E-business and Application Service Provider - Essay Example

I used proper Harvard referencing Pls visit http www.lib.monash.edu.au ials/citing/harvard-books.html to check!!! THERE ARE NO DIRECT QUOTATIONS, SO THERE IS no need FOR PAGE NUMBERS!!! Introduction The advent of technology provided several options in the business process practised by firms. Technology has become as fundamental components firms and has provided the competitiveness. Jonscher (1995) pointed out that most of the functions of organisations are being completed through computers. Evidently, computer-aided tasks have dominated most approaches observed in several companies. The use of modern technology is considered to be effective and efficient. Usually, firms eliminate the tendency of laxity in workplaces and production continued to increase. Drucker (1993) predicted that the impact of information technology in the global economy will be as widespread as that during the Industrial revolution. The technical process of information technology (IT) management has become more simplistic with the introduction of conventional approaches. It all revolves around the concept of replacing traditional methods with computers and other gadgets. The aim of this transition is promote productivity and ensure that the organisations are highly efficient. Aside from these basic goals, the extensive use of technology has reduced overhead costs and other forms of expenses. Since the demand for computers and other similar commodities have increased, some innovators have realised the potential of creating businesses out of such products. With this development, the application service provider (ASP) became a well-known concept. ASP is designed to provide computer-based services through established networks. The process involves the provision of access to particular application program. Application Service Provider According to Parveen (2001) ASP is an emerging form of service provider concentrated on delivering outsourced application hosting services. ASP is used to manage and distribute application capabilities to a wide range on entities from a data centre across both public and private Internet on a rental conditions. Commonly used ASPs include: enterprise resource planning applications, e-commerce, customer relationship management, productivity applications, e-mail, and unified messaging services. These applications are highly valued in firms and demanded by both multinational and small and medium enterprises. The industry is still in its development period and was motivated by the dot com era. Because the needs for such applications continue it is expected that the industry will continue to improve. Logically, the process of ASP development is highly dependent on several circumstances. First, infrastructures that promote the internet have to be established with reliability. Second, the utility of the browser needs to be a universal client for the internet enabled application. Third, server-based computing models have to be developed. Finally, the available bandwidth has to adequately satisfy the requirements of the application. The applications are obtained from outside suppliers which eventually become the ASP. Some of the fundamental aspects related to ASP creation are up-front capital expenses, challenges in the implementation, and the continuous process of maintenance, improvements, and customisation (Smith, 2001). Most of the firms requiring ASP are keen on improving their financial and business applications that are critical in their performance. The idea of using ASP is centred on the use of software to replace the conventional business process. For instances, firms use the email instead of the usual meetings conducted to relay information. In addition, the finance department will be aided by the presence of accounting software. The use of ASP has expanded and even technical procedures have been embraced by the industry. ASP firms continue to explore the necessities of firms and study the improvements in technology. As an emerging industry, some companies that have no technological capabilities have started building their networks to facilitate the access of valuable applications. Schweitzer (2001) mentioned that the process of understanding ASP has been complex for some business. This reality, however, has failed to stall the development of the industry. The figures that will be presented comprehensively in the succeeding segments have suggested growth and robustness. Indeed, ASP is technical in nature and requires various expertises. These necessities have even allowed the industry to expand and elaborate its coverage. The continuous upgrade that technology undertakes including the current skills enhancements gained by ASP personnel is vital for the industry. It is understood that ASP exploits the recent technological advancements. Although new knowledge is highly valued, some ASPs have continued to use conventional information. It is evident that some companies hesitate on acquiring applications because previous information in their databases is relevant (Cross, 1999). Reinvented applications have realised the need to incorporate new and old methods and approaches. Evolution of ASP The idea of establishing ASP was motivated by the enabling of companies to outsource their computer application requirements. This allows firms to have ample time to concentrate on their core competencies. Accordingly, the existence of computer bureaus in the 1960s and 1970s has