South African small and medium businesses likely to be early adopters of Application Service Provision (ASP)

Application Service Providers (ASPs) - companies which host software applications that are made by other companies and then rent the on-line usage of that software to customers - will most likely be attractive first to small and medium-sized businesses.

This is the view of UUNET SA`s Rob Lith: "As a network service provider, we have already put in place network technology which will enable ASPs to offer a high quality service in South Africa. Initially, we expect the impetus in the South African market to come from small and medium-sized organisations because their gains from the technology will come much more quickly than in larger businesses."

By using an ASP a company can rent business software for a monthly fee instead of going through the hassle and expense of supplying the hardware and staff required to take advantage of software`s supposed efficiencies.

Also, because the ASP undertakes the licensing for and upgrades of software the ASP user is always at the cutting edge of technology - all for the price of a relatively small monthly fee.

Says Lith: "Outsourcing one`s information technology requirements to an ASP makes keeping pace with the high-speed changes in technology and business processes spawned by the Internet and e-commerce much easier - and cheaper. However, we expect that large corporations, with their considerable investment in legacy systems, would wait for the end of product and equipment cycles before changing over to ASP services."

"As a cost-saving technology resource for smaller businesses, ASPs will probably be a significant economic growth engine - particularly in an emerging economy like ours."

However, Lith warns that the ASP market is currently unchartered - and unregulated - territory, populated by multiple suppliers, many of them new companies.

The first link in the ASP chain is the network service provider and telecommunications carrier. These supply the physical infrastructure for connectivity - telephone lines, satellite links and data centres - and the capacity both to maintain and manage that infrastructure according to specified service level agreements.

The next link is independent software developers (ISD`s) who supply Internet-enabled software to the ASPs who will rent it out to customers. A concern here is the willingness of developers to refocus their sales strategies away from the end-user and on to the new middle-man, the ASP. There are also issues of standardisation of delivery platforms and architecture about which industry haggling is expected to continue for some time.

Also, although enterprise resource planning (ERP) and customer relationship management (CRM) software fit snugly into the ASP model, the most ubiquitous application sets in the market today, office productivity packages such as Microsoft Office and Corel WordPerfect suites, do not.

The third link in the chain is the ASP itself. Very few have emerged in South Africa, as yet.

For a business to thread its way through these complexities is not all that difficult, says Lith. "Just ensure that you choose ASP partners on the basis of their ability to guarantee service levels, security and improved productivity."

For instance, because demands on servers which host complex enterprise software are that much greater than, say, those which host email facilities, the management of those servers by an ASP (and their network service provider) should be strictly governed by service level agreements.

Also, because ASP`s are dependent on a telecommunications infrastructure, guarantees of uptime on a network as well as high connectivity speeds are crucial to the improvement of corporate productivity."

Virtual Private Networks (VPNs) offer greater bandwidth redundancy than Wide Area Networks (WANs), making specified uptimes easier to deliver. Speed of connectivity increases if the ASP is either locally based or has a regional hub close to its client.

"Customers are also more comfortable with suppliers who are part of an industry-wide organisation set up specifically to iron out regulatory and service issues," says Lith.

In May this year, UUNET Technologies, one of UUNET SA`s parent companies, helped found the international Application Service Provider Industry Consortium. Members include computer software and hardware companies, network service providers, Internet service providers (ISPs) and ASPs. The Consortium sponsors research, fosters standards and works to articulate the measurable benefits of the evolving ASP delivery model.