Get ready to hear a lot more about ASPs in the months ahead.
The practice of paying to access business applications over the internet from an application service provider (ASP) rather than buying the software outright, has been heavily hyped south of the border but virtually ignored up here. So far.
In the months ahead, the big players in the ASP game will begin to “educate” Canadian businesses about what they are certain is the future of business software applications.
A recent study of the Canadian ASP market by IT market research firm IDC, found 43 per cent of information system executives had never even heard of the term ASP. Of the 57 per cent who were familiar with the concept, just six per cent said they had detailed knowledge.
However, IDC still predicts huge growth in the market with $29 million being spent on ASPs this year, up from just $12 million in 1999. By 2004, spending is projected to climb to $455 million. Some of the large ASPs from south of the border, like Corio and USinternetworking, have announced intentions to establish footholds in Canada before the year is out, and large software vendors like SAP, and PeopleSoft have begun striking partnerships to cash in on the largely untapped Canadian market.
The hype over ASPs in the United State has waned slightly — six months ago anyone with a business plan for an ASP caught the eye of venture capitalists and high-tech stock watchers — but the consensus is that there is substance behind the hype and the shift to ASPs is inevitable. “As a concept it’s definitely here to stay,” said Lars Goransson, an analyst with IDC. The appeal is simple: “Any time you can take a capital expense and it becomes an operational expense, any CFO will be happy with that.”
Some disciples of this new model predict a time when businesses will access software like any other utility; everyone pays a provider for their water and electricity rather than buying their own generator or water supply so why buy the software when you can rent it from an application service provider.
Although the Canadian market is expected to grow at better than 100 per cent, year over year for the next five years for the next while the market will be vendor driven as Canadian businesses learn more about ASPs and become comfortable with the new model.
With nearly everyone headlong rushing into e-business, good information management becomes essential to success and e-business applications are a valuable tool to guide decision-making.
Human resouce management systems (HRMS) are said to help eliminate administrative burdens freeing up HR staff to become strategic knowledge workers. The problem has always been that the considerable upfront costs of buying, installing, and maintaining these systems put them well beyond the reach of most organizations. To say nothing of the headaches typically associated with a system implementation.
For any company that has gone through an human resource management system or enterprise resource planning (ERP) implementation, they know it is not easy. “It’s like a root canal; absolutely necessary, but never enjoyable,” said Peter Newson, associate professor and specialist in information management systems at the University of Western Ontario’s Richard Ivey School of Business.
Because of that, there is a great deal of appeal in the simplicity and affordability of going with an ASP, he said. An ASP can be up and running in a matter of weeks rather than the months — sometimes stretching into years — it takes to implement an HRMS or ERP.
Businesses using an ASP typically have the option of accessing a complete suite of fully integrated business applications, essentially an ERP system over the Net. If that is too grand an offering one or two functions — recruitment for instance — can be managed in this way.
At the end of June, the International Association for Human Resource Information Management held an information session on ASPs for its Toronto members. Spokespeople from several of the big software vendors were on hand to explain the emerging trend and field questions. A lot of people are interested in freeing up resources from the maintenance and administration of an ERP and using those resources instead for the core business, said Larry Moore, a partner in the Toronto office of Sierra Systems Consultants and moderator of the discussion.
But many of the attendees were concerned about security, said Moore. “If you are talking about your financial payroll data, you have every right to be concerned.” He said most of the concerns are being met by the service providers for the simple reason that if they don’t they won’t succeed. Certainly they have to be able to guarantee security, but also performance and connectivity. Customers need to know a power outage at the server’s site perhaps a continent away will not mean they’ll be a couple of days late getting employees their paycheques.
HRMS consultant Al Doran is more skeptical.
“I’m not impressed with them,” he said. It is a very new area and so far there still aren’t enough examples to do any kind of benchmarking. He also said Canada has been slower to adapt the new model because of concerns about security and a reluctance to hand sensitive information over to a third party. “A lot has to do with our cautious way of doing things,” he said, adding Canadians like to have control over what they are doing and ownership of their data.
A lot of people are still skeptical because they are having a tough time visualizing how it would work, said Jean Bryant of SAP Canada. It may take some time to make Canadian customers comfortable with the new model, but she is certain ASPs are the way of the future. Canada is a tantalizing, yet untapped market for application service providers because there is a large proportion of small- and medium-sized businesses, an ideal target for their service. “Application hosting is the great equalizer,” she said.
“We have only seen the tip of the iceberg,” said Bryant. It may take a year or a year and half but SAP and peers like PeopleSoft, Oracle and Infinium, are all certain the market is going to take off. “Definitely all of us are looking toward ASPs. We all believe that this is definitely a trend that is going to catch on. And we’re driven by that,” she said.
In August, SAP announced a deal with TELUS which will act as an application service provider for SAP software. The deal with TELUS is the fifth such partnership for SAP in Canada, included among them Hewlett-Packard Canada.
When payroll outsourcing first came out, the vendors often took the equipment into the prospective client’s office to show them how it would work. The same measures may be necessary to get Canadians comfortable with ASPs.
Customers may actually have to see the system in action to visualize how it may be applied in their setting before they get comfortable with the idea. “It may be slow to get started, but once it does you’re going to see a dynamic change in the business IT world,” predicted Bryant.
