Internet applications service providers

Are ASPs right for your business ?

Internet-based e-commerce business activity is growing rapidly and application service providers (ASPs) are the latest resource designed to help you better manage and operate your company. This is the good news, but the bad news is that few business owners are even aware of this new technology.

So, the purpose of this article is to shed some light on these new tools and explain what ASP technology can mean for your business.

According to the ASP Industry Consortium, an ASP is a "supplier that makes software applications available on a subscription basis." Simply put, ASPs make it possible for small businesses to harness the power of software and technology once available only to much larger companies.

Typically, you sign up with an ASP for an affordable monthly fee to use the software to manage your business. This allows you to access ASP processing tools via the Internet at a lower cost than the traditional licensing and using off-the-shelf packaged applications software. Thus, your software costs are reduced and hundreds of hours of costly installation and configuration time is eliminated.

Therefore, this "why buy when you can rent" approach may make good sense for your small business.

Many ASP providers offer a wide range of applications over the Internet, including: accounting, inventory control, forecasting, ordering, pricing, employee and transportation scheduling and payroll services. With an ASP provider, you can reduce or eliminate costly hardware installation, upgrades, and people costs without all the frustrations of in-house processing.

With an ASP configuration, your accounting and other data is simply uploaded daily or periodically via a secure Internet connection to a server hosted and maintained by the ASP. There, your data is centralized in a secure data base where is can be selectively accessed by you, your suppliers and other designated parties resulting in greater efficiency and faster turn-around.

Your data is processed using state-of-the-art software and your reports are downloaded to your home or regional offices, or directly to your warehouses or retail store level.

But a word of caution. In spite of the benefits of ASP processing, the question of security is an important issue and should get a lot of your attention when considering ASP services. However, the question of security doesn't seem to bother as many as you may think. A recent survey showed that only 16 percent of survey participants identified security as an issue.

With advanced firewalls and passwords, the chances of hackers invading your data is greatly reduced. Never-the-less, you need to ask your ASP partners a few questions like, "How do you guarantee our data's security?" "What encryption, firewall, and authentication procedures are used and what is your company's security track record?"

Further, in considering ASP services, you may want to ask yourself and your ASP provider some additional basic questions before proceeding. These include:

"Would I prefer to spread out my costs and improve my cash flow for hardware, software, support, and upgrades over several years through an ASP provider, or face them up front with a traditional in-house installation?"

"Do I see present in-house staff turnover and staffing costs as a problem that is adversely affecting my business?"

"Will my ASP provider guarantee reliability, guarantee minimum downtime, and assure maintenance and reliability issues."

"What happens if my ASP either fails financially or is acquired by another ASP?"

"Who will own what data and what software and what assurances do I have for continued service should the ASP terminate its services?"

And finally, "What customer references are available from the ASP and is it in a healthy financial condition?"

Finally, if you've done your homework well and you get the right answers to your questions, then its time to decide if ASP services are right for you. If so, then you might want to consider testing the water with only a partial and gradual conversion of applications to ASP processing. Then, if things go well, you can move toward a complete applications conversion, but only after your ASP has proven it can get the job done.

Robert E Bunn is an acquisition and management consultant in Cape Girardeau. (335-3351 or email at rbunn@igateway.net)