How ASPs Can Save You Time, Money, and Resources

Last Updated: May 24th, 2007
WebsiteAlive Editor Kasper Liu contributed to this article.

In the not-too-distant past, businesses were accustomed to purchasing a piece of software at a one-time, up-front cost, thus owning the software license and running the system on their own hardware. Today, more and more executives are deciding to rent/lease their software (and in several cases hardware) on a subscription basis from a 3rd party provider. Software vendors specializing in this field are commonly referred to as ‘Application Service Providers’ (ASPs), 'On-Demand' providers, or 'Software As A Service' (SaaS) solutions. They can offer businesses a complete, turnkey solution which will develop the software, provide technical infrastructure (hosting and data storage), and a dedicated team specializing in support and maintenance of the product.

An Example of Leased Software Services - Web Hosting

The most common example of a leased software service is web hosting. When the internet was at its infancy, many companies opted to lease their own high speed internet T1 lines into their own offices and host their servers from within a back room. This provided instant physical access to the server if there were ever any problems, but had 2 major disadvantages: cost and reliability. Costs where high because an infrastructure had to be set up for a small number of servers. Reliability was an issue due to the fact that these mini datacenters lacked any redundant infrastructure - it would just be too expensive to implement. Additionally, it would be expensive to hire staff to monitor the servers 24/7. Fast forward a few years to the era of the World Class Datacenter. Companies such as thePlanet (www.theplanet.com) have created a super-fast, fully redundant network of servers complete with a 24/7 technical support team that provides a level of hosting that could not be ever done within your office. Due to Economies of Scale, large datacenters can provide much higher levels of support, uptime, and reliability at a low cost due to the fact that they specialize in hosting servers - not one, but thousands of servers.

ASP Software Services

Many software vendors who offer their solutions as a service rely on the datacenters above to provide the hardware and network platform to bring their products to market. Security is a major concern since the ASPs will be storing critical and sensitive information from each of their clients. If your company possesses any information wherein its loss would mean serious financial loss, outsourcing storage and/or software can give you the added security that many companies cannot provide effectively in their own office. Again, due to Economies of Scale, datacenters generally have higher levels of security because their thousands of clients demand it. The physical data warehouses and server farms that datacenters offer often reside in areas of incredibly high levels of security, advanced integrated backup systems, and elaborate power generators which provide protection from almost all forms of Mother Nature. In other words, keeping your data in a specialized datacenter may be safer than having it stored in your backoffice.

Staff Resource Advantages

Additionally, using an ASP can provide numerous personnel advantages. Unless your company specifically needs employees with intensive back-end knowledge of the software or hardware you need, there’s no gain in hiring someone full-time to support only your company. Using an ASP also means hiring professionals whose job entitles them to greater knowledge and experience with the particular product than an individual working solely for your company could possess. Employees of an ASP often attend advanced training classes and may even earn certifications for the product(s) you’ve outsourced to them in addition to the day to day specialized knowledge they gain while supporting the same product for multiple companies and instances. ASPs tend to provide specialists in a certain field that would be more knowledgeable compared to a company's own staff.

These knowledge support teams also mean shorter downtimes and implementations than you may encounter with an in-house team. When and if you need to implement a new product, using an ASP can also work to your advantage. Often times ASPs have access to hundreds of products that they can install faster than if a single company attempted the installation. Also, whenever that software or any software you outsource to them needs upgrades, chances are your ASP will get them done faster given their network and infrastructure than with an in-house server farm.

All of this means that they require less overhead costs, so they can offer you the hardware, software, and support you need at prices much lower than attempting to maintain the same equipment and employees in-house. By using an ASP, you can focus all your energy in your core business and let the ASPs take care of the rest and give you peace of mind.

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