started the creation of ASPs. The high demand for ASPs have been fuelled by the increasing price of vital specialised software that are often costly for small and medium scale enterprises. In addition, the complexities associated with the software have become costly for the distributors and burdensome for the end-users. Interestingly, ASP was coined years after its developers have started their operations (Lee, 2000). This was observed by several firms that researched on ASP and found different information on the Internet. When ASP was finally agreed, it became a household name among companies that seek for better business processes. ASPs have gradually replaced the traditional providers of applications. It is expected that the industry will boom because complementary industries such as software manufacturing also improves. Competition has contributed to the desire of companies to acquire ASP services. Greengard (2000) reported that the number of companies catering ASP services have posted consistent increase. The income of the industry is expected to reach $10 billion dollars compared with the total income recorded in 2000, which is at $296 million. Although such growth was expected, the increase in income was unprecedented with the emergence of similar industries and the continuous promotion of competition. Several ASP providers have reported difficulties in communicating and dealing with clients during the early years of the industry's existence. The usual process takes days and both providers and clients complain the lack difference the process provides. With the development of the Internet and other facilities, the method is which ASP companies have strengthened. Through the Internet, the process of acquiring services has become easier. Instead of the usual communications, emails and website access have improved the capacity of ASP firms to improve on their service. The customers as well were provided with several options that can improve their performance. One of the most basic necessities of ASP is the personnel to handle the provision of service. Lavery (2001) stated that the influx of employees highly skilled in information technology is a milestone for the industry. Without the aid of skilled personnel, the companies will have a hard time creating quality solutions for the clients. Some ASP companies have resorted in providing training mechanisms to continually equip the capabilities of the employees. The hiring processes being practised by ASP firms have also improved because the need for top notch employees is an imitable necessity. Finally, several companies have recognised the efforts of the public sector to improve infrastructures and limit the barriers to ASP improvements. Definitely, the public sector has to take some strides and manifest its role in the process. Without government assistance, firms will have difficulties in facilitating the development of ASP. The partnership forged by the ASP firms with the public sector is critical in the health and development of the industry. Benefits of ASP Decreasing business cost is a primary aim for firms. Cost-effectiveness is achieved by decreasing the efforts and resources allocated for certain corporate activities (Dewire, 2000). The software cost of the application is distributed among various clients. Without ASP, firms are inclined to obtain the cost individually. The process requires resources because software acquisition is not limited to the cost. ASP provides an alternative that reduces the cost of acquiring software wherein the quality of the software is preserved. Minimising the time and cost for maintaining and using applications in a vital attribute of ASP. The applications that firms use have to be monitored and customised to ensure competitive outcomes. The fast paced development of technology makes useful software obsolete and more efficient software appears in the market. Through the ASPs the firms will not be burdened by such need. The providers are the ones in-charge of ensuring that the software acquired is within the market standards. ASPs limit the responsibility of the information and technology personnel in firms to the implementation of the software. Indeed, training and other initiatives are reduced because the applications are handled by experts. The firms can stop worrying on improving on their software and other applications used in business processes. The task of creating new innovations and solutions are tasked to ASPs (Currie and Seltsikas, 2001). Conventionally, firms will resort in improving its research and development to aid their information and technology department. It will be practical for firms to transfer the difficulties of such initiative to other firms that are more capable and highly credible. When firms acquire software and applications from manufacturers, the reliability is always an issue. To prevent such incidence, firms have to shift and use the advantages provided by ASPs. The presence of ASPs makes the valuable applications available and the time of transfer from the ASP to the company in need is fast. The usual process is time consuming and requires several conditions being asked by software developers. In addition, it has been proven that ASPs have been providing services that are credible. ASPs have been working towards protecting the systems of firms and prevent the exposure from individuals that are interested with corporate information. The flexibility of ASPs is a critical attribute that will benefit