WHY ARE BUSINESSES ADOPTING ASPS?
Certain new ADOPTER COMPANIES and selected members of the industry press continue to see the idea of outsourcing new applications as the wave of the future when it comes to delivering applications. Enabling applications over the Web is all about bringing businesses time to value, or competing effectively by providing customers greater opportunity for revenue or greater reductions in costs. The ASP model is actually following what the IT industry has known for quite a while: Taking the most common tasks and delegating them to the people with a core competency for getting results in those areas is the best approach possible to getting more done in less time.To place an order for the Complete Project Material, pay N5,000 to
GTBank (Guaranty Trust Bank)
Account Name – Chudi-Oji Chukwuka
Account No – 0044157183
Then text the name of the Project topic, email address and your names to 08060565721. That’s the essence of this delivery model: It gives organizations of all sizes the opportunity to focus on their core business models without being distracted by systems issues and the very real need for building systems that will scale.
This posts focuses on actual companies that have adopted the ASP model, and provides insights into their motivations for getting an ASP involved with their businesses. One of the foundational elements in the growth of e-business is the quantification of transactions, and over time, the building of trust in electronic transactions. This trust factor ranges from building a simple e-marketing site to a full implementation of an integrated warehouse and shipping solution. For example, one of the key lessons learned from Jeff Bezos and his Amazon.com efforts is that building a robust order-fulfillment system is the best approach to building an e-commerce strategy. Amazon.com quickly received attention from Yahoo! and also the Wall Street Journal, resulting in a 10-fold increase in sales. By having a focus on the fulfillment aspects of his business, Bezos was able to scale rapidly as his business grew.
Case study: how tamura corporation is using asp- enabled applications
Tamura is one of the “world leaders in the manufacturing of components. Tamura s complex components and the need to get the latest information out are the most important aspects of selling them, hence the need for getting the latest technical info onto the site in PDF format.
Developed to provide Tamura s distributors and customers with the latest technical specifications, the company is focusing on how to compete more effectively for business in its channels of distribution. Tamara decided that using the Internet for communicating with its distribution partners and sales offices would alleviate the bottleneck that occurred when trying to get information out quickly. Because Tamura’s sales force was included in the most recent information, the overall effectiveness of the entire team increased with the greater flow of information. They reacted enthusiastically to the external Web site, as did internal employees who now have a place of their own on the Web Tamura s intranet.
Tamura is a high-volume, world-class designer and manufacturer of power-conversion and magnetic products. The company owns and operates 26 factories worldwide, which build over 1,000,000 telecommunications, audio, and power transformers daily and 2,500,000 wall plug-in power sources monthly. Tamura’s factories are certified to ISO 9001/9002 and are BSI licensed, Tamura products meet the toughest international agency requirements.
Tamura sells directly to large OEMs and through a network of distributors to smaller customers. Users of Tamura products are technologically savvy, and therefore have embraced the Internet as the medium they can count on for up-to-date product information. With its competitors turning fast to the Internet for disseminating technical specifications, Tamura knew that to keep customers from moving to the competition, it had to offer more than the printed product catalogs of the past—it needed a Web site to convey the very latest information on its products.
As a company of substantial size that had not yet established a presence on the Internet, Tamura was the target of a great many firms interested in helping it build its first Web site. “I didn’t feel comfortable with a lot of the companies who came calling,” said Bill Dull, Director of Sales and Marketing. “Would they be around next year? Would some key employee leave the company and leave us in a lurch? What if they had a server failure? We like to work with companies who have a substantial presence, who make us feel comfortable about continuity of service no matter what might happen, and that’s what our selection, ZLand.com, offered. Furthermore, the price was right.”
Tamura’s foremost requirement was to publish online specifications for all its products and keep them up to date. “We used to rely on printed catalogs, but we used the ZLand.com e-marketing base package to build a comprehensive online catalog with Getting to Know Early Adopters of the ASP Model detailed specifications on all of our products. Our customers are engineers, and they’ve come to expect a supplier to use the Internet to keep product information up to date. If we hadn’t embraced the Web, we’d run the risk that they’d go to our competitors. Instead, our sales force is providing powerful feedback on the value of tamuracorp.com for retaining customers and building revenues.”
