Hosting Hopes: How the ASP Model is Making a Comeback

With so many public hosting companies and high-profile ASPs floundering, it's a wonder that the business model is still seeing success. But while larger firms like USinternetworking and Globix have filed for bankruptcy, smaller start-ups have revived hosted solutions, especially in the SMB market. Customers shying away from pricey software have been migrating to hosted applications and online services for a variety of business functions such as CRM and ERP.

Companies such as Salesforce.com, UpShot and SalesNet have seen the earliest success with CRM solutions, offering a purely online service for a modest per-user subscription fee. Other start-ups such as NetLedger are now offering e-business solutions in the areas of financial management and human resources, all with a low-cost service and quick ROI. Alan Turner and Associates, a small IT consultancy, gets sales-force automation from Salesforce.com for $65 a month, Web-site hosting from NTT/Verio for $25 a month, and financial management from Intuit QuickBooks on the Web for $15 a month. "For $105 a month, I get my entire business hosted. It allows me to forget about infrastructure and backups, too," says Alan Turner, head of the start-up consultancy.

Big Wave Technologies, a start-up IT consultancy, adopted NetLedger's Oracle SBS because the low-cost service helped the company save time and money. "We needed to off-load all the heavy IT management because we need to focus on our business, rather than focusing on keeping the servers running," says Kurt Pfluger, CEO of Big Wave.

"People still say, 'Isn't the ASP model dead?'" says Chad Keiser, CEO of Digital Quotient, a NetLedger partner. "It definitely still takes some evangelizing, but I think the SMB market is going to continue to embrace hosted solutions."

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