Free asp application

LIKE GEOLOGY ON speed, IT outsourcing has undergone several distinct evolutionary stages, reflecting the mood of the industry it serves. The technology-centric outsourcing of the 1960s and 1970s focused on the service bureau; the 1980s and 1990s proved far more business-centric, with the emphasis on client-server networking. The next few years will see the widespread offering of all kinds of applications, delivered in "per seat, per month" packages over WAN connections, notably over IP-VPNs and the public internet.

Rollout of application service provision (ASP) -- a service from a third-party company providing software over a WAN link to enterprises who rely on the provider for the storage, security and availability of applications that would otherwise sit on the desktop of LAN server -- hit the buffers in late 2000. The popping of the dot.com bubble, the subsequent loss of commercial confidence in communications followed by the events of 11 September, swept aside what Phil Wainewright, founder and consulting analyst at ASPnews.com describes as "the irrational optimism surrounding the ASP model."

RUNNING ON HOT AIR

Running applications from a server hosted in a data centre does not, by itself, offer sufficient benefits to an enterprise, competing as it does with two proven models for the supply and maintenance of applications, namely in-house IT organisations and traditional outsourced IT services. As Mike Valiant, market development manager at IP network builder CommWorks, puts it: "The existing staff who work in either of these environments are not likely to spend much time looking at ASP models, any more than turkeys would vote for Christmas."

And a turkey was how ASP looked, until recently -- all talk and no substance. The initial ASP phase was marked by venture capital-funded start-ups that mostly failed due to wafer thin business plans and little customer focus, offering applications that were not wanted to enterprises that were not adequately web enabled. As Professor Wendy Currie, a director for the Centre of Strategic Information Systems at Brunel University says: "Vendors discussed their value proposition almost entirely among themselves, so that by mid-2001, customers were at best confused and at worst apathetic."

However, the industry seems to have dusted itself off and started over, having extricated itself from what analyst Gartner describes as a "trough of disillusion", recognising that ASP only delivers benefits to certain customers in certain circumstances. In short, ASP works when it is not simply re-locating an internal process to a third-party data centre but offering new services, grounded in and designed for the internet.

As Wainewright puts it: "There is no point in providing Microsoft Office via an ASP model -- it just introduces a communications cost between application and user: a waste of time and money. However, if they want to collaborate, it makes sense to place them in a collaborative environment and that is where the ASP model begins to look more interesting."

VERTICAL MARKETS

Individual productivity tools, such as Excel, are best run on the desktop; many applications are enterprise-centric, involving workgroups best managed in-house. Then there are collaborative applications involving the sharing and exchange of information within and across organisations: at first sight, these are prime targets for an internet-based environment.

Until now, many customers did not want to purchase collaboration tools via an ASP because they saw no real benefits. Nor would they consider outsourcing "mission critical" applications, such as supply chain management or CRM because of concerns about data security. Brunel University research found enterprises are concerned about ASP security but, suggests Professor Currie, it is more a cultural fear than a genuine obstacle: "They mainly have to get their heads around having their data stored off-site. The biggest problem is a lack of education in the potential customer marketplace."

She adds that collaboration tools, such as email and calendar are suitable, but alone are not sustainable to develop an ASP industry, while the biggest enterprise solutions -- CRM and ERP -- may well be seen as too crucial to an enterprise to outsource. In other words, there has to be a compelling business reason to consider ASP: "So vendors are targeting vertical markets, such as legal and retail applications -- specific solutions for specific types of customer."

Concur Technologies, for example, hosts its web-based expense management application to corporate via a private link to the ISP and to individual users over the public internet. The application is thin, with no software at the desktop other than a web browser and no downloads to the client. Significantly, Concur does not position itself as an ASP, but delivering a service via the internet. Simon Nelson, EMEA general manager says: "For customers of 5,000 users or more, there is benefit in hosting the product themselves, but we realised that for smaller enterprises, ASP offered us an effective delivery channel." Customers with as many as 2,000 staff are attracted by the low outlay and lower risk to tackle the mandatory and time-consuming task of company expense claims.

TALKING 'BOUT AN iREVOLUTION

Successful ASP implementations do exist, but stealthily, with little fuss. iRevolution delivered its first ASP solution in 1997. Known back then as a network services agreement, it provided an application on a Microsoft platform for 350 end-users across 30 sites for what is now TMP Worldwide, owners of monster.com, the world's largest recruitment website, iRevolution set up an ASP arrangement, in effect, to design, deliver, own and manage a solution, charged per user, per month, guaranteeing continued investment, availability and performance under a service level agreement.

To keep communications costs to a minimum, iRevolution uses the Citrix Metaframe low-bandwidth thin client -- 25kbps per user -- with each user given a dedicated to a Citrix server at iRevolution's Docklands data centre. As the first organisation to provide a fully outsourced thin client WAN, iRevolution now hosts 30 applications for TMP Worldwide.

Eamus Halpin, CEO at iRevolution says: "Citrix is not a panacea but good for applications not designed for a thin environment, as was the case in 1997. But our success is not based on being an ASP, but on delivering systems integration -- so we tend to call it `software as a service'." A `thin' solution ties the service to the network, so that a user cannot work if the connection fails for an instant. A future alternative is to "loosely couple" the service, so a user continues to use the service whether actually on or offline. A laptop, for example -- with a wireless link to the VPN giving access to the service provider network hosting the applications -- runs Word with a document downloaded from the hosted environment. Should the connection break, the document remains in tact on the laptop and will reconnect when the user has finished working on it.

Aspiring ASPs need to develop strong partnerships with data centre providers and independent software vendors, to offer the customer real benefits over and above an in-house solution -- a value proposition based on price, performance and quality. Halpin points to Microsoft's $10bn investment in .NET, Microsoft's platform for XML web services, which allow applications to communicate and share data over the internet, regardless of operating system, device, or programming language: "I believe it will be a bigger revolution than DOS to Windows." The Microsoft .NET platform aims to deliver what software developers need to create XML web services and stitch them together. "Next generation applications using Microsoft compilers are going to be designed for an ASP model, delivering services to the enterprise network -- many of the via ASP -- in a risk-free, strictly controlled environment. We manage to deliver effectively using a thin client, but just think how well applications will perform when they are build specifically for an ASP environment."

LET THE GOOD TIMES ROLL

After the deluge, the catalysts for an ASP renaissance are the big outsourcing players such as IBM and EDS, who can take control of the concept, enabling smaller, successful outfits such as Concur to surf their slipstream. The global players are approaching the concept with cautious optimism. Neil Barton head of global IT consulting practices, Compass Management consulting says: "The economies of scale appeared if an ASP could sell the same package to users with minimum customisation, but the one-to-many model floundered. Now the whole idea is in flux, particularly when it comes to major applications such as ERP, where the only stable component seems to be human resources -- managing payslips for $4 a month."