Things to Consider
Key challenges to the success of ASPs revolve around the network bandwidth to let the applications perform at a necessary level for consistent, acceptable service-level agreements and 24×7 availability. While most companies are still undecided on the future, the companies that are providing robust integrated application suites seem to be gaining the momentum.
Will ASPs become the way of the future? This is still the subject of many debates. Voicemail supplied by the telephone company is the equivalent of outsourcing your answering machine service, for a monthly fee. Many consumers feel very comfortable with an outside organization managing this mission-critical service. Nonetheless, there are still questions about control and security of CRM data. Many businesses do not feel comfortable housing mission-critical data at some ASP site somewhere, and prefer instead to have that data located at the company site.
Overall, the ASP market is still forming. Vendors are still working on service definitions and priorities, network availability, and bandwidth issues as well as partnership strategies.
According to a recent ASP Industry Consortium survey, 56 percent of companies currently renting business applications from an ASP have less than 500 employees. The survey indicates that small to mid-sized companies still form the largest market for the ASP model.
Renting applications seems like a logical solution for many businesses. However, time will tell. The promise of computing as a utility has been touted for several years now.
Companies deploying CRM might consider ASP as a potential software delivery method. But, be forward-thinking in terms of your business model. To date, ASPs have not really addressed requirements like call centers or customer interaction centers. Does this mean that your organization should outsource only half of your CRM application, if you need call center functionality as part of the CRM system?
Another issue is that there are varying levels of willingness among ASPs to integrate their applications with your existing legacy applications, ranging from import/export integration to more complex integration capabilities. Do not be surprised if an ASP informs you that you have to manage your own legacy systems. Again, does this provide a good business case if you still have to have an IT department just to manage your legacy? If you do interface your legacy applications to the ASP, third-party ASPs' mixed-bag approach to application hosting makes it unclear where accountability lies. So, pay attention to what integration services the ASP will provide.
Whereas some ASPs use co-location facilities and buy bandwidth from network carriers, other ASPs opt to control every aspect of their service. This impacts the important issue of the ability and willingness of ASPs to offer varying levels of SLAs. The SLAs offered by the ASP generally cover only the services over which the ASP has direct control. In general, the SLAs cover availability, functionality, and performance, from the applications to the network.
The SLA should include, but not be limited to:
Purpose of the SLA
Description of service
General payment terms
Duration of service
Termination conditions
Legal issues such as warranties, software ownership, etc.
Start date of service indemnities, limitation of liability, etc.
Installation timetable
ASPs also are struggling with the customization issue and this does not appear to be going away anytime soon. Shared services always means more generic offerings. However, remember that many companies unnecessarily customize applications. To help address the customization issue, ASPs also are turning to more configurable solutions that customers can tailor to their needs without doing expensive source code customization.