all clients. Evidently, firms have different requirements and their needs are dependent on the nature of their operations. As companies compete, the necessity for software and applications also change. Before, some firms fail to compete effectively because their procurement process takes time for new and better software to be purchased. It is also observed that the change in firms have to be responded as to stay in the playing field. Through ASPs, firms are provided with their necessities in any form and nature (Tao, 2001). Lastly, the operational effectiveness of firms is an important issue that needs to be considered. While ASPs perform their responsibilities, the firms can assign their information and technology experts to other tasks that address core competencies. The process allows firms to have leverage in personnel especially when the necessity for employees when immediate projects arise. It enables companies to perform multiple tasks without worrying about the applications. ASP Models The most common ASP model is that the provider owns and operates the software application. The first ASP existed in this form and was regarded as the most effective among all ASPs. ASPs following this model usually cover all the cost needed for developing and launching the software. For most clients, this model is the most advantageous. Since the ASPs own and operate the software, the company will be solely paying for the cost of the services. Firms, however, are prevented in the operation of the applications. The lack of constructive intervention can affect the results are indicated in several instances (Bush, 2001). The second model that several ASPs practise is that maintenance that is handled by the providers. In the previous model, the ASP only controls and operates the application. Usually, the maintenance and customisation are given to the companies acquiring the service. This business model, however, provides expanded roles to ASPs and the sustainability of the application is the main focus of the supplemented responsibility. It is expected that the cost for this mode of service is higher than the previous model. ASPs usually gain more from this model because maintenance cost is high (Bush, 2001). For some ASPs, the participation of the firms is important. Thus, a model of ASPs was created to become strictly an information provider for companies. The process involves companies acquiring data on applications that are useful. Instead on relying on ASPs for the development, the firms that the ones creating their software and applications. The available information is regularly updated to provide the current trends in the industry (Columbus, 2001). The process of renting application has originated from some ASPs. In this model, the provider will bill company only when the applications are used. Unlike previous models, ASPs practising this approach focus on the sparring use of software by companies. Definitely, there are some companies that require use of applications only when needed. In addition, some firms are ill-equipped to maintain the applications in a given period. To accommodate the needs of such firms, ASPs have designed a model that will charge only when the application is used. The efficiency and effectiveness of the applications is similar to the ones used by firms discussed earlier (Bush, 2001). Another model that was created after the ASP is MSP. Michels (2006) classified MSP as Internet intensive and relates more to information and technology services. In terms of scope, MSP is wider because it caters even technologies needed by firms. The management services provided by MSP are important in the entire applications. The MSP is important because it can directly management the applications provided by the ASPs. Furthermore, MSP can aid firms that have complicated needs in relation to the applications used. The entire company is being upgraded by the MSP and not only the applications. The model introduced by Bush (2001) shows ASPs providing netsourcing. This has been designed to specifically address the needs of small and medium scale enterprises. The concept changes the fundamentals of outsourcing. Netsourcing business applications provides organizations with the solutions the clients need to operate effectively while offering an increased availability of applications and an overall cost savings. Challenges in the Industry The emergence of ASPs has continuously expanded. It is imperative for the industry to recognise the challenges that will affect its future growth. As Columbus (2001) noted, that the complexities of ASPs have to be cleared. Although this goal is highly improbable, the industry needs to make the methods and parameters comprehensible to the clients. Proper orientation on the applications of ASPs is an option. Other alternatives are available and have to be exerted by the ASPs. Understandable services of ASPs are highly valued by firms and future clients. Aside from the intricacies, there are certain disadvantages of ASPs that need to be addressed. First, the client has to holistically accept the application as provided. This is important because ASPs can only afford a customised solution for the largest clients. Second, the firm may depend on the ASP to provide a critical business function; hence limiting their control of that function and instead relying on the ASP. Third, changes in the ASP market can result in modifications in the kind of service available to clients. Finally, integration with