ASP and ERP: An Alternative Buying Model and Its Critical Success Factors, Slides of Business Administration

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ASP – An Alternative buying

ERP

Alternative: The Application

Service Provider model

• Attempt to increase the market
  • Extending to smaller players
  • Speeding up implementation
  • Limiting draw on scare expertise
• "An ASP manages and delivers application capabilities to multiple entities from a data centre across a wide area network.”
• different types of ASP:
  • horizontal: enterprise or regional ASP
  • vertical model: task-specific or industry-specific ASP
• solution offered through a Best-of-breed or One- stop-shopping model

ERP and ASP

• As with all ecom systems, service has two parts:
  • interface (web) or client
  • back end functionality on a server
• opportunity to differentiate service for ASP + offer additional software in the package
• opportunity for customer to pay far less and to implement far quicker (c.f. SMEs)
• Also, traditional ERP market is contracting
• expertise is in short supply

Mechanics of ERP / ASP

Services

• 24 to 36 months contracts
• 500 euros per workstation per month + subscription fee at start
• service includes: technical setup / implementation + software licences + on-going support + upgrade
• some ASPs offer differentiated services for different industries
• others develop interfaces that allow some degree of customisation without touching the software
• SAP claim the same margins can be obtained as with traditional projects

Potential partners

• Pure play ASPs - 100% new
• ISP and Telecom companies - own the

infrastructure

• Software vendors - own the licences
• Hardware vendors - own the platform
• Distributors - own the customers
• No one has all the required competence

Future trends

• Risk element is great for all partners involves - especially customers
• Application Service Provider Industry Consortium created end of 1999
• Code of good practice written in January 2000
• creation of a certification that guarantees service and gives protection to customer (CGEY and Deloite & Touche)

Managing IT investments

• Allocation of resources to selected projects
• Application portfolio contains list of potential

systems

• Limited resources mean that systems must be

evaluated in terms of their business potential

• justifying investment
• allocating priorities
• determine how the expected benefits will impact the business overall (+review of these)