There is a shakeout underway among glutted Application Service Providers. Consultants and management gurus love to spout off about the benefits of outsourcing. Focus on your core, and farm out the nonessential things like human resources, payroll and customer relationship management. ASPs host software on powerful servers and make those applications available to clients over a network for a subscription fee. The benefits of ASPs are clear.
Users can run the applications using Web browsers from any computer that has Internet access.
Employees working from home or on the road can still collaborate with co-workers and can access data. ASPs also allow businesses to get new applications up and running more quickly, without worrying about finding and retaining qualified IT staff. The cost savings can be immense. Unfortunately for the ASPs, the current economic slowdown has had drastic consequences. In February 2001 free-storage service provider Driveway told its customers only two weeks ahead of time that it was going out of business, forcing them to scramble to find a new provider before their data would be wiped out.