Another highlight of the Web, according to Dull, is the intranet portion of the site. “The intranet is an emotional tool that allows us to keep our employees abreast of company developments, a place they can go that belongs just to them,” he explained. “We use it to host the company newsletter, to post birth announcements, to highlight new employees, and 3 lot more. It’s been a great unifying influence within Tamura.”
“I’m very impressed with the new capabilities available and just recently introduced by our ASP, which will allow us to get into true electronic commerce,” Dull said. “We’re going to start with our distributor network because that’s the biggest short-term win. Distributors deal with smaller customers. Therefore their orders tend to include a large number of product types, with low volumes of each. That makes for substantial paperwork for them and for us. By automating the process over the Web, we’ll save everybody a lot of time.”
“Next, we’ll implement joint sites for us and each of our major OEMs, individual sites where they can place their orders for larger volumes of fewer product types,” he continued. “Not only will it save time, but it will build loyalty because these customers will see that they’re so important to us that we built a site just for them.”
“There’s a lot more in the new release that we’re excited about, such as die new parameter search capabilities that customers can use to get to the data they need more quickly,” Dull concluded. “We definitely made the right decision.”
GETTING TO KNOW EARLY ADOPTERS OF THE ASP MODEL
Tamura is just one example of hundreds of companies who are actively adopting the ASP model for their businesses. There is a common set of characteristics that these companies share. They are more forward-thinking and tend to have the capability to adopt and leverage technology for the benefits of their organizations with a minimal interruption to revenue and profitability growth.
The following sections describe the common characteristics of these early adopters.
STRONG FOCUS ON THEIR CORE BUSINESS AND EXCELLENCE AT SERVING A VERTICAL MARKETPLACE
This is a market dynamic so strong with early adopters that even the venture capitalists are now looking for vertical market strength in application service providers they are considering funding to ensure the business models are sustainable over time.
Instead of being focused purely on the quickness and rapidity of completing a transaction, early adopters are focused on how to accentuate their relationships with customers through new and innovative approaches to keeping them informed. The priority is on responsiveness and keeping customers informed and involved. Customers become part of the development planning boards and councils to drive innovation and bring new, fresh perspectives into the company.
FOUR OR MORE DISTRIBUTED LOCATIONS
Many companies are adopting the ASP model because they need to communicate across time zones and even continents. Increasingly, small businesses that are based throughout several countries need intranets and coordinated information flows between key points. Often, ASPs provide both the Web site e-commerce and collaborative tools internally for both customers and employees with a separate intranet. The business models of companies with these distributed locations typically use information to their competitive advantage as well, hence the need for quickly having the latest sales, production, and development data online. This is particularly true with franchise-based sales environments.
MEDIAN AGE OF 14 YEARS OR LESS
From the surveys completed during the last year, it’s apparent that the majority of companies adopting e-business partnerships with ASPs are also the younger companies that have less than 20 years of experience in their businesses overall. Although this metric in and of itself is not earth shattering, it does start to make an interesting pro¬file of the early adopter in conjunction with the broad geographic distribution of the offices that make up the business itself. These younger, more geographically distributed companies have a corresponding high demand for information to continue to grow and keep the momentum of their businesses going forward. Apart from literal waves of hundreds of emails, the best solution is to have a centralized set of documents available over an intranet for handling internal communication and an e-operations-based site for customers and trading partners.
