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More and more companies are examining how application service providers (ASPs) can benefit their business. Some are looking to find a way to execute back-end applications while saving money in operating costs. Others are simply looking beyond their traditional IT solutions.

Whatever the reason, this approach can greatly benefit the bottom line. According to a recent IDC study cited by the accounting firm of Bennett Gold, an ASP implementation will yield significant quantitative and qualitative benefits including an average ROI of over 400 percent over five years.

Web-based IT solutions have come a long way from legacy enterprise resource planning (ERP) systems. Affordable web-based software is an alternative to big-ticketed CD-Rom applications. While both options provide solutions for human resources administration and accounting, companies still pay an arm and a leg for IT department management (including high salaries and expensive equipment) and application purchases.

Now envision an economical hosted version of the same application without IT operating overhead. This is the ASP. Companies can now outsource their back-end applications and have the ASP vendor develop, build, distribute and maintain custom applications and databases for client use. At a typical price of only $50 to $100 per user per month, the ASP is drawing thousands of potential buyers to its doorstep.

“The service model provides a constant annuity revenue stream, moving away from the spiked quarterly model” that prevails with traditional software sales, says Fred Hoch, vice-president of software programs at the Software & Information Industry Association (SIIA). “Also, [ASP] changes vendors’ relationship with the customerā€”and vendors are in need of better customer relationships. Hoch was quoted by ASP News.

ASPs arm users with almost everything, including databases, e-mail, processing, shopping cart options, e-commerce services, search engines, calendars, FTP applications, and custom programs. ASPs also generally provide multiple servers (redundancy), 4-way replication, power backup, and 24-7 customer support, according to HotSearchUK.

Chief information officers (CIOs) and legal departments shiver at the thought of outsourcing critical proprietary and customer-related data to a third party. Many entrepreneurs prefer keeping company data close to the vest. Security can be protected, however, by demanding stringent service-level agreements (SLAs) to ensure the privacy and security of company data.

Today, most major software companies offer ASP technology. Therefore, be sure to shop around for the company offering the package that best suits your corporate needs. With ASP technology, you are paying for the peace of mind that comes with entrusting your back-end data in the hands of exceptional professionals.

Article Source: SmartBiz

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