ASPs can simplify your technological challenges. By outsourcing them, you can save time and money, but look before you leap.
Two years ago, Silver Arrow Express switched to a Web-based version of its operations management software on a subscription basis. The application service provider (ASP) version of the system, TMW Systems’ TMW Suite, helped defer at least $50,000 in startup costs for software licensing and new hardware, says Jeff Wilmarth, president of the 25-truck, Rockford, Ill.-based carrier.
“(The ASP) is a great alternative for small businesses,” Wilmarth says. “It brings them into a level playing field with larger carriers.”
For Wilmarth, the product worked very well. TMW bore all the hardware costs. “We just connected through our cable Internet service provider,” he says. “I wouldn’t have thought about changing.”
But last year, TMW Systems discontinued the ASP version due to low demand. Despite the cost savings an ASP version offers, many fleet executives are hesitant to use an ASP for applications that are central to internal business processes, such as dispatch, billing and accounting, says Tom Weisz, president of TMW Systems. If demand does build, TMW is able to again offer an ASP version at any time, he says.
Still, ASPs remain an option for many information systems that trucking companies and private fleets use. The ASP concept is simple: A vendor installs and maintains software on its host server and gives customers access to the program through the Internet.
For the end user, the benefits of an ASP arrangement could include minimal up-front costs for equipment and application licensing, Web-based access to applications, fixed monthly billing and smaller IT staffs. ASP’s have potential downsides, however, including difficulty integrating the data with existing business systems, customizing the software and relying on an Internet connection to run your business.
The challenge for fleets is not necessarily in using an application through an ASP but in knowing how to identify, evaluate, purchase and manage software and services with such a wide variety of choices.
Look ma, no hardware
With software licensing and hardware being the main cost-saving benefits touted by ASPs, comparing the cost of licensing and maintenance to a monthly subscription rate is fairly straightforward. Whether or not an ASP will save you money in hardware costs is really a timing issue, says Mike Hufnagel, vice president of information technology for Maverick Transportation, a 750-truck carrier in Little Rock, Ark.
“If you’ve got all the hardware to run your operation, going to an ASP at that point is going to be an additional cost,” Hufnagel says. “But if you’re at a time when you want to do an upgrade, by offloading the software from your box and putting it on an ASP’s box you can keep from doing an upgrade.”
One of the most popular – and expensive – computers used in the trucking industry, the IBM AS400 server, is one such example of how an ASP can save significant dollars in hardware costs. The cost savings from not buying an AS400 and the software support were the two main reasons executives at Smith Logistics chose Innovative Computing Corp.’s (ICC) IES Access, a Web-based enterprise system to manage its trucking and brokerage services, says Tiger Wagner, vice president of the 65-truck carrier based in Dalton, Ga.
Instead of paying software maintenance fees, IES Access customers pay a per-truck fee, says Kristy Connerly, general manager of ICC. For data security, Innovative runs dual, redundant AS400 servers in separate locations to ensure that clients can be up and running with no disruption should a disaster strike one facility.
“If they own their own AS400, they don’t have that safety net,” Connerly says.
ASPs also can save companies time and money by handling all the data backups and other routine system maintenance. That is why Montgomery, Ala.-based Jenkins Brick switched to an ASP version of its Dossier maintenance software from Arsenault Associates, says David Whitmire, vice president of maintenance of the company’s 360-vehicle fleet.
Before using the ASP version, Jenkins Brick had all its maintenance data stored on a stand-alone PC in the shop that was susceptible to damage, theft and data loss. Backups were not being done regularly, and switching to an ASP quickly eliminated that problem, Whitmire says.
The need for speed
Many ASPs that offer solutions strictly through an ASP model have vanished with the dot-com shakeout. Despite the financial problems many experienced, the ASP model remains attractive for vendors and carriers alike because it allows for quick implementation of new solutions. Subscribers can receive updates automatically and sign up for new applications, as they become available, by simply increasing the monthly billing rate.
Steve Teeple selected the PeopleNet Communications mobile communications system primarily for Global Positioning System tracking and monitoring of waiting and arrival times at customers’ docks. Then PeopleNet rolled out an automated fuel tax program for an additional $7 per truck and no additional hardware in either the truck or the office. The service saved Pollywog Transport a full-time staff position in the office, says Teeple, president of the 45-truck carrier based in Palmetto, Fla. This year, Pollywog Transport added electronic driver logs to its subscription.
For Teeple, the Internet-based service offered still another advantage. He can offer customers a password to access the tracking system, providing the same capability as larger carriers. An ASP also can help on the front end of the customer relationship – sales, Teeple says. Because he can access the system from any computer with an Internet connection and browser, Teeple can show prospects real-time data on Pollywog Transport’s operation.
While ASPs can help small carriers adopt new capabilities faster, they can help large companies with multiple locations implement systems more quickly. Southeastern Freight Lines (SEFL), 3,000-truck LTL carrier based in Columbia, S.C., signed on with Unicru, a Web-based system for handling the hiring process across a company’s locations. The carrier has implemented the system at all 65 of the company’s service facilities, reducing by half the number of days it takes to hire an employee by eliminating paperwork and errors from the application process, says Braxton Vick, senior vice president of corporate planning for SEFL.
Unicru interfaces with several third-party providers of employment, motor vehicle records and criminal background checks to automate this task. If an applicant is hired, all the necessary information feeds into SEFL’s Cyborg payroll software with a single mouse click, Vick says.
Before Unicru, the screening process was handled separately at each SEFL location. “The difference is that we don’t fill one thing out and wait two weeks to get results,” Vick says. The human resources department now knows in less than three minutes whether or not an applicant should be considered, she adds.