REVENUE GROWTH OF 20% OR MORE YEAR-BY-YEAR FOR THE LAST FIVE YEARS
Companies that are growing faster, therefore needing to automate and streamline applications, tend to be early adopters of technology. The relative growth rate of sales is one of the most telling statistics for a small business that is an early adopter of the ASP model. With high growth comes workloads with deadlines that are significant and can quickly tax even the most efficient of organizations. With revenue growth comes accountability to shareholders and the need for delivering ever-higher returns on their Using Portals for Managing Projects investments. That pressure creates the need for singularity of purpose and focus that is uncommon in other phases of a company’s growth. Source procurement—the ability to automate purchasing and procurement functions and thereby free up the time of operations staff—is driving the widespread adoption of e-procurement throughout the worlds mid-size and larger corporations.
PREDOMINANTLY IN THE SERVICES BUSINESSES
The companies adopting the ASP model faster than anyone else are also predominantly in the B2B services sectors, and are using the Web to leverage their existing knowledge and expertise to serve their customers. Getting from concepts for a Web site to closure quickly is the main reason companies are looking to ASPs for their implementation expertise. Being competitive with the knowledge of the industry and customers is crucial for early adopters, and the capability to leverage the knowledge globally is one of the strongest reasons for getting an ASP included in an e-business strategy.
SUCCESSFUL TRACK RECORD INTEGRATING TECHNOLOGY
This seems like common sense, yet there are companies who have the same profile as detailed previously, but stumble with technology and find it mysterious and even fearful. Early adopter companies, on the other hand, are selective about the technology they adopt, making sure a critical customer need is driving the decision. These companies typically have intranets and possibly e-marketing sites already, but need the further collaborative tools and a cohesive e-business strategy to fully leverage their in-house expertise to serve existing customers and find new ones.
USING PORTALS FOR MANAGING PROJECTS
Increasingly, companies are creating entire portals behind their firewalls to enable collaboration on projects and make the process of sharing schedules and information more efficient. Forrester Research projected that U.S. trade online was expected to hit $2.7 trillion by 2004, and that 53% of the total was expected to flow through eMarketplaces, which are electronic exchanges serving as hubs of procurement. The early adopters in the ASP marketplace are driving the movement to exchanges, with the larger corporations leveraging outside expertise to gee exchanges created.
Underlying the need for using portals to manage development projects is the increasingly important role partnerships play in Web-based development programs. In a recent survey for the eMarketplaces report, Forrester Research asked approximately 50 Fortune 1,000 executives responsible for product development how they collaborate internally and with partners. Of the interviewees, 96% said that three or more departments are intimately involved and 44% report working with five or more departments.
Also, 40% of execs expect to work frequently with partners in 2002—twice the number who already do so. The quotes from key executives who participated in the survey also show a bias toward having more people involved in the development cycle than ever before. Several of the comments from the participants in the survey showed that with a development portal, there exists the opportunity to get feedback from everyone who has experience to contribute. One of the comments came from an executive from an aerospace company:
“The biggest difference with our latest project was the breadth of the people involved with design. We had customers, floor workers, and maintenance people in addition to the development regulars. It worked great. We had been planning to use a new part, but the maintenance guys told us it wears out quickly. Five minutes of dialogue saved major delays in production.”
As the size of a project grows, handling communications becomes even more complex due to the total number of interactions that are possible. Most of the companies that are working with larger development teams say that the sheer size and number of the teams makes collaboration harder. Their greatest challenges? Thirty-six percent attribute difficulties to a lack of upfront planning, and 32% cite a misalignment of expectations. This is a common problem with larger Web and Internet projects as well; the need for making expectations very clear is a high priority in getting a project underway with multiple cross-functional teams involved.
Comparable to the model of providers delivering applications and Intranets, the use of portals is much less often used than many emails, teleconferences, and in-person meetings. In the work completed by Forrester Research and others, it’s apparent that portals could greatly increase productivity within the development organizations that rely on extensive cross-functional work to make projects come together quickly. From the Forrester surveys, it was found that most of the teams still rely on phone calls, email, and in-person meetings for their communications. Although 26% have some electronic document sharing, only 12% have made information available via the Web. Of the respondents to the survey using the Web to collaborate, they report excellent results.
