Sweating the details

Even though you're handing the job over to an ASP, you'll still have lots of work coping with integration and implementation issues.

By Lauren Gibbons Paul
Network World, 01/22/01

Technology Insider You might be tempted to think of using an application service provider as a no-brainer. After all, the ASP takes over the hassles - and the upfront costs - of implementation and training, ensures that its network is robust enough to handle your users and secure enough to keep out intruders. All you have to do is sit back, put your feet up and see what's happening on ESPN.com, right? Wrong.

It's a lot of work to get up and running with an ASP. You have to provide a redundant connection between the ASP's server and your network. If you need to interface the outsourced application with legacy systems, you have to figure out how that integration will happen. You must worry about the size of the pipes that carry the application from the ASP to your firm and also sweat out the security arrangements. In many regards, outsourcing an application is a lot like hosting it yourself.

Competing forces
Key concerns
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Many IT managers are well aware of the potential integration issues lurking with ASPs. Integrating an ASP offering with existing applications is the top concern of 47% of IT managers who have used an ASP or will use one in the next six to 12 months, according to an Information Technology Association of America (ITAA) survey.

"All the work is not on the ASP side, there's a lot on your side too," says Troy Tate, corporate network manager for CTS, an electronics components manufacturer in Elkhart, Ind.

Tate is investigating the possibility of having an ASP such as Corio host a customer relationship management (CRM) package from Siebel Systems or Onyx Software.

"These CRM apps are pretty beefy and require a lot of bandwidth. Whether we buy it and run it in-house or give it to an ASP, our network will be affected either way," Tate says. He's looking for assurances of excellent response time for CTS' 250 to 400 users.

His concerns are valid, says Liza Henderson, vice president of consulting at TeleChoice. Hosting the application at an off-site location implies application response time will not be as good as if it resided on an in-house server, she says. Unless your application enjoys a dedicated server at the ASP's data center - something that is increasingly uncommon - the response could potentially be affected even more, depending on the type of connection between the data center and the firm.

CRM and enterprise resource planning (ERP) applications are among the most bandwidth-intensive applications around. As such, you'll need to do some extra planning if you decide to outsource this type of application to an ASP. PSDI (now called MRO Software) found this out the hard way when it outsourced the Siebel CRM application and the PeopleSoft ERP application to USinternetworking (USi) in late 1999.

Shortly after implementation, PSDI salespeople were having a hard time accessing Siebel from their laptops in the field. PSDI and USi had to go back to the drawing board, rearchitect the application to make it less bandwidth-intensive and then roll it out again. Today, both applications are running smoothly, according to Sheila Hoey, global IT program manager for MRO Software in Bedford, Mass.

Intraware, an online marketplace for software and IT services, also had trouble with a hosted Siebel application.

The company outsourced the application to SiebelNet, a unit of Siebel Systems that hosts its product through USi. IT managers failed to provide a clearly defined data model to USi prior to beginning the installation.

"Because we had an unclear data model, the customer data quickly became unusable," says Shaun Fenn, director of sales information systems at Intraware in Emeryville, Calif.

This turned out to be a serious problem. The first Siebel rollout failed, but Intraware pressed on with a second project that succeeded, according to Fenn.

Integrating ASP applications with the legacy environment is challenging enough, but this gets even trickier when you factor in service-level agreements.

If the hosted application uses data residing on the customer's own servers, to what degree can the ASP guarantee availability?

On the other hand, if you're planning to move an existing application to an ASP, lots of groundwork is required before you go live with the ASP version. First, take a thorough inventory of the application in its current environment.

Randy Gardner, vice president of IT for Viking Freight in San Jose, investigated the extent of customization and the type of network connection required for roughly 100 users prior to moving his firm's ERP application to Infinium. This process took two weeks. The data migration took five weeks and testing took another six weeks.

"We ran parallel systems during the test period," Gardner says. He advises anyone moving an existing application to an ASP not to migrate "dirty" data, because moving obsolete information is a waste of labor and storage space on the new system. "Make it as lean as possible before the vendor comes in," he says.

Alan Harding, vice president of operations for DataCert, a Houston legal software company, did not find it to be particularly onerous to set up the company's application on Interliant's servers.

DataCert connects to Interliant through a leased line but will move to a VPN some time this year. Interliant technical staff set up the link between DataCert's Check Point firewall and Interliant's firewalls, a process that took about a week.

CTS' Tate has hesitated to pull the ASP trigger, wary like many other potential customers of the amount of integration work that may be ahead.

"I think this is why the [ASP] adoption rate is not so high," Tate says.

Competing forces

Here are some of the top drivers and obstacles of ASP deployment:

Drivers Obstacles

Mobile workforce Security and reliability

IT skills shortage Inadequate user IT infrastructure

World-class processes Market confusion and hype

Improved return on investment Need for customization, integration

Need for speed Resistance to change

IT infrastructure complexity and cost Lack of focused offerings

Network-ubiquitous, low-cost delivery Quality of service

Rearchitecting of software as a service Unknown vendors

Source: Gartner Group

Key concerns

IT executives who use an ASP or plan to in the next six to 12 months identify these factors as drawbacks:

Integration 47%

Worries over ASPs stability 45%

Loss of control 44%

Security 41%

Contract lock-in 39%

Not enough choices available 38%

Reliability 36%

Performance/uptime 25%

Unproven business model 24%

Reduced flexibility 24%

Higher IT costs over time 12%

Higher capital outlay 7%

Source: Information Technology Association of America (ITAA)