ASP Selection Process

By Dawn Marie Yankeelov

Choosing to outsource part or all of your IT needs through an Application Service Provider can present a daunting task of now reviewing more than 630+ such named products worldwide. And, if you really want to be relatively thorough in your competitive intelligence you can visit The ASP Consortium website, a not-for-profit advocacy organization, (www.allaboutasp.org) and click on each member link. However, there is a less time-consuming methodology to follow to narrow the field.

IT Consultants and related web strategists suggest you use the following criteria for evaluating ASPs:

• Ascertain ASP’s primary business focus to make sure it meets your standards for the horizontal or vertical products selected.

• Determine the ASP’s size, coverage, and ability to provide service in the regions you need it.

• Evaluate the company’s operational excellence by discussing their automation processes for additional users and their available help documentation on products marketed.

• Review the technologies for (a) data management; (b) application management; and (c) change control management.

• Make sure you know how your data is secured in their system architecture.

• Know and understand the uptime you will require of a vendor and read the Service Level Agreements from each ASP under consideration.

• Discuss your company’s future growth with the ASPs of most interest to determine if they will be able to grow with you.

• Gather all financial information necessary to compare and contrast fee structures for installation of each desired application, help desk support, additional provisioning of new users, and monthly per user subscription fees.

“Choosing an ASP can save you money, but evaluate it as just another IT choice. . . Your ASP relationship should also be looked at in human terms. Where is this ASP going and what will it mean to our future,” explained Bill Martorelli, Vice-President of eServices and Sourcing for the Hurwitz Group, a consulting firm based in Framingham. Mass.

Martorelli indicated that security issues are high on his lists on evaluation factors. “It’s easy to show a physical approach to security like a state-of-the-art data center, but an ASP customer needs to ask about how his company’s data will be stored. Not all of the customer’s data will end up on a dedicated server. What are the possibilities of another customer having access to critical business data?,” he pointed out. “Often times, it will be true that an ASP can provide a higher-degree of security over than of most customer’s internal systems,” he added.

There are numerous other selling points of an application service provider, according to the Mike Dahan, director of eBusiness Hosting for Breakaway Solutions which offers front-end ebusiness consulting and high-end ASP solutions as a full service provider. “First and foremost, with an ASP solution you should get a much lower upfront costs than doing-it-yourself, and a predictable, reoccurring charge you can afford.”

He cited three areas to make sure you investigate—an ASP’s people, process, and technology. Topping his list for going with an ASP model:

1. An ASP can be a quick way to add new applications without spending the dollars necessary to outright own the system.

2. An ASP often provides a method to create a relationship with a secure data center that should offer the stable, level of infrastructure that most companies need.

3. An ASP provides ongoing application support generally with help desk services, upgrades, and virus protection.

4. Implementation and integration answers are not always found within your organization for new applications.

The complexity of what is defined as hosted application management can be the real difficulty is finding the best ASP match for you, continued Dahan. For example, Breakaway Solutions categorizes its services this way: (a) Managed Hosting—racking and stacking hardware and internet connectivity management; (b) Application Infrastructure Hosting—support for the databases, web servers, but not the applications themselves; (c) Application Hosting—all above services mentioned including application hosting; and (d) Additional Managed Services, such as enhanced security; and enhanced monitoring.

The biggest “gotcha” that ASP users face, he explained, is the 24/7 support paradox. “Just because an ASP claims 24/7 support that doesn’t mean that it is true round-the-clock availability. A lot of companies put monitoring tools on the applications and the hardware, however your contract only include steps to alert you and not to fix the problems as they arise.” He added that many companies may equip a help desk representative with a pager and that’s your support. Dahan pointed out, “For a company to run a true 24/7 dedicated help desk there must be a minimum of seven employees in that area for round the clock coverage.”

Edina, Minnesota-based Cherry Tree & Co., which offers investment banking services for IT firms, in a recent report emphasized the changing value themes of ASPs and suggest that the wisest choices for companies purchasing services will be in choosing those with domain expertise. Companies like Peopleclick.com, and Employease have made domain specialization their model. Peopleclick delivers e-cruiting software that provides hiring process management, and applicant tracking functionality to HRP professionals who are managing high volume hiring campaigns, including Ericsson, and Morgan Stanley.

Employease offers a business-to-business network with access to human resources, benefits, and payroll applications via the Web. The network connects employees, insurance companies, managed care organizations, and other relevant service providers and has more than 1,000 clients.

ASPs as a whole will look to offer what customers want in the way of cross-application integration for turnkey ecommerce solutions and wireless access to devices via handhelds or smart phones.

Mobile computing will become another ASP way for an end user deploy its applications. Several companies have already begun to offer this type of service. A New York City-based ASP called Mi8 Corporation offers wireless connectivity to its Microsoft Outlook & Exchange mailbox functions through its Mi8’s Wireless Palm Service. Using a wireless Palm device, connected to a wireless network, users can send and receive email, view and schedule appointments, and manager their contacts and tasks from anywhere, anytime. Mi8’s service supports PDAs, the Palm VII and the Palm V and Vx with wireless cradle from Palm Inc.

As ASP players differentiate themselves even further, it will become more important to know where an ASP company begins and ends its services. Consultants say that pricing structures will vary widely due to emphasis of the company. Martorelli of the Hurwitz Group indicated that, “In this marketspace, there’s not a great deal of thorough total cost of ownership analysis yet. I think it is plausible to believe widely-accepted numbers of 20 to 40% cost savings with an ASP implementation.” Most pricing choices will include a monthly fee per user, but buyers beware of consulting fees, infrastructure investments, and connectivity charges that come along with subscriptions.

Infrastructure ASPs may call themselves Managed Service Providers or Infrastructure Management Providers and provide an additional layer of network and data center management software between ASPs and their Web hosting partners. Key areas of infrastructure management for companies like DataReturn, and Broadwing, may include: network and application monitoring and testing; database architecture and management; systems and network management and capacity scaling and load balancing with security.

The Full Service Provider, such as Breakaway Solutions and Millennia Vision Corporation, is often an ASP that started as an IT services firm and offers an end-to-end solution encompassing IT consulting, application development and hosting, systems integration, and ecommerce builds.

Internet Business Service Providers focus on delivering web-based solutions in a hosted model, such as Agillion, and other providing basic messaging services.

An ASP aggregator, such as Jamcracker, offers multiple platform solutions with some opportunity for a small to medium-sized business to get the best-of-breed applications while avoiding the need to manage multiple hosting contracts and systems. There is also a single point of contact for technical support issues.

Vertical Service Providers are ASPs that specialize in specific industries, such as Andalon in legal and health care services.

Once the type of ASP services is known and the capabilities are defined, the final measure in choosing an ASP, may well be its service level agreements. The ASP consortium has a short report available that discusses what to ask in detail. A company prepared to use an ASP must know just what they mean by “uptime,” and what will happen in the event of “downtime.” Many ASPs are willing to deliver 99% uptime, but the real task is in understanding the definitions in the SLA. Potential ASP clients should not be afraid to ask for addendums and make adjustments as they see fit. Martorelli of the Hurwitz Group said, “In the world of SLA witchdoctory, an ASP can usually meet an SLA terms, but this may not meet the customer’s needs. The notion that penalties take the place of performance is cold comfort to the end user. Every SLA should be reviewed with on eye on plausible escalation.”