analytical Q Article Contact Search Energy

from Anne Ku's article on ASP's

Pros and Cons of using an ASP


Pluses (benefits of using)
Someone else

- purchases, installs, and configures the software

- maintains the system and is responsible for uptime and reliability

- responsible for various software versions and compatibility

- performs the required data backups

- has to hire, train and supervise the IT staff to do all of the above

ASP makes sense when

- speed to market is paramount

- cost savings are not the key issue

- management wants to keep staff focus on core competencies

- management wants to avoid capital outlay on software and IT staff but wants to tap the latest technologies to provide state-of-the-art offerings

Minuses (reasons not to use)
- ASP market unstable, it may shrink and consolidate

- No real cost savings or additional revenue- Internal IT may resent use of ASP

- Customization costs too much, some level of custom configuration is always required

- Anxiety over ASP security

- Lack of knowledge transfer from ASPThings to watch out for

- ASPs may not be able to perform to claims

- Scaleability

- Avoid service level agreement short-cuts --- ask tough questions, demand specific answers

- Define rules on data ownership, access and liability before deals are signed

- Credit risk: what if the ASP goes out of business?

Source: Theo Mullen, E-source, European E-business Strategy Series, October 2001 "Application service providers (ASPs) - not for all energy service providers (ESPs); Energy Insight Today, 24 October 2001 "Utilities slow to buy into ASP market"