By now, if you follow the computer industry at all, you've probably run across the term application service provider (ASP). Broadly defined, an ASP is any organization or third party that provisions software applications over the Internet, typically for a fee. ASPs host and manage the applications from their facilities or from co-location centers, and coordinate the ongoing support, maintenance, and upgrades of the applications. By combining software, hardware, networking technologies, and technical expertise, ASPs can provide superior performance and increased security. They also offer reliability and scalability over traditional corporately owned, in-house applications-without a significant up-front financial commitment. Or at least that's what the ASPs claim; your mileage may differ.

Can ASPs Survive the World Wide Wait?

The main hurdle ASPs face is speed of execution. Based on actually trying out and using some of these services, it becomes clear that the end-user's Internet connectivity speed will be a major factor in the acceptability of outsourcing a company's mission-critical applications to an ASP operation. The idea that a customer can save money by centralizing applications is tempting, but many users' current Internet access services simply aren't fast enough to justify applications used day in and day out.

The key thing to remember is that users can get their applications from their local machine or office server in seconds, but an ASP will be lucky to get its applications to you in less than a minute. For applications that require little interaction while using them (or that only require a limited number of accesses over the course of a month), this may not be a significant drawback. But for day-to-day use of general office productivity apps like word processors and spreadsheets, the time lags could make a significant difference in the suitability of using an ASP.

Most industry analysts see the bandwidth issue declining in importance as time goes on. They cite the increased deployment of xDSL and cable modem Internet access services to homes and businesses as one factor that will increase the attractiveness of the ASP model. But without high-speed connectivity, an ASP will be out of the question.

Not Just for the Enterprise

While ASPs originally targeted large corporations as potential customers, a growing number of operations have been launched that appear eager to serve small businesses. Whereas the pitch to big business tends toward centralization and control, the sales pitch to small businesses goes something like this: For a nominal monthly fee, an ASP can host mission-critical apps that a small business otherwise couldn't afford. This message is already succeeding in a small way. According to analysts' surveys, the majority of customers using ASPs to host their packages are small businesses with 100 or fewer employees. As a result, they are usually companies that cannot afford IT staff and do not want to get involved with technology themselves, preferring to concentrate on their core businesses.

According to one ASP, its typical customer is a small business with less than 100 staff and an average of 25 seats. It uses predefined applications such as desktop productivity and accounting packages, with maybe one custom application that it either developed itself or brought in from outside.

Is there an ASP in My Company's Future?

Outsourcing applications can be a big advantage. But how can you be sure it will work for your business? Not every application should be outsourced, and not every business should outsource. By and large, however, application-service provisioning saves time, money, and headaches. The trick is to find an ASP with the knowledge and experience to handle mission-critical enterprise applications. Also make sure the ASP has a background in systems integration, security, and high availability systems. If your day-to-day business is dependent on the applications you outsource, then you need an ASP that can guarantee that your apps are up and running all the time.

Let's say you're interested in seeing if there is a fit between your small business and an ASP. What do you need to do in order to explore this option?

The first step is to determine which applications you can or should outsource to an ASP. Typically, companies and organizations outsource software applications that require a high level of availability or technical expertise that the company doesn't have-or doesn't wish to maintain in-house.

An example might be your billing solutions. Say you have a small accounting staff that has been working overtime generating bills from a small-scale accounting package. The result is a lot of returned bills sent to outdated addresses, poor collections, and bad debt. Rather than hiring more people, you'd like to update your billing solution to allow your accounting staff to do more number crunching and less arm-twisting.

Preferably, you would like the solution to enable electronic billing, which would save a buck or two per bill for those customers who choose to take advantage of that option. You could either purchase an in-house billing solution at substantial total cost, or lease a solution from an ASP at a very low initial cost and a monthly maintenance and upgrade fee. For small businesses, the ASP alternative would seem a no-brainer.

Once you've determined which areas of your business could benefit from an ASP, the next step is to analyze your business needs relative to the available ASP options. Are security and reliability of paramount importance, or ease-of-use and 24/7 support? Or are both critical factors in making your decision? ASPs vary widely in terms of service-level agreements and customer support. Some offer fully integrated, turnkey solutions; others do not. Some applications are designed to handle growth through very scalable systems, while others may be limited and difficult to scale in step with growth demands.

You should also consider how your employees would be accessing the ASP. Most ASP services have surprisingly simple minimum requirements in order to take advantage of their services. Usually, a Java-enabled Web browser is all that is required. Any device that supports a Web browser--including a laptop, PDA, Internet appliance, or set-top box-has the ability to access ASP services. This could well be a selling point for small businesses that don't already have a significant investment in computer technology or in-house expertise. A set-top box or a Web appliance costs $100-$200 or so, and yet might be able to provide all the access your business and its employees need in conjunction with an ASP.