Still, for many applications, the benefits of an ASP may be exaggerated if the principal goal is to connect multiple locations, argues TMW’s Weisz. Carriers with multiple locations can easily connect to the host system in the office from any PC with an Internet connection – in effect, becoming their own ASPs, he says.
Talking with other systems
Integrating data from an ASP with existing systems, as well as customizing a specific feature to suit your needs, can add value to the service. Customization, however, is a common drawback to using software through an ASP since many other users are using the same application at the same time.
The decision to use an ASP heavily depends on the IT expertise of your company and how much of an application you want to develop yourself , Hufnagel says. “If you want to do any customizing, ASPs do not work really well. They want you to stay plain vanilla. If you can do that, I think they should be considered.”
Also, remember that in an ASP environment, the vendor benefits from the suggestions and feedback of all the customers using the same version of the software. Although you may still have some needs specific to your operation, you can bet that the vendor is hearing about basic functionality difficulties from others.
Innovative Computing Corp. has addressed the customization concern another way. The company offers IES Access Plus, a service where customers can buy the software license outright and host it on Innovative’s AS400 server, giving fleets the flexibility to customize their software.
While pure customization can be a problem, many ASPs can provide the raw data in an easy-to-download format to customize the presentation of data however you want it, or to integrate with other systems.
Silver Arrow Express’s Wilmarth found his ASP vendor willing to run a special report or provide additional data. “I never came across anything they couldn’t do for me,” he says.
The reality is that few carriers operate information systems that are so fully integrated that using the Web or downloading files becomes unnecessary for all applications.
“There is no way their back office systems give fully dynamic maps,” says Miguel Gonsalves, vice president of commercial vehicles, AirIQ, a Web-based wireless fleet management system. “They may integrate with the system and jump out when they need detailed, specific information to get the best of both worlds.”
Still, large carriers in particular can be frustrated by the inability to integrate ASPs as seamlessly as they would like. Receiving well-integrated information from an ASP is vital to analyzing and understanding what happens in business, says Roy Cashman, the chief information officer of Des Moines, Iowa-based Ruan Transportation. Once an ASP has your data, it can be very difficult to integrate it into your own information stores, he says.
“You are limited by the access methods they offer,” Cashman says. “What they often tell us is ‘We’ll do all of this, whatever part you need done,’ but they are limited by Excel downloads or whatever,” Cashman says. “You end up with silos of data. ASPs are limited by their ability to provide integration, but you’ll probably hear this from any CIO.”
For many carriers, however, options like XML and comma-delimited text files may be sufficient. Also, many ASPs are also starting to use Web services to provide a standardized framework that allows businesses to easily exchange data via the Internet, computer-to-computer, regardless of what back-office applications and databases they use. (See “Future Bound,” CCJ, December 2002.)
Ultimately, however, companies often make the decision on ASPs on a more fundamental level: whether savings in capital investment and technical expertise outweigh the concern for control and customization.
The right stuff?
An ASP is only as good as the vendor offering it
Before you entrust an ASP with the data that runs your company, you need to research the ASP’s operation thoroughly, says Adam Galbreath, manager of vendor relations at Roadway Express, who led a presentation on the topic at the Technology and Maintenance Council’s annual meeting in March 2002. Key areas you should address are financial strength, system security, backup contingencies and the ASP’s ability to meet the changing needs of its customers.
Before signing a contract, Galbreath suggests defining the responsibilities and liabilities for the ASP in three areas: performance warranties for response time and availability; support services for problem resolution; and customization if you want to have changes made. Agree upon a grace period to cancel the agreement if services do not meet your expectations. Also, agree upon early termination fees, and decide in advance what will happen in the event the ASP changes its business model.
“If they want your business, make them do it,” he says.
Other items that Galbreath recommends you talk through and put in writing with a vendor include:
Will the ASP use a VPN?
Does your company have to worry about encryption?
Will there be response time issues?
Examine an ASP’s ability to monitor security of the system
Back-up contingencies of the ASP’s data center
How an ASP manages change in applications and systems
Information security: what’s at stake?
What’s your exposure if the ASP is hacked?
Define your security expectations of the ASP: firewalls, VPN, IDS, access controls, etc.
Ensure the ASP has proper recovery plans in place. How often do they test their recovery plans?
The bottom line, Galbreath says, is if an ASP is out of business, will you be out of business too?
Only as good as the connection
When using an application service provider (ASP), the reliability of your connection to the remote server becomes the lifeblood of the service. Deciding whether to connect to the ASP through the Internet or a private connection, price should not be your main concern.
If you are using the Internet to connect to an ASP, you should have, at minimum, a DSL connection, says Jeff Cornejo, vice president of Blue Ridge Internetworks, a Charlottsville, Va.-based company that manages Internet hosting services. But many businesses that have a DSL connection have as backup a dial-up connection. Should you lose your DSL connection, the dial-up will not be robust enough to support the application, he says. Therefore, as backup, you should consider getting another DSL set up from another provider.
In addition to using a high-speed connection to the Internet, consider connecting to the ASP through a VPN. A VPN is a private network that uses the Internet to connect remote sites or users together. Instead of using a dedicated, real-world connection such as leased line, a VPN uses “virtual” connections routed through the Internet from the company’s private network to the remote site. The information is encrypted and decoded at each end.
For maximum reliability, businesses do not use the Internet but instead use a private line connection to the ASP, Cornejo says. Any of the major telephone companies can provide a point-to-point T1 connection, for example, but the cost could be up to $1,000 per month per leased line-and for maximum reliability, Cornejo recommends having two private lines. Although this may seem too expensive for a small business, when you consider how much it would cost you if you lost the connection to a mission-critical application for just one day, it could be the best insurance