By Gordon Opland, Managing Director; RSM McGladrey, Inc.
TWENTY-TWO PERCENT OF SMALL BUSINESSES WILL HOST THEIR MISSION-CRITICAL APPLICATIONS BY 2003
Will your organization be part of this 22%? What is hosting and is it the correct business decision for you? Application Service Providing (ASP) is expected to be an $11.3 billion dollar industry for small businesses within the next 3 years.
Application hosting or ASP¡¯s (Application Service Providers) allow businesses to house their mission-critical software and data on off-site servers owned and operated by other organizations. However, hosting is just one of the many features involved with application service providing. Many ASP organizations will allow you to rent software applications so your company has access to previously unaffordable applications that provide increased functionality beyond what you currently use.
Sound too good to be true? Wait, there¡¯s more! Since your organization no longer has to own and maintain the software, the technology infrastructure to access these applications requires only an Internet connection from your business. Each individual needing access to applications will require a PC, an Internet connection and a password-secure logon. You no longer need to upgrade hard-drives, ensure backups, provide technical support or be concerned about security. Your computer terminals will operate on "thin-client" technology, meaning you will use "dumb" terminals since all the data resides on the server provided and maintained at the data center by the ASP. At a minimum, quality ASP¡¯s provide 10 hour per day/5 day per week immediate support with 24 hour 7 days a week access to your server. Now your technical support people are free to do other IT-related tasks. There is a strong case that ASP security is far more enhanced than anything most individual organizations are able to supply. Data centers provide individual servers for each hosting client, the latest firewall protection, backups more than once per day, natural disaster protection, redundancy and T1 connections, all in state-of-the-art climate controlled environments with third party certification of security.
Now for the best part of all. Application hosting is a cost-effective means to run your business efficiently. In the current environment, the small business has two options: purchasing inexpensive business management software and managing with what is available, or buying expensive software that has additional functionality. Both options require some degree of customization, constant upgrades (requiring the latest powerful hardware) and a significant amount of time management and attention ¨C especially when things don¡¯t go right. Don¡¯t forget the capital needed to purchase this software. If you choose to use an ASP, your monthly subscription fee will be low enough that you can access higher quality software and modules. It would be misleading to say you will not need to customize your applications, but customizations tend to get easier with higher quality software. Plus, any existing modified software or legacy systems may be relocated to a hosted environment.
How do you choose an ASP? This might be the toughest decision of all. There are many questions that need to be answered before choosing an ASP.
1. How many people in your company will need access? Some ASP¡¯s will charge you by the number of "seats" and will have a minimum number, which could be costly if your organization is small.
2. Where does the licensing (Microsoft, Software, Network, Data lines, etc) reside?
3. Who pays for the licensing?
4. Who will provide your software support and is there additional cost for this support?
5. Did you verify references of other companies who have used this ASP?
Many companies are under-financed and are not predicted to survive through 2004 (Gartner Research). ASP is a huge step toward leveling the playing field for small businesses. For the first time, small businesses have access to high-powered software at a reasonable fee, allowing them to compete with larger corporations in both back office operations and on-line capabilities (B2B and B2C). Don¡¯t let this opportunity pass you by!
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