ABCs of ASPs: cutting costs and headaches by outsourcing applications.

• Author: Kaelble, Steve
• Position: Information Technology - Application service providers - Brief Article

Application service providers, or ASPs, offer a simple concept. Instead of installing a software application on each and every individual machine that will be using it, ASPs keep the application on a central server and allow users to access it across the Internet or a dedicated data line.

In some cases, the application loads onto the user's machine and runs there; in others, it runs on the application server, making the user's machine almost a "slave" terminal. And in a growing number of ASP arrangements, the application is Web-based, running on the application server but giving users access through common Web browsers such as Netscape Navigator or Microsoft Internet Explorer.

Proponents say it's only a matter of time before practically every business will be using some ASP services. Truth is, they were saying that a few years ago, too, right before the dotcom crash brought a lot of ASPs down with it. The ASP business has "died off a little in the last six months to a year," says Jack Wilson, president of The eBiz Shop in Indianapolis. Still, the latest estimates from industry analysts suggest the ASP model is not dead but simply delayed. Marketresearch firm IDC expects that ASP industry sales will hit $20 billion in 2006; before the tech shakeout that sales milestone was expected as early as 2003.

The key to success for ASPs is finding the right niche, according to Wilson. It might not be right for every application used by every company, but "it will be a good model for the right application. It's very efficient for certain things," he says.

Database management is a major computer use that's migrating to ASPs, according to customer surveys by the Information Technology Association of America. Customers also are increasingly using ASPs to handle accounting tasks as well as e-mail and office-productivity functions.

A new ASP product called The Edge is one of the latest offerings from The eBiz Shop. "It's a different approach to the e-mail blast campaign," Wilson says. Clients use the service to store customer contact information, including e-mail addresses, as well as information about how each customer prefers to be contacted. When preparing a marketing effort, the client can use the program to select appropriate customers and contact them en masse via e-mail. For those who prefer to be contacted by mail, the program generates a mail-merge list.

Wilson can list several advantages of using an ASP model for the contact-management system...