ASPs: Lease applications from the vendor

by Timothy Chou

February 1, 2001 —

In September 1998, Oracle became the first major applications vendor to offer application service provider (ASP) services based on its own applications and database technology. Since then, other enterprise resource planning vendors have tried to jump on the ASP bandwagon by using third-party hosting services to offer their applications online. By choosing to run its own applications and technology rather than partnering with a third party, Oracle is able to provide tight integration, accountability and expertise.

Oracle Business OnLine runs Oracle applications, based on Oracle technology. Our developers write the code for everything from the database to the applications and set standards for the development of partner software. Our natural expertise with our products allows us to offer support that no ASP can match. Furthermore, Oracle's hosting model allows customer feedback on applications to funnel directly to the development team. This process enables us to truly meet customers' needs when formulating the next generation of Oracle applications.

Third-party ASPs, on the other hand, run software from many competing vendors, all built to different standards and specifications. Third parties do not have expertise on the software they host; they merely provide the technology to outsource the software from the vendors.

In terms of integration, Oracle Business OnLine offers an e-business suite that includes applications that span the front and back office. Any additional software added to the solution must first meet standards set by us. Partners agree to build the products to these standards and commit to our scheduled product-upgrade dates. This approach makes upgrades painless. Because third-party ASPs paste together myriad applications and require middleware to make those applications work, the integration is often loose and product upgrades can be difficult.

Additionally, the third-party ASPs' mixed-bag approach to application hosting makes it unclear where accountability lies -- with the host or the application vendors. Because vendors are in charge of their own technology and applications, there are no integration issues and customers have only one point of contact for all applications and hosting needs, providing for clear accountability.

The main goal of today's ASP is to deliver core business functions via the Internet using tightly integrated applications -- quickly, reliably and cost effectively. This can only be achieved when a vendor controls the applications and the underlying technology.

Network World