Providers stress the cost saving aspect, claiming a user can save up to 30 per cent versus buying software packages. Besides saving on acquisition and licensing fees, users don't have to spend money on upgrading and maintenance, they claim. Such assertions have to be taken with a pinch of salt, but there is no doubt that going the ASP route has financial advantages. Capital expense is converted into an operational expense, freeing capital for other purposes, implementation time is typically reduced, and users don't have to spend money on system upgrades. Still, cost savings appear to be less of a factor than might be expected.
Observers figure it's a good idea to weave performance criteria into the pay structure.
AMR predicts that cutting edge ASPs will create service level agreements that are expressed in business and operational terms rather than in technology terms. Courting logistics players AMR is projecting rapid growth of the ASP concept in the logistics and supply chain management arena. In the first half of 2000, the rise in ASP logistics solutions eclipsed the research firm's predictions, and if anything the trend is gathering further momentum. Theoretically this is a feasible approach, but there are doubts about whether the logistics industry actually has the necessary domain and process expertise. Moreover, under such a set-up supply chain visibility would depend entirely on the logistics provider.