The practice of paying to access business applications over the internet from an application service provider (ASP) rather than buying the software outright, has been heavily hyped south of the border but virtually ignored up here. So far.
In the months ahead, the big players in the ASP game will begin to “educate” Canadian businesses about what they are certain is the future of business software applications.
A recent study of the Canadian ASP market by IT market research firm IDC, found 43 per cent of information system executives had never even heard of the term ASP. Of the 57 per cent who were familiar with the concept, just six per cent said they had detailed knowledge.
However, IDC still predicts huge growth in the market with $29 million being spent on ASPs this year, up from just $12 million in 1999. By 2004, spending is projected to climb to $455 million. Some of the large ASPs from south of the border, like Corio and USinternetworking, have announced intentions to establish footholds in Canada before the year is out, and large software vendors like SAP, and PeopleSoft have begun striking partnerships to cash in on the largely untapped Canadian market.
The hype over ASPs in the United State has waned slightly — six months ago anyone with a business plan for an ASP caught the eye of venture capitalists and high-tech stock watchers — but the consensus is that there is substance behind the hype and the shift to ASPs is inevitable. “As a concept it’s definitely here to stay,” said Lars Goransson, an analyst with IDC. The appeal is simple: “Any time you can take a capital expense and it becomes an operational expense, any CFO will be happy with that.”
Some disciples of this new model predict a time when businesses will access software like any other utility; everyone pays a provider for their water and electricity rather than buying their own generator or water supply so why buy the software when you can rent it from an application service provider.
Although the Canadian market is expected to grow at better than 100 per cent, year over year for the next five years for the next while the market will be vendor driven as Canadian businesses learn more about ASPs and become comfortable with the new model.
With nearly everyone headlong rushing into e-business, good information management becomes essential to success and e-business applications are a valuable tool to guide decision-making.
Human resouce management systems (HRMS) are said to help eliminate administrative burdens freeing up HR staff to become strategic knowledge workers. The problem has always been that the considerable upfront costs of buying, installing, and maintaining these systems put them well beyond the reach of most organizations. To say nothing of the headaches typically associated with a system implementation.
For any company that has gone through an human resource management system or enterprise resource planning (ERP) implementation, they know it is not easy. “It’s like a root canal; absolutely necessary, but never enjoyable,” said Peter Newson, associate professor and specialist in information management systems at the University of Western Ontario’s Richard Ivey School of Business.
Because of that, there is a great deal of appeal in the simplicity and affordability of going with an ASP, he said. An ASP can be up and running in a matter of weeks rather than the months — sometimes stretching into years — it takes to implement an HRMS or ERP.
Businesses using an ASP typically have the option of accessing a complete suite of fully integrated business applications, essentially an ERP system over the Net. If that is too grand an offering one or two functions — recruitment for instance — can be managed in this way.
At the end of June, the International Association for Human Resource Information Management held an information session on ASPs for its Toronto members. Spokespeople from several of the big software vendors were on hand to explain the emerging trend and field questions. A lot of people are interested in freeing up resources from the maintenance and administration of an ERP and using those resources instead for the core business, said Larry Moore, a partner in the Toronto office of Sierra Systems Consultants and moderator of the discussion.
But many of the attendees were concerned about security, said Moore. “If you are talking about your financial payroll data, you have every right to be concerned.” He said most of the concerns are being met by the service providers for the simple reason that if they don’t they won’t succeed. Certainly they have to be able to guarantee security, but also performance and connectivity. Customers need to know a power outage at the server’s site perhaps a continent away will not mean they’ll be a couple of days late getting employees their paycheques.
HRMS consultant Al Doran is more skeptical.
“I’m not impressed with them,” he said. It is a very new area and so far there still aren’t enough examples to do any kind of benchmarking. He also said Canada has been slower to adapt the new model because of concerns about security and a reluctance to hand sensitive information over to a third party. “A lot has to do with our cautious way of doing things,” he said, adding Canadians like to have control over what they are doing and ownership of their data.
A lot of people are still skeptical because they are having a tough time visualizing how it would work, said Jean Bryant of SAP Canada. It may take some time to make Canadian customers comfortable with the new model, but she is certain ASPs are the way of the future. Canada is a tantalizing, yet untapped market for application service providers because there is a large proportion of small- and medium-sized businesses, an ideal target for their service. “Application hosting is the great equalizer,” she said.
“We have only seen the tip of the iceberg,” said Bryant. It may take a year or a year and half but SAP and peers like PeopleSoft, Oracle and Infinium, are all certain the market is going to take off. “Definitely all of us are looking toward ASPs. We all believe that this is definitely a trend that is going to catch on. And we’re driven by that,” she said.
In August, SAP announced a deal with TELUS which will act as an application service provider for SAP software. The deal with TELUS is the fifth such partnership for SAP in Canada, included among them Hewlett-Packard Canada.
When payroll outsourcing first came out, the vendors often took the equipment into the prospective client’s office to show them how it would work. The same measures may be necessary to get Canadians comfortable with ASPs.
Customers may actually have to see the system in action to visualize how it may be applied in their setting before they get comfortable with the idea. “It may be slow to get started, but once it does you’re going to see a dynamic change in the business IT world,” predicted Bryant.