The dominant need being addressed by using the Web to provide the sharing mechanism is accentuated by the time-to-market required from each of these companies to stay competitive in their chosen markets. In the Forrester report, the pressure to condense the development typical time is. becoming more important to remain competitive, thereby making communication ever more important. Time-to-market was a serious concern for the interviewees in the Forrester study, with 72% expecting cycle time, or the time to complete projects, to decrease over the next two years.
“There is a lot of pressure from our business partners to reduce cycle time. It is critical to be first to market if you want to be a leader. With better communication and document routing, we could probably make an impact,” said one member of the respondent groups interviewed for the study.
WHAT ARE THE LESSONS LEARNED FROM USING PORTALS?
Companies using portals for increasing the communications flow within their organizations see stronger results than companies that rely on traditional methods of collaboration. The ASP model provides the necessary technical expertise to create a portal, whether for use with partners outside the company or as part of an intranet within an organization. Many larger technology companies, Dell Computer for example, are extensively using intranets with portals and information exchanges for streamlining development, production, and support of their workstations, servers, and mainstream PCs. The following sections detail the key lessons learned from the companies that are now using portals for coordinating their development efforts.
PRODUCT DEVELOPMENT IS INCREASINGLY CROSS- DEPARTMENTAL
Companies are relying more and more on partnerships to accomplish their shared objectives. These partnerships are crucial for companies in software-related industries, in which the shared development expertise of companies can. greatly decrease time-to-market and provide the capability to create an entire series of products. A company becomes cross-enterprise when there is a real-time tool for handling the communications between departments.
THE INTERNET HAS THE CAPABILITY TO SCALE FOR MULTIPLE PROJECT COORDINATION
Given the frustrations in coordinating cross-functionality and the need for obtaining closer and more accurate communication by members of cross-functional teams, the Internet is just being tapped for this information-sharing purpose through portals and exchanges. Clearly the companies using portals today are finding that the benefits far outweigh the costs associated with creating these cross-functional exchanges.
TIME-TO-MARKET IS EVERYTHING IN HIGHLY COMPETITIVE INDUSTRIES
For companies such as HP, Sun Microsystems, Gateway, and others, having a product completed when the market window is ready is crucial and often has implications for the entire company’s revenue and profitability picture. For example, in the cellular phone industry, missing or being late to a product generation can mean losing thou¬sands of customers to a competitor. The issue of time-to-market in technology industries is directly related to the relative level of revenue and profitability success that a product or service has over its life. The extensive use of email, teleconferences, video conferencing, and now even the creation of enterprise development portals and exchanges further accentuate the fact that businesses are looking for ways to use technology to compete.
PRODUCT DEVELOPMENT MUST NEVER STOP
With the accelerating pace of product life cycles and the need for having products ready when market windows materialize, product development will never be “done” with a product but rather will be on a mission to continually modify products to align with the changing requirements of customers. Using portals for quickly communicating these shifts in customer demand and preference can be invaluable for keeping cross-functional teams focused on a single development objective.
ASPS CAPABLE OF AN INTERNATIONAL FOCUS WILL BECOME DEVELOPMENT PORTAL
Experts With the programming talent in India generating more and more of the globally focused e-business applications and the focus in Japan on consensus decision making, the role of development portals and their capability to create value for all participants is becoming increasingly clear. The point is that these development exchanges or portals can assist in allowing a company to span time zones and cultures when creating a product or designing a service. There are ASPs today that are focusing on how to create exchanges for businesses around the world.
LESSONS LEARNED FROM EARLY ADOPTERS
Companies universally face the challenge of competing in a more accelerated, more time-sensitive marketplace in which time-to-market and development cycles are crucial for retaining customers. Many companies are adopting an e-business strategy based on the ASP model precisely for the time-to-market and efficiency reasons defined in the portal section of this chapter. These early adopters have also learned from their experiences, and their insights can assist you in defining your e-business strategy with the idea of potentially bringing an ASP into the plans you have. Presented here are the key lessons learned from the early adopters of the ASP model.