the company's non-ASP systems can become problematic (Parveen, 2001). Examining the foundations of the relationship between the organisation and an ASP is a unique model of trust. The company is providing admission to its business making its knowledge available and providing unbinding access to its loyal customers. The organisation is also dependent that its culture and that of the ASP are similar; otherwise, there will a measly synergy and many potential problems in the relationship can emerge (Tao, 2001). The vulnerability of small and medium scale enterprises is centred on the ability of these firms to provide ample resources for predicaments related to ASPs. In particular, ASPs have limited financial leverage and has a small pool of assets for such Initiatives. On the other hand, huge corporations and multinationals have a higher threshold of tolerance for under-performance of applications and aspects associated with technology. The disparity illustrates the important aspect that the industry needs to address. It is important for ASPs to provide solutions to small and medium scale firms that will adhere to their financial capacities (Columbus, 2001). The vital challenges for ASPs in satisfying service level agreements (SLAs) are in managing service over multiple suppliers and communicating service level information. ASPs necessitate visibility into the suppliers' infrastructures to enable better service delivery. To promote communications with SLA, ASPs has to provide active, business inclined perception on the manner in which applications are supporting a customer's business objectives. Statistics on network, server and hub uptime are no longer sufficient. Ascertaining the service level agreement is considered as the most critical segment. Furthermore, the reliability of ASPs has to be established. In most instances, ASPs have failed because their credibility has been tarnished (Columbus, 2001). Clients have become particular with the reliable record and outstanding performance. This is a challenge that the industry needs to continue to work and improve. The process is indeed time consuming and requires more initiatives. The reward, however, will further improve the industry. Conclusion Undoubtedly, the presence of ASPs has changed the phase of several businesses. From the conventional practises, business approaches have improved because ASPs have reduced the burden of their clients. In addition, the industry has remained optimistic in relation to its current strides towards stability. Although an attractive option for hard-pressed executives seeking cost reduction and faster time to market, ASPs are still relatively new and unproven. Moreover, there have not been a significant number of reported disputes involving ASPs. This reality, however, may not always be the situation as there are a number of reasons that suppress disputes between clients and ASPs. As the ASP market develops, it is expected that the number of disputes will rise as a result of the failure of providers to meet their service- level obligations to the necessities of the clients. Moreover, when the forecasts of various analysts' are accurate, the ASP industry will experience significant short-term consolidation. This will lead to even more questions and disputes over data ownership, data transfer and software ownership. The robust industry requires more improvements especially in the fundamentals of its existence. The global market for the ASP industry is forecast to improve despite the threats and competitions that exist in the industry. Another cause of concern is that it is expected that majority of the ASPs will fail by the time new ASPs are established. Unless ASPs do not offer acceptable SLAs with sufficient assurance about security, companies will remain reluctant to trust their applications, regardless of the effect that such strategy will provide. References Bush. J (2001). CMA Management. "A new ASP solution for small and medium scaled enterprises." Columbus, L. (2001). E-Business Advisor. "ASP planning: Create a strategy for scalability." Cross, M.A. (1999). Health Data Management. "Out with the old, in with the new." Currie, W. and Seltsikas, P. (2001). European Journal of Information Systems. "Exploring the supply side of IT outsourcing: Evaluating the emerging role of application service provider." Dewire, D. (2000). Information Systems Management. "Application service provider." Drucker, Peter. (1993). The Practice of Management. London: Harper Collins. Greengard, S. (2000). Industry Week. "Application service provider enter the mainstream." Jonscher, Charles. Information Technology and the Corporation of the 1990s: Research Studies. "An Economic Study of the Information Technology Revolution." New York: Oxford University Press Lavery, R. (2001). Strategic Finance. "The ABC of application service provider." Lee, M.Y. (2000). Entrepreneur. "Choose or loose: Evaluating application service provider." Michels, B. (2006). Mortgage Banking. "ASP vs. MSP: Is either right for you." Parveen, B. (2001). The Banker. "Grasping application service provider (ASP)." Schweitzer, C. (2001). Association Management. "Application service provider a la carte." Silltow, J. (2001). Information Systems Auditor. "Assessing the risk of using an application service provider." Smith, J. (2001). Plant Engineering. "Application service provider (ASP) basics." Tao, L. (2001). Computer. "Shifting paradigms with the application service provider model." Read More