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Opinion: ASP redux: It's about service

Opinion: ASP redux: It's about service

When they first appeared about four years ago, ASPs were going to change the way companies buy and use software. They were going to be fabulous, remember?

Whatever happened to all those application service providers? When they first appeared about four years ago, ASPs were going to change the way companies buy and use software. In the process, they were going to make corporate data centers difficult to justify, if not obsolete. Back then, ASPs made outlandish claims that they could provide robust, enterprise-level software and services at a fraction of the typical maintenance and life cycle costs.

They were going to be fabulous, remember?

But stock market reality -- and the sinking of marketing budgets -- have muted the ASP message, forcing ASPs to become more focused on their capabilities and less defensive about the virtues of joint operations with a corporate IT center.

Yet, with many once-unassailable IT budgets under siege, there's reason to revisit the cost-saving benefits of employing an ASP. For example, if you're spending 80 percent of your IT budget maintaining existing systems, you can't invest heavily in projects that could generate new business. An ASP might be able to free up some of those maintenance dollars.

Good candidates for shifting to an ASP are human resources and payroll systems or a sales automation program. And given the current competitiveness among ASPs, your deal should include software management as well as hardware services. Many ASPs offer packages that include software from Oracle Corp., Siebel Systems Inc., SAP AG and Ariba Inc., and you can get specific service-level agreements that call for financial penalties and technical accountability when things go wrong.

ASPs have also dropped their anticustomization positions. They discovered that there was no plain-vanilla installation for each customer. Now, deliverables such as reports can be generated on the fly via the Web.

George Kadifa, chairman and CEO of San Carlos, Calif.-based ASP Corio Inc., told me that the value of a company like his is most obvious when software becomes more complex. An ASP's real value, then, isn't in its ability to deliver generic software packages. Rather, the value is in the ability to deliver consistent standards of operation, expertise and customer relations to a business in specific areas. If an ASP lets a cookie-cutter approach to IT drive its business, it's probably not a lot of use to you.

The issues of visibility and control are also being addressed via Web-based technology. ASPs now offer an on-demand, secure environment with views of hardware and software assets, as well as real-time usage data and renewal information.

But the best way for ASPs to regain their lost luster is to demonstrate that they provide "service" and not just an "application." -- Computerworld (US)

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