ASP - rewriting the rules of software distribution

Good things needn"t always come in small shrink-wrapped packages. As a natural consequence of the distributed computing paradigm, an emerging breed of service providers are renting out software functions over the Internet.

Application Service Providers (ASP), as they are called, host the software on their server. Subscribers simply log into the network, use the service with the aid of minimal front-end tools, and log off when done.

With ASP, computing can be thought of as having come a full circle, for its roots can be traced back to the days of dumb terminals (as in UNIX). The software lies at the back-end and the users work from the front-end. Going by the definition, Hotmail is a fine example of an ASP, offering remote e-mail management software. Your front-end tool, in this case, would be the Web browser.

In the traditional software-in-a-box model, packages were sold across the counter for a flat price. This did not work out too well for enterprises that went in for very expensive software solutions like ERP. It comes as no surprise that SAP, Baan, and Peoplesoft were among the first software houses to become ASP. The ASP model allows for more customer-friendly billing schemes based on features used, duration of use, or time-based subscriptions.

Looking at software as a service rather than a product is rewriting established business models, quite expected of the Internet. From the point-of-view of a subscriber, they need to pay for services as they use them. Start-up time is negligible as there is very little installation and configuration work. Best of all, the software is always the latest one as it is upgraged at the ASPs end.

The new model clicks with service providers too as they are assured of steady income. The logistics involved in distribution is much more manageable now. It"s a win-win situation.

Payroll, e-commerce, supply chain, and collaboration are likely to be the first applications served up by ASPs. As mentioned before, ERP is already on the ASP bandwagon. Sun Microsystems is doing their bit to introduce the ASP model to home and office users too. When their innovative Star Portal initiative comes to fruition, you can have an entire office suite - word processor, spreadsheet, presentation graphics, and all - available on the Web. Users will be able to access their documents and work on them from any computer running any platform anywhere.

Currently, there just isn"t enough bandwidth for such intense online activity. That is not to say that ASPs won"t do well. Bandwidth or not, more and more applications will be integrated with the Internet, and these will drive the development of faster networking technologies like Internet2 and gigabit ethernet. By the looks of it, there is a strong pro-ASP wave. As with any new concept, there are no convincing success stories to start with; only reasons and conventional wisdom. Here are some of them...