IT department can be a hurdle to ASP acceptance

While application service providers continue to make inroads on the way to an anticipated multibillion-dollar market, a key hurdle remains: the worry on the part of some IT managers that they and their staffs may ultimately be displaced if applications are shuttled to an outsourcer.

“The IT department could see this as a threat,” said John Tonnison, a consulting partner at ASPassist Inc., a professional services firm that helps end users and vendors understand the ASP market.

During a workshop on Wednesday aimed at helping end users make sense of ASPs, Tonnison listed IT resistance as one of the top ASP disadvantages. The workshop was part of the first annual North American ASP World forum, held in association with the ASP Industry Consortium.

IT managers must understand that the ASP would be used to supplement their department, not to supplant it, Tonnison said. That’s why enterprises considering an ASP should outsource existing applications that are not critical to their businesses, he explained.

“Focus the ASP service on taking away the monitoring and the drudge,” he suggested. Customer resource management, travel and expense management, and human resources applications are examples of what enterprises should consider first when deciding what to outsource. Core technology should be kept in house, he said.

That way, once the mundane applications have been handed off to an ASP, there will be time to focus on “smart visionary work.” IT staff would no longer have to deal with trouble calls or back-up systems on the outsourced application; all that would be handled by the ASP, Tonnison pointed out.

A good way to make sure that happens is to include IT managers in ASP negotiations. Tonnison said enterprises need to understand that IT people are the ones who know the most about the application and will have a clear view of exactly how outsourcing an application could benefit the business – or not.

Tonnison said another thing to remember is that the enterprise would need a good IT manager to handle the outsourcing deal if an ASP contract is signed.

Other disadvantages Tonnison mentioned included the need for customized applications, which is limited when using an ASP; integration concerns; security fears; and the fact the model is still young and unproven. Advantages included access to professional data centers and advanced applications without the high up front costs, less pressure for technical resources, rapid implementation and upgrades, and anytime, anywhere access to applications.

But how do you decide if an ASP is right for you? Tonnison said a recent Zona Research Inc. study found that current ASP users based their decisions on predictable costs, performance guarantees and the ability to free IT staff to focus on other, more critical areas of the business. Multilocation businesses, businesses that have been through a painful, slow, overbudget software implementation, and those short on cash are all good candidates for an ASP since ASPs offer anytime, anywhere access to Web- or network-hosted applications for a monthly fee and can quickly scale and upgrade those applications, Tonnison said.

When looking for an ASP, Tonnison said enterprises should never be shy about asking for details. “Keep a close eye on funding. The market is young enough. You have a right to know.”

Check out references, see facilities such as data centres, ask how the ASP plans to become profitable and find out what the ASP’s scope of control is so you know to what extent it outsources and with whom, Tonnison says. Try to sign contracts for one year only, and if you can’t, make sure there are provisions for changes. Also, keep contracts simple, include few, but relevant performance measurements.

And always include an exit strategy. It’s nothing you want to have to use, Tonnison said, but it’s important, so that if your ASP fails there is a graceful way to bring your applications back in-house or move them to another ASP.

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