crisis. One fact is apparent though, ASP services are a good fit for Asia's tight technology resource environment.