ERP driving the ASP bandwagon

Many enterprise application vendors are eager to offer remote access to their applications via the Internet with a host of new packages and partnerships.

The companies welcome Web-based outsourcing, so-called rentable applications, as a way to win more customers, especially smaller ones that might have been put off by expensive, drawn-out enterprise resource planning (ERP) implementations. They also like the steady stream of income that outsourcing can assure over several years.

"I think we're at the early stages of the next platform for enterprise computing. You won't have to go through this quagmire of integration," says Chris Russell, president of Oracle's Business On-Line Initiative, in Redwood Shores, California. "This'll be a great thing for commerce, to run a modest-sized business with enterprise-class agility."

Most vendors offer multiple levels of outsourcing through partners, from remote management of applications that the customer continues to host through Web browser access to software on another company's server, all the way to outsourcing the entire function, such as payroll or marketing.

PeopleSoft, for example, offers three models of outsourcing. Its Application Services program, aimed at midsize companies, and Application Management program are both offered in bundles with hardware, networking, maintenance, and so forth, for a monthly "subscription fee," says Farrell Griswold, director of outsourcing at PeopleSoft, in Pleasanton, California.

Then there is the company's Business Process Outsourcing, which Griswold calls "ADP Plus," referring to payroll company Automatic Data Processing, for payroll, human resources, and related functions.

SAP also offers business process outsourcing. The company provides remote application management and IT outsourcing as well.

Some vendors have had a few false starts.

Siebel, a manufacturer of sales and customer-service software, was one of the first vendors to sign up USinternetworking (USi) to resell its applications last year. But in February Siebel took back control of sales, reportedly dissatisfied with USi's slow sales performance. In the revised SiebelNet arrangement, USi provides only the actual hosting, says Eric Hjerpe, senior director of SiebelNet services, in San Mateo, California.

Qwest, Siebel's new application service provider (ASP), will provide only a scaled-down sales application aimed at small to midsize businesses.

So what kind of company -- ISP, telephone company, systems integrator, hardware provider, etc. -- is an ideal ASP? Many vendors are ambivalent.

"We think each of them is viable," says Tom Melchiore, director of outsourcing for SAP America, in Philadelphia. "We're not really playing favorites here."

The Baan Company, on the other hand, does have a preference, namely companies with experience in ERP applications rather than telephone companies or ISPs, says Jim Worley, general manager of Baan's Global Outsources division, in Reston, Virginia. Baan announced June 9 that France-based Groupe Bull will be its first ASP; four more are due in July.

ERP does not live by Web tone alone, according to Worley. "Does Qwest care which application runs as long as it's eating up bandwidth? ... We want someone that has experience with the Baan skill set," he adds.

A few vendors are trying to avoid the problems that come with delegated control by being their own hosts.

"I like hosting some of it ourselves so we know what it means doing it end to end," says Oracle's Russell. "And we have a hand in advancing the state of the art."

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