ASPs battle it out

ASPs battle it out

Application service providers (ASPs) are creating a huge buzz in the software industry by taking the client-server relationship a step further. Instead of buying an application and installing it on your server, you can buy access to the same software package over the Internet. This reduces hardware, deployment, and maintenance costs. Among the hosted applications gaining popularity are procurement, supply chain, and marketing software.

ASPs currently account for approximately 2 percent of total software sales, and some analysts predict that as much as 50 percent of software sales in three years' time could come from the ASP market. Part of the reason for this popularity is the types of application that companies can outsource using an ASP. Procurement, marketing, back-office finances, and supply chain applications are leading the ASP trend. This is because they're used by big companies that would rather hire the software and pay an ASP to look after the server space, backups, maintenance, and any regular upgrades the software might need. It also relieves the company of the need to provide a helpdesk or online help facility for the application. All of these services can be included in the rental price. The company needs only to supply the Internet connection.
 

ERPs on the Internet

Companies that provide enterprise resource planning (ERP) software, such as SAP, Baan, PeopleSoft, and Oracle, are moving into the ASP market, and each is trying to make its mark. Several of the ERP suppliers had an unsuccessful year in 1999, because most companies put major operational changes on hold in order to prepare for Y2K. Most businesses now want to transfer at least some of their operations onto the Internet, which provides the ERP suppliers with the impetus to develop web-friendly versions of their software, and, in some cases, to devote entirely new offshoot companies to the development of ASPs.
 

What to look for in an ASP

Any customer considering an ASP needs to look at all three aspects - the application, the service, and how the service is provided. Many of the newer, smaller ASPs provide the application software and rely on bigger partners such as AT&T to provide the server space and maintenance. But companies such as Oracle or SAP have the facilities to provide a complete package.

The advantage of using an established ERP supplier as your ASP host is that they can provide plenty of server space, and that their products are already tried and tested. Instead of starting from scratch, they can repackage their existing products and rent them to customers instead of selling them. From the customer's point of view, this means spending less time and taking less risk than a full installation of a typical ERP would involve. However, it does mean that the customer needs to have fast and reliable web access, which can mean significant investments in new hardware. For example, Oracle's ASP recommends the following optimum configuration:

• Pentium? II, 266 MHz processor

• 64MB of RAM

• Microsoft? Windows? 95, Windows 98, or Windows NT?

• standard Java-compliant browser such as Netscape? 4.x or Microsoft Internet Explorer 4.x

Oracle Business OnLine

Oracle is so determined to penetrate the ASP market that it has created a new division, Business OnLine?, to handle its ASP strategy. The Business OnLine hosting service provides a separate, secure server for each customer's database, which is backed up regularly. The access rights to the server are controlled by the customer. It also provides telephone support right down to end-user level, all included in the fixed fee.

Business OnLine hosts applications from Oracle's Release 11 range, including manufacturing and distribution applications for the company's operations, and financial, human resources, and project accounting applications for the company's infrastructure.

For more information about Oracle Business OnLine, click here.
 

mySAP.com application hosting

SAP's hosted solution is an extension to the existing mySAP.com? service. You can create a customized ERP solution on the SAP web site, and then choose to implement your ERP in the traditional way, or you can outsource to an ASP. SAP allows you to choose your own ASP to host the application - for example, you might have a relationship with a particular ASP already. Alternatively, you can choose SAP's We Host Your Solution Online service, in which SAP provides you with a choice of service providers from its Service Marketplace.

We Host Your Solution Online offers you a choice between creating a virtual private network (VPN) or accessing your application over the Internet. In either case, the end user needs no special software except a browser, and receives full support from SAP. This solution offers a full range of services from SAP's R/3? release.