By definition, ASPs aren't so simple

By definition, ASPs aren't so simple

As industry insiders try to define terminology, others say cost-savings questions remain


What is an application service provider?

The Information Technology Association of America's ASP Committee spent several months trying to come up with an answer, said Harris Miller, president of the Arlington, Va., association.

'We believe it's important to have a simplified definition,' he said. 'Customers want a simplified definition.'

What is it?

Here is ITAA's take: 'An application service provider is any company that delivers and manages applications and computer services to subscribers or clients remotely via the Internet or a private network.'

The research firm Gartner Inc. of Stamford, Conn., offers this definition: 'ASP is the delivery of preconfigured template software from a remote location over an IP network on a subscription-based outsourcing contract.'

Simply put, you're renting software. It's usually delivered over the Internet. The ASP provides the systems infrastructure. The only thing you own is the data.

But the ASP model is still emerging, industry insiders said.

'The traditional format is one where the ASP owns the licenses, the hardware and all the information technology staff and delivers that as a complete managed service,' said George Caravias, secretary-treasurer of the ASP Industry Consortium. 'There are variants from that where customers can own the licenses or have more involvement with the management of applications.'

The touted benefits of using an ASP instead of running the application in-house are generally the same as with any IT outsourcing effort: An agency turns its systems over to a vendor so it can concentrate on its core business.

Outsourcing also helps agencies deal with the IT worker shortage.

What you get

Moreover, service-level agreements guarantee uptime and data security, industry officials added.
Another enormous benefit for agencies faced with the federal year-to-year budgeting process is the pricing structure that ASPs offer, industry officials said.

'When you go with an ASP, you're going to be paying a flat monthly fee, and it does not come out of your capital budget,' said Karen VenDouern, manager of public-sector business development for USinternetworking Inc. of Annapolis, Md. 'It can come out of your operating budget or discretionary budget. Basically, it's going to save you money in the long run.'

There are, however, questions that still remain on potential cost savings, said Christopher Ambrose, research director for external service providers at Gartner.

'I haven't seen any sustainable or substantiated data from the vendors or the clients that would show that they have reduced the total cost of ownership over a specified period of time,' he said. 'That's still an issue for people looking at the ASP model.'

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