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Taking the Mystery Out of the ASP

January 1, 2002
by root
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ASP's seem so promising - but what of the doubts they raise? A vendor's advice By Howard Lange
This information technology alternative SOUNDS ATTRACTIVE but
still raises concerns - addressed here by an experienced vendor
Long-term care organizations are continually searching for new ways to reduce costs while improving efficiencies. Among the functions that are examined routinely is information technology (IT), and an increasingly popular cost-saving solution in this area has been the use of an application service provider (ASP). An ASP hosts, manages and deploys software applications from a central facility known as a data center. Long-term care organizations can access the software and their data through the Internet on a subscription basis.

The ASP represents a new way of handling and managing data, one with many benefits. But that newness can produce skepticism, con-
fusion and many questions among those being asked to consider adopting the ASP. Asking these six basic questions is one of the first steps to take in considering an ASP:

'Does the ASP host the right applications for current and future needs?
'Does it offer an appropriate level of application and technical support?
'Does the ASP offer service level guarantees in its service level agreement (SLA) to ensure that you receive the level of quality you need at par or above what you could obtain through internal resources?

'Is the ASP specialized in any particular industry?
'Does the ASP's business model ensure that it will be able to service its current customers while sustaining manageable growth and sustaining financial stability?
'Can you interview the ASP's customers?

There are other areas of concern as well, often expressed in the following manner, with suggestions on how to address them:

"I don't really save any money with ASPs; in fact, I might spend more." At the heart of any business decision is cost. When considering cost, an organization must compare the ASP's monthly service fees against the costs of acquiring and maintaining IT resources in-house. Since the decision is not always an either/or proposition, consideration must be given to such issues as:

'A capital budget that might previously have been allocated to IT for hardware, software and services might now become an operating budget that doesn't necessarily reside in IT.
'For larger organizations, the potential exists for smaller IT departments and computer rooms. ASPs likely will displace some personnel and physical hardware within many IT departments.
'Consolidation of hardware resources and some technical personnel could translate into less work in some IT departments.

Other cost variables that must be factored in include data center construction and maintenance; hardware obsolescence, replacement and upgrades; and personnel.

"The software available on the ASP won't meet all my specific needs." ASPs that host a wide array of integrated clinical and financial software applications as well as niche applications, such as scheduling or rehab services documentation, offer flexibility in terms of the functionality, benefits and price. Furthermore, ASPs often host widely popular front-office applications, such as Microsoft Office.

"ASPs are in a shaky business; what if mine folds?" Although some ASPs have succumbed to over-optimistic market projections and poor management, the ASP industry in general, according to analysts, is still a healthy alternative. According to some analysts, the key to ASP stability and growth is specialization or a vertical focus. Even if you have completed a thorough due diligence, you should investigate the ASP's SLA, business model, background of its executives, references and financial stability in light of your industry's needs.

Having a contingency plan is also a must. Consideration should be given to migration of data to another hosting entity if the need arises, as well as timing and access to your data.

"The Internet isn't secure; hackers will have access to my data." Though security should be at the top of your list when considering an ASP solution, it is important to remember that ASPs operate with a clear understanding of data security. They go above and beyond what most companies could provide themselves, and in most cases they can likely provide the safest, most secure technology available.

"The Internet isn't reliable; our Internet service provider (ISP) goes down too frequently for comfort." Hand in hand with security is the issue of "up-time." Customers demand application availability on a near-constant basis. ASPs typically will go the extra mile to make sure that connectivity problems are mitigated if not eliminated altogether, and often offer a back-up alternative if the standard connection process is down.

"My staff is resistant to technology. Learning a new software program will be a real challenge for them." With the extensive training resources of the ASP, customers are able to more easily adapt to changes in applications or the introduction of new applications. ASPs can offer on-site training, as well as computer-based (CBT) and Web-based (WBT) training.

"Doing anything over the Internet takes too long. The process of entering data would be too time-consuming and frustrating." Through new technologies that allow for greater bandwidth, the resulting performance and speed over the Internet is almost equal to having a server on site. Internet connections through a frame relay or a virtual private network, or VPN (ISDN, cable or satellite), both increase the speed and reliability of an Internet connection.

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