The ABCs of ASPs: the ASP model offers a challenge to the way IHEs have traditionally viewed the use of software. (Technology).

What is an ASP (Application Service Provider)? In my town, it is no longer necessary to cook in order to eat at home. Two chefs, a father and a son, will contract to bring your family's food to your home each and every night. You just choose from a menu the day before, and you pay a fixed fee every month. If we were talking about software instead of dinner entrees, that would be an ASP. In an ASP arrangement, you pay a monthly fee for the use of a software application, and the vendor takes care of everything else: acquiring the software, hosting and operating it, and delivering it to your doorstep, either via a private WAN or the 'Net.

The ASP industry was invented during the dotcom boom, and went through some rough times during the shakeout. Certainly, it has learned some lessons and taken some new directions since the wild and crazy days. What the ASP model has to offer to higher education institutions right now is a challenge to the way we have traditionally thought about owning and operating software.

ASP-ING A WHOLE CITY

The City of Houston is blazing a trail that may prove instructive. Any Houston resident, armed with a free Houston Public Library PowerCard, can tap into a suite of office applications to write a resume, maintain a personal calendar, or keep records for a business. The city signed a contract with Internet Access Technologies (IAT) in June 2002 to provide the SimDesk and SimMedia applications from an Internet server and to provide remote storage for citizens' documents. In effect, the city (through its contractor) has become an ASP on a wide scale. In the first phase, over 60,000 people have used SimHouston and have stored over a quarter of a million documents on the city's servers.

If the SimHouston project can flourish, it may introduce the ASP model to more ordinary people than ever before. Of course, one could argue that Web-based e-mail services, or even eBay, also deserve to be called ASPs. But somehow, complex as they may be, Web e-mail and online auctions feel more like front ends to services, rather than complex software applications that are being delivered into users' hands remotely and without an up-front purchase.

As intriguing as desktop ASP software may be, the major ASP firms have generally built their business case on relieving corporations from the burden of operating massive enterprise software. They have focused their attention on applications that are complex and demanding to run, but fairly standardized from one company to another, such as human resources, customer relationship management, e-business, payroll, and accounting apps. The major players (Agilera, Appshop, Corio, Crestone, Surebridge, USinternetworking, and many others) are not yet recognizable enough to show up on the Sunday crossword puzzle, but the applications they provide (Oracle, Lawson, J.D. Edwards, Great Plains, Microsoft Exchange, Lotus Notes, PeopleSoft, SAP, Siebel, and so on) are more recognizable.

The ASP model has not found many takers in higher ed so far, at least not for handling the entire suite of core enterprise applications. There are a few exceptions for vendors that have already established a business providing the traditional ASP-friendly applications (such as HR, procurement, and financials): Oracle and PeopleSoft are two. The Kentucky Community and Technical College System, for instance, has outsourced its PeopleSoft applications with Crestone, and all its servers are now in Atlanta. But even those vendors are still grappling with how to offer the highly customized student-centric parts of the campus information system. Datatel, for example, offers its portal product, CampusCruiser, through the ASP model, but does not offer its core Colleague product (to which CampusCruiser must be linked) on a pay-for-usage basis. Jenzabar, another vendor of packages for higher education, says that there simply hasn't been enough interest in the ASP model on the part of its customers.

So far, there is no firmly established marketplace in which colleges and universities can review numerous institutions and vendors playing out an ASP relationship. But there are some bellwethers that may provide encouraging results.

CEISS: AN ASP-LIKE COLLABORATION

There are five postsecondary institutions in British Columbia running Datatel's Colleague almost as if it were an ASP product. (I'll explain the "almost" in a moment.) For all practical purposes, they turn on the tap, and Colleague runs out. This magic has been achieved through a province-level agency called CEISS (pronounced "cease"). CEISS (www.ceiss.org) is an independent organization founded to support British Columbia's public colleges and universities, but is empowered to provide services to other institutions as well. As one of its functions, CEISS has evolved into a consortium and service bureau for five smaller institutions.

