Logic is Variable

The advent of shared applications is a new way to meet some or almost all aspects of information technology (IT) needs. Concept of application service provision has come a long way since it first came on the scene in the late 1990s. Hi-tech developments and changes at a fast rate are moving towards convergence of the software, information, technology carriers, and computer engineering. Result: IT structural designs are shifting from desktop and mainframe environments towards Internet based structures. Similarly, software applications are altering from made to order and separately owned solutions towards pre-packaged and Web based solutions. It is in this context that ASP business model is getting more interest as a hot trend.

IT business model that offers end users – small and large businesses, government organizations, non-profits, and membership organizations even individuals -- an access to applications and services over the Internet is known as application service provider (ASP - not to be mixed with Active Server Pages. It also is an abbreviation of as soon as possible). It is sometime called software-as-a-service, on-demand computing, apps-on-tap or utility computing.

Typically, the applications are deployed by a third party that hosts, manages, updates software based service and solutions and distributes to clients from a central location. XML and HTML processes allow thee clients to interact with the software. Sometime, ASP also rent out the server hardware and the network. What is more, many ASPs, particularly enterprise ASPs, have now started offering on site solutions in which the relevant hardware, software and function remain on the customer's site.

Hewlett-Packard and Qwest are among the pioneers for providing application services. Microsoft also allows some companies to offer its Back Office products, including SQL Server, Exchange and Windows NT Server on a rental, pay-as-you-use basis.

Some larger corporations like Accenture have established their own in house application service, moving applications from personal computers and housing them on a kind of server that is meant to handle the client workstation on ‘as required’ bases. This helps a business to keep the central control over application usage. In some way, this is like what used to be before the arrival of computers.

Services provided by ASPs can be grouped in different categories. As per International Data Corp, they are commercial enterprise applications (customer relationship management, enterprise resource planning, e-commerce, data warehousing and programs to support vertical industries), collaborative applications (programs that enable internal operations such as e-mail, groupware, document creation and management messaging) and applications for personal use (games, entertainment software, home-office applications and any other software).

Broadly speaking, there are four major types of ASP business: A special function ASP that offers a single application, such as banking service like control of remittance or loan management; An ASP delivering a solution package for a similar customers type, such as a hospital management; A project ASP that give a mixed group of solutions; and an area based ASP that caters to the IT needs of businesses within a specific area. In addition, some large firms like IBM are using ASP methodology as a specific business model that supports specialized clientele. According to ASPnews.com, “ASPs are grouped into five subcategories: Enterprise ASPs -- deliver high-end business applications. Local or regional ASPs -- supply wide variety of application services for smaller businesses in a local area. Specialist ASPs -- provide applications for a specific need, such as Web site services or human resources. Vertical Market ASPs -- provide support to a specific industry. Volume Business ASPs supply general small and medium-sized businesses with pre-packaged application services in volume.”

The main advantage of ASP is that the clients do not have to bear the upfront capital costs of the hardware and software. They can pay like electricity and or PTCL landlines on a pay per use or yearly license basis. The interest that ASPs have generated, elsewhere at least, does not come only from economy of investment, but from qualitative considerations as well. Using the best applications available, faster than in house deployment are some others benefits. Businesses, though an ASP, can change their operational characteristics, placing less emphasis on IT operations and development, and more on core business operations and growth through the productive use of IT.

The ASP phenomenon is poised to make a central surge on the application market for the years to come. The ASP model can be extremely tempting to any cost conscious businesses but scouting reveals that the ASPs around the world so far are targeting small and medium businesses and start ups, which otherwise may not afford high end and costly applications; selling their software and enabling end users to avail the utility they need at inexpensive price. Small and medium businesses can rely on ASPs and can start using the Web as a business tool rather than a communications tool. The target market for ASPs is much larger in developed countries than in more developed countries. Economic conditions and desire to have a competitive edge are likely forces to accelerate adoption, anxieties associated with exercising control over the business processes notwithstanding.

ASP model is one of the economical behind the scenes business methodologies that the Web has made possible and it is working very successfully in more connected world. Many industry analysts see ASPs becoming a big business. ASP concept is ideal for countries like Pakistan. The impact of any such development may be seismic here.

The concept of ASP is still new in Pakistan. “Despite all the whirl we are going through, corporate Pakistan have not yet embraced IT, hence no effects can be seen on ground or in term of revenues in the account books. Affordable services offered by ASPs might help change this scenario. News is that some local companies are already working to establish ASP business in Pakistan in collaboration with foreign counterparts. “When ASPs come in operation and results are noticed, people will start buying ASP solutions, for automating manufacturing and marketing processes, instead of costly software solutions. Businesses have to realize that it is like anything else they do on a subscription basis. Major thing any potential ASP need is to build confidence and develop trust,” says Ibrahim Khan, a call centre developer.

Naveed Mehdi, another developer says, “Like Internet Services Providers (ISPs), we are so familiar with, ASPs have to make applications available to multiple users at a time, the more subscribers they will have, the lower the lease rates will drop. Difficulty is that no one wants to take the initiative. Everyone wants to see what others do and how. Which is why we are far behind in making innovative use of the technology available?”

ISPs are most suited to transform themselves into ASPs. “Today's ISPs are ASPs of tomorrow,” believes Mehdi. The only thing they can do before that is to become dependable. Which application they should offer: Customer relationship management applications, enterprise resource planning applications, banking and credit card transactions, hospital management or simple email management? It depends on the market demand. ASPs have to carry out diligent research and interact with potential users to carve out niche areas for themselves. Though, initially small and medium businesses seem the most likely users of ASP, in Pakistan, larger organisations could also convert to this method and cut IT costs. Ironically, when various ISPs were contacted for finding out about any possible future plans for the purpose of this article, the answers were not very encouraging. No one revealed that they have any plans to expand as ASP.

This is a significant opportunity for Pakistan. ASPs could enable the Pakistani software industry’s transition into a larger role as a global leader in mainstream. Ibrahim says, “We have already missed so many opportunities (like business process outsourcing and back office operations) in IT sector, we should not miss this one. Stakeholders should focus on measures to stay competitive. Necessary talent is there and many companies are doing a good job in individual capacity.”

What would constitute a world class ASP business? Local companies planning to plunge in to this sector have the opportunity of learning from the successful experiences in the developed countries by closely examining he standards being implemented and the demands made by the end users companies. Because everything cannot be mirrored in local corporate sector, therefore, they should carry out thorough indigenous research and interact with their potential customers. Interested IT firms should help small and large commercial enterprises to identify their IT needs in term of economic profits and then offer the solutions. Stakeholders should take extensive confidence building measures in this field.

Hopes are that demand driven ASP business will pick up here. One wishes to see it happen as soon as possible.