Having discussed all the benefits of the ASP model, it is only fair we look at some of the problems associated with it. They are five key issues the two most important deal with Customisability and Integration. In an article last year, The Economist laid out the arguments and the responses:
[There are] two main arguments against the ASPs. First, software as a service is much harder to customise for the special needs of big firms. Second, it is harder to make it work with a firm’s existing software applications. Companies want their CRM to integrate with their billing system and everything else, says George Ahn, the CRM boss at PeopleSoft. Salesforce.com’s mottoNo Softwareis thus hot air, says Mr Ahn, because it takes lots of software and fiddling to get it to link to the rest of a client’s systems. There is no magic pixie dust that makes integration go away.
Mr Benioff shrugs (note to regulators: this was before the quiet period). The evolutionary advance of the second generation of ASPs over the first is precisely that customers can now customise their pages, as easily as consumers arrange their Yahoo! or AOL pages to their liking. And the task of integration too has been solved. In fact, argues Mr Benioff, clients can do themselves a favour by letting Salesforce.com worry about hooking their various systems together. Increasingly, the vision says, all that users need to understand is how to navigate a web page, leaving them to get on with life. That is the same for Salesforce.com as for Google.
The third issue deals with Performance, which is related in part to the bandwidth available, and the fact that a rich client interacting with a local server will always be faster than a browser talking to a server over the Internet. The bandwidth bogey has been there since early days. While it is not much of an issue in the developed markets, it is still a serious issue in emerging markets like India. But the good news is that telcos and Internet service providers are working to bring down the cost and improve speeds. With regards to the rich client, technologies like Ajax hold promise to bring the experience ofa rich client within the browser.
The fourth issue deals with Security. Can enterprises trust a third party with all their mission-critical data? The response to that is: we already are. Banks hold our financial information and provide us online access. There are many sites which have our credit cards. Some of us even use public email providers for our business mail. In fact, all our email is sent unencrypted over the Internet. The success of ASPs like Salesforce.com (nearly 14,000 enterprises and over 200,000 individual users) is testimony to the fact that we are getting more comfortable using online services. But this still means that ASPs will have to demonstrate that they have adequate safeguards in place before customers can trust them with their confidential business information.
The fifth issue deals with Data Lock-in. What is the ASP decides to shut down? Or suddenly increase its rates? Wouldnt business users be locked in because they may have no option? To tackle this issue, customers need to ensure that ASPs have standard mechanisms to export data out should they wish to move. This needs to be verified before the business starts using the ASP as part of its processes. With technologies like web services, this should be much easier to ensure.
Tomorrow: Looking Ahead
TECH TALK The Coming Age of ASPs+T