How An Early ASP

By Deborah Gage Print this article Print

The days of the application service provider may have come and gone. But standardized services on the Web are gaining customers, who want low-cost means of handling systems like customer relations. Should your company be next?


How An Early ASP Adapted

One of the very first ASPs, Corio, survived by changing its business model, although its focus on providing enterprise software—from PeopleSoft, SAP, Oracle, and Siebel—did not change. Corio just acquired the ASP customers and assets of Qwest CyberSolutions, a failed joint venture launched by Qwest and KPMG in 1999. (See Dossier: Qwest Cyber.Solutions," November/December 2001.)

But the company taking credit for Corio's transformation is a customer. Carlson Companies, a provider of travel, hospitality, and marketing services, chose Corio to implement PeopleSoft human resources and payroll software for 35,000 employees rather than try the implementation itself. The project has been under way for a year and is scheduled to go live in December.

Carlson negotiated several exceptions to Corio's usual contract, in part to protect itself in case something happened to Corio. Carlson was already hosting software internally—its Shared Services division provides common processes like HR across all other Carlson divisions, and it wanted to continue hosting on-site. Carlson also owns its own hardware and software, has its own people on the development team, and manages everything below its Oracle database—including the operating system and the network—for Corio. Corio handles Oracle and PeopleSoft applications.

Project manager Joe Ziglinski declines to state an exact return on Carlson's investment in hosted software, although he cites "significant savings," especially in storage. Indeed, PeopleSoft now finds the Web services market so attractive that it has allied with Hewlett-Packard to compete against Corio, in which it made an equity investment in 1999. Sanjay Katyal, senior director of PeopleSoft's eCenter, which now relies on HP's data center to host customers, says PeopleSoft's software is already designed for the Web. He calls the newer Internet applications "niche products."

But Putnam Lovell's O'Connor is sticking with those products, and he has convinced Putnam Lovell's new owner, National Bank Financial, to do the same. After the acquisition was completed in June, some of NBF's employees fell under O'Connor, and he provisioned them for Salesforce.com. Because the software runs on the Internet, he says, he finished the job in two weeks rather than the two months he would have required had Putnam used a more traditional product.

Banking on Web-Based Services

Putnam Lovell NBF, an investment bank, uses services on the Internet to handle many basic company functions, such as keeping general ledger accounts. Here's what it figures its costs would have been to keep some of these functions in-house; transfer them to equipment housed and maintained by other companies (application service providers); or, to use services delivered on the Web that can't be customized.

What You Should and Should Not Do: About Using Hosted Software

Research before you decide. Understand your needs and study vendors, providers and technologies before you make a decision

This article was originally published on 2002-10-11
Senior Writer
Based in Silicon Valley, Debbie was a founding member of Ziff Davis Media's Sm@rt Partner, where she developed investigative projects and wrote a column on start-ups. She has covered the high-tech industry since 1994 and has also worked for Minnesota Public Radio, covering state politics. She has written freelance op-ed pieces on public education for the San Jose Mercury News, and has also won several national awards for her work co-producing a documentary. She has a B.A. from Minnesota State University.

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