Hosted Applications: Look Before You Leap

So you think you’re ready to deploy a network-hosted application? There are a few application service providers (ASP) out there to take your business. But before you dash off that request for proposal (RFP), you better make sure you know exactly what you want.

It’s so early in the ASP process that many ASP service models are emerging, and no one knows what is going to remain in the end. Some ASPs will execute on more than one service model.

For example, some ASPs focus on software delivery over the network providing off-the-shelf software delivered on-line and hosted on the network. In theory, this means you won’t have to store 100 million lines of code on your desktop. Some providers, such as USinterworking, will provide enterprise resource planning applications, such as SAP’s R3 or PeopleSoft, from a network-hosted platform. Other ASPs, such as MTT in Nova Scotia, will deliver basic software, such as word processing and spreadsheet applications, over the ‘net.

In the short term, this service model may suffer because most software has not been written for this type of environment. This is especially true for business software such as Microsoft Word, Excel and PowerPoint. Java-based programs have the advantage here, but as the market grows, many independent software vendors will help to rewrite current software. The beauty of this service model is you don’t have to worry about software licensing and management, upgrades, revisions and so forth — that is handled as part of your service.

A variant on this service model is the management of software revisions and updates. In this model, you’ll still have a software resident on your desktop; however, software revisions and bug fixes are managed by the service provider and downloaded from the network. If your business is short on MIS resources and managing desktop applications is not the top priority, then a service such as this could be appropriate. Your MIS people can then focus on more important, strategic projects.

Another variant on this service model is the development of customized applications to solve specific business problems for specific industries. These ASPs are likely to emerge out of the vertical industries they serve.

Some service providers will be in the business of helping the would-be ASP get into the industry. We see this being a great opportunity for today’s facilities-based carriers. They don’t have to know each specific industry or compete with ASPs on a niche basis. Instead, the ASP becomes a sales channel for their backbone services.

Given this broad spectrum of provider types, expect to send your RFPs to a lot of people who will come back with many different offerings. This is not going to be an easy apples-to-apples comparison because of the lack of uniform definitions, terms and processes. So if you are going to buy, expect to spend a lot of extra time defining what you want.