Backup & recovery: the killer app for ASPs.

• Author: Cramer, Bob
• Position: ASPs - Application service providers

The ASP model in general has not lived up to its promise -- except for one shining exception: backup and recovery service providers. Unlike other ASP offerings, in this case, having a remote service provider is actually an advantage.

Measuring the return on investment of information technology (IT) initiatives has always been a difficult proposition. Large upfront capital expenditures, combined with extended deployments and often difficult-to-measure results, require financial executives to make at least a small "leap of faith" when justifying IT budgets.

The application service provider (ASP) model promised to improve this situation. By "subscribing" to applications over the Internet for a regular monthly fee and eliminating the costs associated with deploying and maintaining applications in-house, the ASP model seemed like a "can't miss" proposition for reducing IT costs without sacrificing IT effectiveness.

However, the ASP model has not taken off. On the service provider side, the large upfront capital expenditure required to launch an ASP operation, combined with the relatively low monthly subscription fees, have made it extremely difficult to turn the ASP model into a profitable business proposition. On the end-user side, giving up control of mission-critical applications can potentially cause disruption to key business processes. These factors and tighter capital markets have slowed ASP model adoption.

There is one shining exception to this rule: online Internet Protocol (IP)-based backup and recovery service providers. These service providers give companies the ability to use the Internet, on a subscription basis, to store critical data in a secure, remote location. Backup and recovery is ideal for an outsourced solution, because while essential to every business, it doesn't provide a company a strategic advantage -- only a strategic disadvantage if not done well. Therefore, it makes little sense to expend scarce internal resources administering to it. Furthermore, there are inherent advantages to online backup and recovery services: namely, should a disaster occur in your business, you want all of your data to be located in a secure remote location, rather than within your own building. So, unlike other ASP offerings, having a remote service provider is actually an advantage when it comes to backup and recovery. Indeed, it is thought of by many as the "killer app" for the ASP model.

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