These campuses selected Datatel as part of a province-sponsored drive to modernize and unify the software on all campuses, but found that they couldn't manage the staffing to support it properly. Instead, they rely on CEISS's data center in Victoria to host the application and support their use of it. CEISS was intimately involved in the implementation of Colleague, helped each campus develop rules and procedures, and provides ongoing training. CEISS supports 250 users at the five institutions.

The CEISS consortium is a proving ground for the following concerns, often raised about the ASP model:

Bandwidth. You need plenty of bandwidth to keep users happy with an application that is hosted remotely, and the connection had better be reliable. British Columbia already had its Provincial Learning Network in place--high-speed, robust (only one major interruption thus far during the life of the consortium), and guaranteed to grow as the needs of BC's postsecondary institutions increase.

Business case. David Rees, chief executive officer of CEISS, says that it was crucial to walk the VP/administration or the business manager at each institution through the business case, to show them that they could save money, but not at the expense of services. There were incentives for the original purchase and implementation: The province paid for the Datatel Licenses and subsidized some of the startup costs. And, unlike a traditional ASP, the service bureau is a "multiclient shared service," with the members participating in its governance.

Service levels. Rees convinced campus administrators that they would get the same response they could expect from an in-house operation, with data fully backed up and protected, and that service levels would be met. If CEISS had failed to follow through on any of these, they knew they ran the risk of losing their customers.

Rees admits that CEISS started out with some advantages, such as the established network and a pre-existing level of collaboration. But he insists that the success factors include treating the project as a change-management initiative, not an IT project. "We exercised very disciplined project management," says Rees, "making it very explicit what would happen, when, and how much it would cost." Delivering the service that is expected, he says, comes from hard work: "You build your reputation one step at a time."

SOFTWARE VENDOR AS ASP

One of the things that the CEISS consortium demonstrates is that becoming a successful ASP demands deep expertise in the application that is being provided. This is how the ASP function is different from mere application hosting or platform provisioning. The ASP customer wants the reliance on the program to cost less trouble and effort, so the service provider must have the know-how to make many of the complications invisible. One of the things that was learned in the post-'90s shakeout was that generic ASPs are a contradiction in terms. This has brought some of the larger software vendors themselves to the forefront of the ASP market.

Oracle has leveraged its ASP business on the difficulty of finding and paying qualified staff to keep the Oracle tools and apps in good running condition. Greg Myers, vice president of Outsourcing Services for Oracle Government, Education, and Healthcare, says he has one argument that CIOs find especially persuasive. "You struggle to get your application up, fight to make it stable, then the last thing you want to do is change it. It's like a moving a china cabinet. But that means you can't take advantage of improvements in new versions." Oracle, he says, has the definitive expertise, so why not let them manage the Oracle application stack from top to bottom?

Myers says he is seeing increased interest from higher ed. Oracle calls it "outsourcing," but Myers says that universities are generally not using Oracle's services to replace staff, but to move them to more mission-critical or urgent work, like SEMIS or mandates related to homeland security. The cost to do this is 3 to 5 percent of the list price of the software, per month (in addition to the usual charges for software support and maintenance). The minimum contract is about $72,000 per year for hosting and support services.

A NEW MODEL?

As software gets increasing complex, the cost of maintaining a good support staff has soared at a dizzying rate. People swap stories like the one about the database administrator who left the university to take a job in industry that paid more than the chancellor's salary. The dilemma has become especially hard for smaller institutions with lean staffing. There is a fixed core of needed skills that doesn't decrease significantly once the size of the institution shrinks below a certain level. New models of support, pricing, and delivery--perhaps variations on the ASP models that exist today--may offer a way out for some campuses. But there are still some significant concerns that must be faced squarely, such as cost, the risk of relying on a vendor that may fail to meet expectations (or may even disappear entirely), and the need to have an exit strategy if the worst happens. But as more institutions work out satisfactory arrangements, buying and running software on your own may become a less inevitable choice.

John Savarese is a consulting principal with Edutech International (www.edutech-int.com). ,