Database Reference
In-Depth Information
4.
Bottom-right quadrant
: Represents the
private application service providers (ASPs)
that pro-
vide operations and maintenance of especially custom applications to an ecosystem of enter-
prises involved in a particular area of business. We describe this category in Section 14.7.3
“Private ASPs.”
Top reasons cited by enterprises for resorting to outsourcing are as follows:
◾
Free internal resources for more strategic projects
◾
Offload functions that are difficult to manage
◾
Receive cash infusion from transfer of assets to outsources
◾
Replace capital expenditures with pay-as-you-use operational expenses
◾
Gain access to world-class IT expertise
◾
Reduce costs for research, development, and successful deployment
◾
Reduce investment risk in a rapidly changing environment
◾
Obtain additional manpower on an as- and when-needed basis
In the simplest case, the application is merely hosted for the customer. AO typically does not
include responsibility for the underlying business processes or functions; a more comprehensive
engagement like Business Processing Outsourcing (BPO) may include operations assessment, pro-
cess improvement, and change management services. When standard applications are being out-
sourced, the level of staff and asset transfer to this facility may be minimal, and the application
itself may be provided via a license or lease agreement included in the overall service agreement.
On the other hand, for more customized applications, the contract may include the transfer of
people and assets associated with the outsourced application.
14.7.1 CRM Application Service Providers (ASPs)
The basic idea behind the application service providers (ASPs) computing model is that a provider
hosts and manages applications that users can access over networks like the Internet. This is the
final step toward software manifesting as a service. The market is evolving toward a state where
companies will pay for the software as services on a usage basis, as they do traditionally with utility
services like electricity and gas. This market was pioneered in 1998 by start-ups such as Breakaway
Solutions, USinternetworking, and Corio. The ASP model typically involves lease-to-own options
on software. It entails renting access, at a low rate, to the functionality of ERPs, CRMs, SCMs,
etc., over the Internet. In contrasts, traditional outsourcing requires up-front purchase of software
licenses and often charges large fees for contracted services. But, recently, many ASPs are also
experimenting with other pricing models that involve charges for initial customization, migration,
and integration plus a flat monthly fee depending on the use of functionality and services or even
a percentage of the customer's revenue. The ASP services could range from infrastructure, coloca-
tion, cohosting, dedicated hosting right through, to even hosted businesses such as hosted buying
services or even hosted customer relationship management services.
The level of the packaged application could vary from discrete applications (like Web-based
transaction application for conducting a commerce-based transaction) to environment applica-
tions (like CRM). The level of service provided by an ASP can range from simple hosting of
application(s) to also managing the application environment. Hosting is a standardized service
that is based on a high-volume and low-cost business model in which applications are hosted at a
