News and Events

December 20, 2000

ASPs Deliver Low-Cost, Highly Efficient CRM Solutions BY DICK LIU More and more businesses around the world are choosing Application Service Providers (ASPs) for their Customer Relationship Management (CRM) solutions rather than purchasing prepackaged CRM software. ASPs can solve CRM challenges faster, more efficiently, and more affordably by speeding up implementation, minimizing the expenses and risks incurred across the application life cycle, and overcoming the chronic shortage of qualified technical personnel available in-house. The High Price Of Legacy-Based CRM Traditional CRM packages require staff time, new hardware, and a team of MIS consultants who typically charge high fees for customizing and integrating software into an existing system. Implementing such packages often takes six months, but can take 18 months or more. After totaling up capital outlay and factoring in the disruption to customer service and purchasing, the costs of installing CRM packages can be staggering. Implementing a packaged CRM over an 18-month period can cost hundreds of thousands of dollars. The ASP Advantage ASPs give customers a viable alternative to procuring and implementing complex systems themselves. By outsourcing applications, the customer can focus critical resources on their core business function while ASPs maintain, upgrade, and customize the services for their clients. The goal for the ASP industry is to make the management of information technology as reliable and transparent to Web visitors as possible. Customers who turn to ASPs often find better application reliability and availability than they experienced from their internal IT organizations. Typical CRM-focused services from ASPs include self-help knowledge bases, chat, Web-collaboration, VoIP, e-mail management, and "rent-a-rep." CRM From ASPs Is Seamless And Profitable In one respect, leasing a service from an ASP instead of purchasing CRM software is like leasing a car versus buying one -- usually the initial investment and monthly payments are lower. Cost models vary, but generally include some combination of usage charges, flat fees, and set-up charges. An ASP solution can be deployed overnight without disrupting customer service or purchasing, and without hiring consultants or buying additional equipment. A good case in point is Watlow-Anafaze, a manufacturer of thermal system components based in St. Louis, MO. For years, Watlow-Anafaze received a steady flow of repeat phone and e-mail inquiries that overwhelmed the company's CRM resources. After years of wading through countless repeat e-mail and telephone inquiries, Watlow-Anafaze decided to tackle its problem with software. The company did not, however, want to dole out thousands of dollars to install a program and worried about QoS (Quality Of Service) disruptions associated with deploying a new system. Nor did it have the technical expertise to implement and maintain a complex software solution. Installing an ASP seemed the perfect solution for the mid-west company. Initially, Mike Sims, a product manager for Watlow-Anafaze, decided to put off implementing an ASP solution until his return from a business trip to St. Louis. However, hours after talking with the ASP, he received a phone call informing him that his company's portal had been installed. Then, en route to St. Louis, Sims wrote out 30 frequently asked questions (FAQs) that the company regularly received from customers. By the time he reached his hotel in St. Louis, Sims had completed all of his FAQs. Using his password for the administrative site, he logged on, and uploaded the FAQs. Once he entered the FAQs, they were automatically HTML-coded, categorized and posted online. In less than a day, Sims had implemented a professional, integrated customer service Web portal for his company -- without doing any programming. The ASP Model: Designed For The Internet First used by Silicon Valley venture capitalists, the term "pure-play" refers to a company whose business solution is designed exclusively for the Internet right from scratch. For example, Amazon is a pure-play bookstore, but Barnes and Noble is not; E*trade is a pure-play ASP, while Charles Schwab is not. If a company offers its software product as a traditionally licensed package or legacy program, it is not a pure-play company even if it has expanded its offerings to include a hosted option. There are significant differences between pure-play ASP solutions and other solutions. The most dramatic one is functionality. Legacy companies are still developing systems that pure-play ASPs have already put into wide scale use. As a result, pure-play ASPs can spend their resources refining their services, not just making them work. Additionally, pure-play solutions are more scalable and can grow faster with a company. One should be cautious about using a legacy system that has adopted the ASP model. Legacy systems often have significant bugs that can cause minor disruptions or totally halt business. Earlier this year, thousands of businesses and organizations worldwide suffered tremendous problems because their legacy systems were attacked by the Love Virus and Distributed Denial of Service (DDoS). Version Control And Real-Time Publishing -- ASPs' Superiority Version control is a challenging issue for companies that have several versions of a program, each operating differently. Different versions of a software make it difficult for technicians who often don't know how each one works. ASPs eliminate this problem, by providing the most up-to-date version of a product without any extra costs. In addition, a company doesn't have to worry about maintaining a back-up system or getting upgrades; the ASP continually takes care of everything. Having a customer service site up-to-date and always running is critical to building customer relationships and promoting purchases. Using an ASP's real-time publishing capability, a company can immediately and directly update and modify the CRM section of its Web site. No special programming ability is needed. Publishing directly to the CRM site eliminates the service interruptions associated with programming. ASPs Keep Data Secure Behind Locked Doors And Firewalls Security, in addition to performance and cost are top concerns for companies looking to outsource to an ASP. Typically, ASPs take several precautions to secure data, including firewalls, locked doors, encryption, and redundant Internet links. In today's Internet economy -- where a company's CRM can make or break it and time is critical -- ASPs offer quick deployment of services and an efficient and low-cost way to ensure high-quality, reliable, and secure CRM. Rather than spending large amounts of capital and time in a traditional CRM model and dealing with compatibility issues, ASPs offer companies a viable alternative. Next time your CRM software comes up for review -- and it will -- think ASP. Dick Liu is the president of Software911. Software911 is a leader in a new generation of e-business communications and knowledge management services delivered as hosted solutions. Subscribe FREE to all of TMC's monthly magazines. Click here now. Technology Marketing Corporation, One Technology Plaza, Norwalk, CT 06854 USA Ph: 800-243-6002, 203-852-6800; Fx: 203-853-2845 General comments: tmc@tmcnet.com. Comments about this site: webmaster@tmcnet.com. © Technology Marketing Corp. 1997-2002