ASPs: A State of the Market: Page 3

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In fact, after conducting continuous research on the ASP market for more than a year, Blatnick concludes that not much has changed over the past 12 months. The ASP users we survey are sticking with the same kinds of applications and continue to have the same reasons for using ASPs, he says.

Lessons Learned about Application Service Providers
  • Expect glitches in the first application rollout.

  • Like any organization, an ASP can lose key technical people and users may suffer the consequences.

  • Be prepared to be aggressive with the ASP about performance measurements that go into the service-level agreement.

  • Being clear about your expectations in the SLA pays off, i.e., what's fundamental, what's important vs. what's nice to have.

  • It's important to require routine results and reporting of services, downtime, and project changes.
  • A Work in Progress

    Clearly, the ASP market is quite young and in a transition period. So it's not surprising that Zona's research indicates users continue to have issues with the market. For example, Blatnick says most applications delivered via the ASP model are existing applications that have been Web-ified with a browser front end. They weren't necessarily created as good Web applications, he says.

    This leaves room for improvement on many fronts, namely, performance, reliability, and security. One application category where Blatnick says this is particularly prevalent is in the ERP space. Perhaps the reason for this is due to the complexity of the application. But we do see vendors working on this on a module-by-module basis, he says.

    According to recent Zona research, unacceptable application performance and security are the top two concerns of ASP customers. Just ask Physician Practice Partners LLC (PPP), a Springfield, Mass.-based medical group. During a time of transition about 18 months ago, PPP turned to TriZetto Group Inc., a vertical ASP in Newport Beach, Calif., that caters to the healthcare industry. TriZetto provides multiple services to PPP, including billing and collection; basic software and hardware support for three of the medical practices' systems, i.e., practice management, financials, and pharmaceutical; managed care database and analysis; onsite personnel and equipment, i.e., PCs used in the practice; and network design.

    We were half a year into our contract when our ASP lost a key person in one product area and we haven't been satisfied with the performance in this area since, says Doug McKell, CEO at PPP. The company signed a three-year contract with TriZetto, but officials will not say what they pay for the service. Fortunately, the SLA drawn up between the two parties addresses remedies for situations such as this one and, as a result, McKell says he'll renegotiate his contract with TriZetto. He adds PPP is not ready to bring the applications back in-house, and it will stay with the ASP model for now.

    It's still user beware, though. Not all vendors calling themselves ASPs offer SLAs, according to IDC's Mizoras. However, many do, and all of the businesses Datamation spoke with cited a solid SLA as part of the criteria for vendor selection. As the ASP market matures, Mizoras expects SLAs to be a great differentiator. Among the things SLAs cover are network uptime, support response times, and security.

    For B2B e-commerce solutions provider Identrus, whose business depends on its ability to secure transactions in a PKI infrastructure environment, security was at the top of its list when it went looking for an ASP. It was critical that we maintain the integrity of our customer database, which contains information on the PKI infrastructure; the nuts and bolts of our business, says Tuttle. To that end, Identrus had security written in is a core part of its SLA with USi.

    Despite a lot a bumps in the road and the need for the ASP market to solidify in terms of both vendors and business practices, an increasing number of organizations of all sizes are kicking the tires. For many, the ASP model is a compelling one. PPP's McKell says being an ASP customer has been a positive experience for the medical group. Using TriZetto gave PPP's internal IT organization time to evaluate where it was and where it needed to go.

    Even areas of customer concern, such as security and performance, are not barriers to choosing or planning to choose an ASP, Blatnick says.

    One of the lessons we learned about being an ASP customer is to take it slowly, write down what we need, where there are glitches, and work it out with our vendor, Identrus' Tuttle says. None of the issues we've had thus far has been a show stopper. //

    Lynn T. Haber reports on business and information technology from Norwell, Mass.


    The Wireless ASP

    While ASP usage trends have remained somewhat consistent, according to Zona Research Inc., of Redwood City, Calif., it doesn't mean that some companies aren't breaking the mold. Take United Parcel Service of America, Inc., a global package distribution company that transports more than three billion parcels and documents annually.

    An innovator in the use of technology, Atlanta-based UPS wanted to offer customers the ability to access shipping information from a wireless device. The company selected Air2Web Inc., also located in Atlanta, and in September 2000 it launched the application. UPS offers the wireless application capability for free as a customer value-add. The company won't comment on what it costs to outsource the application, but officials do say UPS had no interest in hosting the application in-house.

    "Despite large numbers of companies calling themselves wireless ASPs, this segment of the ASP market is very immature."

    According to Robert Conner, director of interactive marketing at UPS, customers using a number of wireless devices, including one-way short message service (SMS) phones, two-way SMS phones, WAP devices, Palm Pilot VIIs, and Blackberry pagers, can access four different types of shipping information from the company's back-end systems. These include package tracking information, time in transit, drop off locations, and a quick cost calculator. Reception to the wireless application has exceeded our expectations, Conner says, noting that thousands of mobile professionals have used the service to date.

    Like other companies that turn to ASPs, UPS decided to have Air2Web create and maintain the application because it knew the work wasn't its core competency. However, before partnering with Air2Web, UPS did a thorough search for potential vendors, which included looking at the breadth of wireless functionality each ASP offered, the stability of the company, and its background, size, expertise with wireless technology, investors, customer base, revenue stream, etc. UPS wouldn't comment on the other vendors its evaluated.

    The way it works is, UPS provides four APIs for data feeds to Air2Web, which customizes and formats the data so it is presentable to the end user and then sends it through its carrier network to the end-user device. Today, UPS offers its U.S.-based customers the wireless application as a value-added service. However, the company has bigger plans for using wireless technology. We want to add functionality to the application where we can push out information to the customer, information that they'd be willing to pay for, as well as expand the wireless application internationally to customers in Europe, Asia, Canada, and Latin America, Conner says.

    Greg Blatnick, vice president at Zona Research Inc., notes that despite the large numbers of companies calling themselves wireless ASPs,'' this segment of the ASP market is very immature. While he wouldn't comment on any specific providers, he did acknowledge that, there have been singular wireless ASP applications that have been very successful. --L.H.


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