Think twice before hiring an application service provider

Coming up with new product features and new business ideas is a requirement in the high-tech industry, where change often happens for its own sake. The feature bloat that accompanies many current products makes me think that you can have too much of a good thing. One technology development that is storming the trade press is application service providers (ASPs). (No, not Active Server Pages—that acronym is more than a couple of years old, so it's due for replacement.) In a nutshell, ASPs host your business applications across the Web. Emerging ASPs aim to host enterprise-level applications—such as SAP, Oracle, and PeopleSoft enterprise resource planning (ERP) applications—and even personal-productivity applications, such as Microsoft Office.

In many ways, ASPs make good business sense. Instead of shelling out for the application licensing fees, the hardware required to run the application, and the added support costs to keep the app running, your company pays a simple monthly rental fee. As long as you have Web access, you can use a browser to access the application. Theoretically, this setup gives you global access to your applications while freeing you from hardware and support expenses. In addition, your IT costs become a fixed monthly figure that is easy to budget.

As with most things that sound too good to be true, if you look closely at ASPs, you'll see some flies in the snake oil. The first—and by far the biggest—problem with ASPs is that your applications aren't available if the Internet isn't available. It's one thing to have your email stopped for a while. It's quite another to have your order-entry or production processes dependent on services outside your control. For an additional price, you can set up redundant Internet connections and even redundant ISPs. However, even that extreme measure can fall short of real protection. In 1999, a New York street crew accidentally cut a phone company's primary Internet backbone cable, bringing down that area's Internet access for days.

Using ASPs also brings up the closer-to-home matter of data ownership and availability. Running your applications through an ASP means you relinquish control of your data, so your company must depend on outside resources for disaster recovery.

The final flaw in the ASP concept is the problem of business exposure and security. If your company's data is available on the Web, then it's vulnerable to intruders. ASPs provide expert security measures, but security breaches—such as the recent Denial of Service (DoS) attacks on eBay on the day of its initial public offering (IPO)—make the daily news. Most businesses can't afford this potential exposure, regardless of how much money they might save with application hosting. Any company that goes this route is betting its business on its ASP.