Firms must do homework before turning to application service providers

Early in the New Year, Network World Canada hosted a round table of some of the movers and shakers in the Canadian carrier and ISP market. One of our goals was to find out what trends and technologies these industry players thought would be hot this year. Network services outsourcing was a consensus pick. So was wireless. But one of the biggest emerging trends – application service providers (ASPs) – merited only a lukewarm response.

At a glance, it’s hard to imagine why ASPs wouldn’t be hot in 2000. Companies allowing a third-party provider to host their applications for them could get access to powerful applications without having to worry about the tens of thousands of dollars and endless technical headaches a full-blown implementation would cost. On closer inspection though, issues such as bandwidth, network availability and application customization make outsourcing applications a riskier proposition than it might at first seem.

Obviously bandwidth is critical to the success of any ASP implementation. If a company’s applications are hosted off-site, as they are in an ASP model, employees need to have enough bandwidth to access and run the applications properly. How much additional bandwidth a company will require to take advantage of an ASP model is an important consideration. While the price of bandwidth is dropping, it’s not dirt-cheap. And if the price of additional bandwidth meets or exceeds the savings an ASP model offers, going with an ASP isn’t really an option.

There appear to be no tried and true formulas for calculating how much bandwidth a particular application will require to run. The Manasquan, N.J.-based Tolly Group, which conducted tests using Citrix thin-client software and Microsoft Office applications, found the Microsoft applications required data streams of between 97Kbps and 122Kbps at a moderate typing speed. So only 12 simultaneous sessions could be accomodated on a T-1 line. If these calculations are accurate, then the ASP model would seem to work for only small office settings, or for situations where only a limited number of users would be accessing an application at one time.

In an ASP setting, network uptime is just as critical as bandwidth. In a typical “fat client” PC setting, with applications residing on individual employees’ PCs, if the network goes down, employees can continue to work at their own machines. If a firm relies on an ASP, however, a problem with the firm’s network, the ASP’s network, or the carrier network in between would prevent employees from accessing applications.

Any firm planning to use an ASP must make sure it gets solid service level agreements (SLAs), with financial penalties for non-compliance, put in place with both its ASP and carrier. Potential ASP clients must also ensure their own networks can handle the increased burden that will result from employees accessing applications from an outside source, rather than from their own PCs.

The final potential drawback of going with as ASP is perhaps the most obvious one. Since ASPs will be offering access to applications to more than one client, the ASPs will not be able to offer much customization on those applications. If a company relies heavily on highly-customized apps, ASPs are pretty much eliminated as an option.

The bottom line is any firm looking to use an ASP must carefully weigh the potential benefits against the potential drawbacks. There are companies out there that have been using ASPs for years and have been happy with the service they’ve received. But for now, at least, ASPs will not be a money- and stress-saving option for every outfit.