LOOKING AT SERVICE LEVEL AGREEMENTS
The best place to start with an ASP is to check into their service level agreements, and what the minimum level of service is. The minimum level of service needs to be quantified in a service-level agreement as many early adopters tie these minimum performance guarantees into their leasing contracts. After going through a selection process with the ASP you want to use, get copies of its standard service level agreements and check into its terms for minimum service levels for your needs. One of the early adopters also found that having its specific customized applications also mentioned in the service-level agreements was useful because this made sure the company’s applications were covered with a minimal performance-level guarantee.
LOOKING AT RISK MANAGEMENT WITH ASPS
Risk elements are often overlooked during the outsourcing process, but they can dramatically affect the deal. Given the fact that the ASP industry is maturing very rapidly, there is the potential that market dynamics can greatly change its competitive land¬scape, forcing companies out of business or driving mergers and consolidation in specific segments served.
Given the fact that ASPs are growing and many new ones are entering the market nearly every week, you should ensure that the ASP you choose can “go the distance” with your needs and ensure the delivery of the results you expect. You also can benefit from the lessons learned from early adopters in this area. Here are pointers from companies who have already adopted ASPs and their services into their businesses:
• Start with a project that is very similar to a previous project to benefit from the previous learning.
• Clearly define performance metrics and project scope, objectives, and deliverables. These metrics include the amount of resources available, the anticipated burn rate of both funds and other resources, timeframes for project reviews, and the product’s performance as well.
• Assign a project manager within your organization to take ownership of the relationship and milestones associated with the project. Have the CEO select this person and actively voice support for the initiative and person handling the task. This brings credibility to the project and gives the project manager implied authority to get cooperation and time constraints removed when implementing the applications and services.
• Build contingency plans and have a fall-back plan in place for handling any delays or stoppages to the schedule.
• Have an extensive internal and customer preview center for beta testing the applications before they go live. This ensures both internal associates have a chance to get their insights shared on the project and also gives the eventual customers for the solution a chance to comment on the application/service offering before it goes live. This also instills a sense of ownership with everyone involved before the program formally launches.
• Insist the project manager and the team have a singularity of focus just on the project, excusing them from other responsibilities so they can complete the programs with the ASP involved to ensure accuracy in the completion of the development.
The insights from the early adopters show that the ones who have been successful see that focusing a resource, in this case, a project manager, on the task of integrating the ASP applications and services to an organization provide the best results. Companies who have multiplexed people (those members of an organization who are in matrix-based organizations) into handling the ASP relationship while handling other responsibilities have had mediocre results at best, and even had projects stop half-way through due to time demands being placed on the person handling the relationship. Even for the most basic of Web sites for medium and larger organizations, the amount of con¬tent needed for making a robust Web site is significant. Even for e-marketing sites in larger organizations, it is common to find teams of three and four individuals focused on making sure the content is accurate, timely, and has been checked by each functional area represented by the Web site’s many sections.
The teams handling content on Gateway.com, for example, number 15—20 people, and they act as “traffic cops” for content, coming in from other functional areas of that corporation. With e-operations—based applications in which extensive and seamless collaboration is the goal, the teams have typically been 10-15 people, with a project manager handling the cross-functional communication and project schedule. It’s imperative for even the most basic of Web sites to have a single point of accountability for handling project schedules and partnership relationships with ASPs and if needed, software companies providing utilities to complete the Web site.
OUTBOUND MARKETING AND SEARCH ENGINE OPTIMIZATION
Before jumping in to a major project with an ASP to get an e-marketing, e-commerce, or e-operations site up and running, it’s important to see what the ASP has in the way of ensuring that the hits to your site are going to increase. This area is called search engine optimization, and is invaluable for getting your Web site listed with the major search engines. Many of the ASPs today are looking at how to offer this service, as several companies are working on techniques for ensuring search engines can find your site.
This is particularly important for companies providing B2C commerce, in which having a search engine recommends a site is critical for leveraging the investments in a Web site. Search engine optimization uses techniques for embedding meta-tags into Web pages so the search engines pick up the identity of the Web page and filter it to the top of searches on the topics applicable to the site itself.
