ASP Spotlight

Are You Ready to Adopt ASPs?

By Kevin J. Taggart

DEVELOPING a strategy to stay on top of ever changing IS demands is a daunting task. Analyzing the best use of budgeted dollars, implementing new software, and administering hardware and software ­ these are the "tip of the iceberg" issues that mus be addressed.

Now, throw in a new approach that could potentially force you to re-think every decision you've ever made with respect to software and IS infrastructure investments. ASPs (application service providers) offer alternatives for purchasing software, with many ancillary benefits too enticing to ignore.

For many, the question is, "When is it appropriate to start fresh and cut your losses on previous IS investments." For others, the benefits of ASPs are too great to ignore, and they will choose the "sooner the better" approach. Each firm must individually weigh the pros and cons of the different application software and services models to make the right decisions.

ASP v. Traditional

In an example of an ASP model, a law firm contracts with an independent provider to host a time-and-billing application. The firm pays a monthly fee based on their number of users. In return, the ASP provides access to the software while hosting the data on their own secure servers. This allows a firm to access the software they need without the expensive costs associated with establishing a proper IS infrastructure, such as: servers, workstations, licensing, maintenance, upgrades, security, staffing and administration. Other reasons to move to an ASP are scalability and mobility.

There are a couple of varieties of the ASP model from which to choose. An ASP can offer a traditional application with the machines in the firm acting as dummy machines and the entire processing taking place at the ASP site. This variety uses a full-version of the software with very rich features, connecting by using application-hosting software. The firm continues to use the actual PC-based time-and-billing product, they are just using it remotely.

An alternative is a purely Internet-based software approach. These are written specifically for use with a browser over the Internet, eliminating the need for application hosting software. This product is built specifically for the way it is being used.

Both of these systems would be considered "thin client" architecture, where all of the processing of information happens elsewhere than your PC.

Despite the upfront costs associated with a PC-based software model, there are still many convincing reasons to wait to "abandon ship." While the total cost of ownership is high, these products are generally very feature-rich and offer functionality that may not currently be available in new ASP products. In addition, the reliability of a PC-based product is typically very sound, especially products that have been on the market for some time.

Another reason firms may hesitate to move quickly to a pure Internet product is customization: administrators like the ability to customize software applications to their own specifications. They also want to integrate these applications with other software products they use. This level of integration and customization may not be readily available with an ASP and should be considered before making that transition.

Considering the pros and cons for both models has lead a few developers to embrace more of a "hybrid-ASP" approach, which takes into account all of the good aspects of both the ASP model as well as the traditional PC-based model. In this example, a software provider will require one machine in the firm's office to have the PC-based software installed while the remaining users access the system via the Internet. In this hybrid model, the data is typically housed on internal secure servers, providing many of the benefits of a pure ASP while still retaining the power, functionality, and maturity of the traditional software.

An ASP arrangement, whether it is serving up traditional PC-based software or offering a pure Internet product offers one common benefit: fixed cost of ownership. Accessing the software on a monthly basis has only one requirement outside of the leasing/rental costs. That is the cost of good bandwidth, such as: T1, Cable, DSL, ISDN. A firm could potentially pay more over time with a monthly leasing arrangement; however, many intangibles that are not included with PC-based software are addressed through an ASP. Additionally, there may be an accounting advantage to amortizing IS expenses over several years rather than showing all costs in a short period of time.

Security

The legal community's major concern about ASPs clearly is security. Ironically, if you examine this further, you may find security is the best reason to make a move to an ASP. The security found on the servers and the data in an ASP is unparalleled to anything a single law firm could create. This happens because of the sheer number of people involved. An ASP can afford to buy and maintain extremely powerful servers because this is the key to their business. If security isn't there, then there's nothing to sell; therefore, it is in the best interest of an ASP to make sure they are taking advantage of the highest possible security standards.

Aside from having powerful servers and equipment, it is important to look for an ASP that protects your data with guaranteed "digital certificates" such as Verisign seals and advanced encryption methods.

Making IS decisions in such a fast-growing industry will always be complex. In deciding whether to move to an ASP or continue on with a PC-based software can only be determined by knowing all the options and making an educated decision based on the individual needs of each law firm. The bottom line is determining how to maximize functionality and cost while meeting the demands of a growing business.

Kevin Taggart is vice president, time division, Sage U.S. Holdings, Inc., and is based in Dallas.