Kick the Tires and Take It for a Spin Around the Block

When evaluating whether outsourcing to an ASP could prove useful to your business, the best thing to do is test-drive the service. Interestingly enough, the average small business has some enticing options when trying to do just that.

You can test-drive the idea of using an ASP by visiting one of several new ASP offerings just coming to market. Some offer free service because they are in their initial test periods. Others are free because they are sponsor-subsidized (users live with mandatory displays of advertising banners from sponsors). And some offer their services for free to operations with up to five employees.

Most of these ASPs offer general office productivity suites of one kind or another. However, a few services exist that specialize in one basic area such as time and expense accounting, invoicing, or billing.

If you are interested in testing one of these kinds of services, surf on over to OpenAir www.openair.com and check out its time- and expense-tracking services. The OpenAir.com services are free for the first user in an account. For each additional user, a single service costs $9.95 per month, and each additional service costs just $4.95 per month. OpenAir.com offers a suite of integrated time and expense tracking and invoicing services that are easy to use, secure, and can streamline your business administration.

Some particulars about the elements of OpenAir:

Time Bills provides your company with a flexible way to invoice clients for services and expenses. Expense Reports lets your employees create and submit expense reports for reimbursement or client billing. Time Sheets gives your employees an easy way to track time and attendance for internal management and payroll or client billing.

OpenAir OffLine is a companion application for offline data entry. Another application, OpenAir Connector for QuickBooks Pro, provides a seamless link to the QuickBooks accounting package if you happen to use that particular software. You can use OpenAir.com Time Sheets that link to Powerpay.com, which provides an integrated link to automated online payroll.

To experience an advertising-supported ASP (if you're into that sort of thing), check out ThinkFree Office www.thinkfree.com which offers Microsoft Office-compatible office suite services for free to subscribers. ThinkFree Office gives you license-free, Microsoft Office-compatible software: word processor, spreadsheet, presentation, address book, e-mail client, and file manager.

Unlike Web-based folder systems that are limited to storage, ThinkFree Office is a suite of truly usable office programs. They're similar to Microsoft Office, so you can get started right away. No relearning is required.

You can store your documents in your Web-based ThinkSafe cyberfolder. The ThinkFree Office and ThinkSafe cyberfolder are safeguarded by password protection, a secure physical location, and the latest security technologies, including encryption and authentication. No one can access your files unless you want them to.

The entire ThinkFree Office suite takes up less than 8MB of disk space and downloads in as little as two minutes via xDSL. No computer expertise or time-consuming installation is needed. Your ThinkFree Office applications and data are stored on your local hard drive so they open and run just as fast as Microsoft Office. ThinkFree Office doesn't leave any temporary cache lying around when you log out; it automatically cleans up temporary files stored on local disks.

A similar (but ad-free) service is offered over at WebOS.com www.webos.com. Founded in 1998, WebOS.com has developed a Web-based operating system that has (according to company literature) taken the concept of network computing to the next level. WebOS.com's primary product is WebOS, an operating platform that makes the World Wide Web the application and data network for personal users, small-to-midsized businesses, and the enterprise. WebOS is the platform upon which developers can build applications to suit the needs of their own companies or other users of the service.

WebOS.com offers a suite of collaborative software and Microsoft Office-type applications, called HyperOffice, for free. HyperOffice is a suite of solutions for individuals and small business professionals. HyperOffice uses the functionality of WebOS to provide many business services, including e-mail, calendaring, document creation and management, presentation, and database management. HyperWord allows WebOS users to access a fully functional Web-based word processor to create and edit documents within the WebOS environment. All of these applications are available in both personal and groupware settings. Other applications will be available in the near future. HyperOffice is also accessible via its own site www.hyperoffice.com.

Easier than Ever

The convergence of software and IT infrastructure toward an Internet-centric environment has enabled the ASP concept to emerge. Software has evolved from custom-coded, proprietary applications to prepackaged or off-the-shelf applications, and now to the development of Net-centric applications.

ASPs can provide small businesses with the opportunity to outsource some or all of their IT infrastructure needs. However, the potential ASP customer needs to carefully consider all the issues, especially the speed of its end-user's connection to the Internet, before hopping on the ASP bandwagon. When broadband access is a more wide-spread occurrence, many of the arguments against using an ASP will evaporate. Until then, if you are careful in how and what you deploy to an ASP, you can take advantage of ASP services today.

Contributing Editor Don Fitzwater is a principal partner in Interface Solutions, a Minneapolis consulting firm.