An example of how this can work well for a small company focused on B2C e-commerce illustrates how search engine optimization can assist a company in getting its identity known. Many companies created their Web sites initially with a local developer and had mixed results. They were breaking even with their business and had dis¬appointing results with getting new business over their Web sites. Toastmaster’s International created another Web site with another ASP who had search engine optimization, and its site was found by a regional department store within a month. The result is that this organization who assists people with their speaking skills is much more in touch with potential customers.
The fact that the majority of people using the Web use search engines and portals such as Yahoo!, Excite, and Dog pile to find sites of interest makes being one of the top entries imperative. Forrester Research estimates that 8 out of every 10 Web users rely on a search engine to find sites they need for their. jobs or for personal interest. Forrester also has found that Web users only look at the top thirty entries in a search engine. Clearly being able to optimize your site for ease of location by search engines is a service worth looking into. Be sure to ask your ASP if they offer this service; when evaluating potential companies to work with, see whether they offer this service.
The needs driving the ASP marketplace are the same ones driving outsourcing in other areas of B2B and B2C commerce today. With the growth of the Internet, the benefits of streamlining time-to-market and erasing geographic boundaries and time zones in product development and service delivery are accentuated. It’s possible to meet business needs across geographic boundaries, delivering the same level of service and expertise as if the customer was located next door.
The characteristics of early adopters in this market show a pronounced focus on lever¬aging technology for the more efficient and timely use of company knowledge and service. The early adopters see the Internet as a bidirectional communications and
Security in Hosting
You’ll need to also determine how ready the company you’re working with is to host your data in-house. There are many companies entering the ASP arena today, and the issue of security is foremost in everyone’s mind, even the early adopters. Using the following series of questions, you can get a good understanding of how committed the ASPs you are working with are to the idea of client’s data and application security. If your ASP has a “yes” answer to all of these, that is a signal they are very strong in secu¬rity. Any single “no” answer requires more investigation and more evaluation of addi¬tional ASPs. Many early adopters have used these questions in the matrix format to evaluate ASP companies they are looking to work with:
Is the Network Operations Center supporting two-fact.or authentication (in which both the sender and receiver are authenticated) for administrative control of all routers and firewalls?
Are support for 128-bit encryption and two-factor authentication for the connection from the customer LAN to the ASP production backbone standard?
Are data redundancy and load-balancing services for firewalls and other security-critical elements available for all accounts the ASP has?
Does the ASP perform (or have an experienced consulting company perform) external pene¬tration tests on at least a quarterly basis and internal network security audits at least annu¬ally?
Can the ASP show documented requirements (and ASP audit procedures) for customer net¬work security to ensure that other ASP customers will not compromise the ASP backbone?
Can the ASP provide a documented policy for hardening the operating system under Web and other servers?
If the ASP collocates customer applications on physical servers, does it have a documented set of controls it uses to ensure separation of data and security information between customer applications?
Commerce mechanism they can use for expanding their businesses and more responsively serving existing customers. The use of development portals is also accelerating as ASPs apply their expertise in creating Web sites to the needs of companies who have tight market windows and time-to-market pressures, which intensify with each pro¬duct life cycle. The needs driving ASP adoption should be countered with the lessons learned from these early adopters, which include steps for minimizing risk and ensuring security of data located at the ASP’s Network Operations Center. The ASP you choose for your e-business strategy needs to be able to go the distance and provide marketing and search engine optimization tools for driving traffic to your site. Clearly the role of the ASP as service partner overshadows the role of purely an applications-only provider. The ASP model is increasingly about service, and the early adopters are driving the industry in that direction as their needs for responsiveness, security, and proactive marketing support increase.To place an order for the Complete Project Material, pay N5,000 to
GTBank (Guaranty Trust Bank)
Account Name – Chudi-Oji Chukwuka
Account No – 0044157183
Then text the name of the Project topic, email address and your names to 08060565721.