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First came the PC. Along with it came DOS. IT (Information Technology) soon followed, along with database and countertop systems, and now there’s the Internet. Once-unfamiliar terms became common as they changed the way we conduct business.
Well, get ready for another one: it’s been out there for years, and now it’s breaking out in a big way. It’s ASP: application service provider, and it’s based on a radical idea — renting.
An ASP is an Internet-based company that specializes in providing the software-management tools businesses need to survive — everything from accounting and payroll to inventory-management programs. The difference is, you rent them; you pay a fee based upon time or usage and enjoy the same advantages your customers enjoy when they rent from your store, plus many others.
For instance, you can use programs from any computer with Internet access and a Web browser. That means that not only is the type of computer irrelevant, but so is your location. You don’t have to worry about upgrades — they’re part of the service — or maintenance issues. Since they’re designed to work with any Web browser (e.g., Internet Explorer or Netscape Navigator), the programs are usually elegantly simple in design and easy to learn. That often allows your business to continue through the changeover between software applications without skipping a beat.
What’s more, ASPs tend to level the playing field between small businesses and huge conglomerates. You say you don’t have the resources to support an IT department and develop your own database management and customer-service tools? You don’t have the capital to invest in an expensive, proprietary countertop system?
Then rent instead, and enjoy the same advantages as large corporations.
And, perhaps, most importantly, renting software gives you the flexibility of changing your mind: with less than a small fortune invested in software, you’re free to move on to a better or more inexpensive system.
But you’re not just renting a software application; you’re also hiring an IT partner to look after your computer needs. The ASP handles all the problems of installing and maintaining software, fixing bugs, upgrading and managing your database without the huge costs involved in maintaining an in-house IT department — something well beyond the means of most small businesses.
But even large businesses with greater resources can benefit from using an ASP. According to Forrester Research, renting can save between 30 and 50 percent over the traditional method of buying site licenses.
Since ASPs work through the Internet, you must have a reliable and fast connection in order to claim the advantages ASPs have to offer. Many large businesses can afford a T1 line or ISDN access, but small businesses frequently cannot, and some areas do not yet offer fast and affordable cable or DSL access. But, just as ASPs continue to gain popularity, high-speed Internet access becomes more and more common across the country.
Some businesses may be leery of hosting their database off-site due to security and ownership issues, but most ASPs have far better security and backup capabilities than the average small business. ASPs typically use multiple disk arrays with the same data resident on every disk, and their backup procedures are usually much more sophisticated than those used by businesses that don’t specialize in managing digital information.
What’s more, ASPs have more at stake when it comes to viruses and hackers, and they have the expertise to combat them. In all, it is like putting your money in the bank instead of under your mattress.
There are already more than 300 companies in the ASP market, ranging from small Internet startups to computing giants such as Oracle and Microsoft. Altogether, they are competing for slices of an industry projected by the research firm IDC to hit $2 billion in revenue within the next three years.
You are probably aware that there are many Internet companies focusing on the rental industry. Each has its own spin on what’s best or what’s next. (See Rental Management, May 2000, page 26.) Some are looking for a percentage of your incremental business; others are focused on monthly fees for services provided. The important thing to remember is that the Internet is here to stay. It will likely change the way we all do business. |
