It's a challenge to speak to a company with strong IT resources and get them to buy into the ASP model. Most folks believe that the difference between an ASP and a legacy software company is simply that one releases software for the client to handle and the other releases online where the application is easier to maintain.
Looking at the industry this way, they both look just like software companies. That really couldn't be further from the truth – but it's tough to explain that to an experienced IT professional who doesn't like to relinquish control to anyone – regardless of their expertise.
What is an ASP?
Software companies create software solutions. Application Service Providers are business partners who leverage software solutions. A software vendor can be leaned on for bug support and new features; where as an ASP can be leaned on to understand the industry, its trends, manage clients' success and growth, and continue to push out releases while maintaining minimal downtime.
Don't mistake a Web-based application for an ASP, the two are very different. Gmail is a web-based application. Google Office is a web-based application. Neither provide any ‘service' to the customer outside use of the software. An ASP provides infrastructure, service, software and support.
Thankfully, someone named ASPs correctly – Application Service Provider. ASPs aren't perfect for every industry nor for every software problem. There are plenty of software applications that work much better locally than outsourced to the web. Applications that require high volumes of data to be moved between client and server are one example – the bandwidth can be a bottleneck.
Application Service Providers provide you with outsourced personnel that are experts in their industry. ASPs recognize how the software integrates well into your business environment and helps to drive your business results utilizing the software.
An ASP Example: The Email Service Provider
- Deliverability teams that work with Internet Service Providers to ensure your email doesn't get misidentified as SPAM and wind up getting you blacklisted.
- Product Management teams that monitor industry trends and ensure that their software creates email that is viewable by virtually all email clients.
- Account Management teams that can assist you in email creation, copywriting, and other strategic services to maximize responses.
- Integration teams that work with companies throughout the world on different applications and platforms. They provide experience so that integrations are developed correctly the first time.
- Application development that supports the highest standards of development and leverages technology and infrastructure to the utmost.
Another Example: Online Ordering
In the Restaurant Industry, there are a lot of folks selling Online Ordering software. We have the same paradigms with IT folks to break through that typical ASPs have, most of all the skilled and experienced IT team that believes it can implement any software on the planet. I have no doubt that they can – but their expertise typically starts and stops where the software begins and ends.
The problem with Restaurant Industry Online Ordering vendors is that few of them look beyond the industry… they've solved an issue of how to get from point A to point B and closed the door. Getting an order from online into a POS is the easy part. Once you can do that, you're ‘in business'. The tough parts, follow though:
- Analyzing application usability, compatibility, usability and maximizing the user interface to increase upsells and reduce abandonment rates.
- Providing escalation for orders that error due to outage, POS issues, menu issues, connectivity issues, payment issues, etc. A single lost order is a disaster since you only get one chance with an online patron to get it right.
- Monitoring industry trends to provide the right technologies and best practices for new adoption and security compliance are essential. Mobile ordering is big news in the industry right now. How many of you have ordered a pizza by SMS? Yea, I thought so.
- Integration to analytics, content management systems, Pay-per-click advertising, email marketing and other marketing tools is essential for any ecommerce platform. Is your ‘software' doing this for you? Nope. But your ASP should be.
ASPs are required to Improve and Invest
ASPs surround themselves themselves with the best talent on the market, and they've constructed applications that leverage both the infrastructure AND the service to provide the best possible results. ASPs are agile and their success is directly tied to the success of your business.
One last advantage to ASPs, of course, is the manner in which charge for their software. ASPs typically provide a subscription model where software providers provide a licensing model. What's the difference? You buy the software and run it. If it doesn't work, it's largely up to your organization to get it working. Good luck! With ASPs you typically run the software and then pay for its use.
ASPs Give the Client Leverage, not the Application
From a business standpoint, this provides a business with much more leverage over the Application Service Provider than the software company. This forces the ASP to invest in both research and development and technologies that are full-proof. The myth with ASPs is that they are more profitable. Having worked with some very large ASPs, I can assure you that the profit is on par with the software industry.