Rent an app and relax

Sunburst Hospitality, along with a handful of other companies, is hoping to catch that break by working with application service providers (ASPs), an emerging class of players offering companies the option of renting applications run off-site at the hosting provider's data center that are accessible via dedicated leased lines or over the Internet through a browser. The monthly fee, which varies depending on the specific requirements of the installation and the number of users, covers the hardware, software, and network infrastructure to run the systems along with the personnel and consulting support for management, configuration, and maintenance.

ERP applications currently make up the bulk of the ASP offerings, although there are datamarts, electronic commerce, customer relationship management, salesforce automation, desktop productivity, human resource, supply chain, and specialized vertical applications coming to market, with new entrants being announced on a regular basis (see "Who's hosting what").

Where ASP fits in

WHO'S HOSTING WHAT? The players and the applications they host. This list is not comprehensive. BizTone Com. BizTone Financials Corio Inc. PeopleSoft Electronic Data Systems Corp. SAP AG's R/3 FutureLink Distribution Corp. Great Plains Software Inc.'s accounting package Onyx Software Inc.'s Customer Center Applix Inc.'s Anyware Office desktop productivity software Applications for the oil and gas industry IBM Global Services, a division of IBM Corp. J.D. Edwards & Co.'s One World Great Plains Software's accounting package Oracle Corp.'s Business OnLine All Oracle applications Usinternetworking Inc. PeopleSoft

ASP deals--which typically span three to five years and cost anywhere from a couple of hundred dollars a month per user up to $1,000--are often significantly less expensive than creating the technology infrastructure and hiring the IT talent to run the systems internally. Along with a reduced initial investment, companies can leave their IT work to someone else, freeing them to concentrate on core competencies. Finally, handing off the implementation and operations to a highly skilled third party is also a way to get complex software into production much more quickly and with the potential for easy scalability.

"The proposition for users is you don't have to build your own computing any more; it's delivered to you out of the wall the same way as the telephone and electricity come to you," says Phil Wainewright, editor and founder of ASP News Review , a specialty newsletter and Web site based in London, which covers this emerging area. "The ASPs are saying, 'we'll take care of all that hassle ... for a fixed, predictable, monthly fee.'"

But there's no proof that the ASP model will be as hassle-free as promised. Most vendors are just unveiling their offerings, and early users are only now starting to move out of the pilot stage and go live with hosted applications. That means there are still questions about performance, system availability, and security, as well as uncertainty over the long-term viability of some of the ASP players, many of which are startups.