The concept is simple — an application service provider (ASP) installs and maintains software on its host server or computer and allows customers to use the program though a wide area network connection, usually the Internet. Like all simple concepts, the reality is a good deal more complicated, and even those who've developed ASPs don't always agree on details like strengths, pitfalls and even basic terminology.

But the ASP model offers so many benefits for businesses like trucking that fleet managers need a clear understanding of just what ASPs can and can't do. Here in non-technical language is a basic guide to ASPs — how they work, how they can help you improve fleet productivity, how to evaluate them and how to avoid some common problems.

Jim Griffin, exec-vp of Nexiq Technologies, uses an analogy to explain the ASP concept. “You don't buy a restaurant, cook the food and wash the dishes just because you want to eat,” he says. “You just order a meal, eat it and pay the bill. With an ASP, we keep the IT infrastructure in place so you can get to the data you need without maintaining that infrastructure.”

In more precise terms, an ASP is “network based software,” explains PeopleNetCommunications' Brian McLoughlin.

Instead of purchasing software and installing it on your own computer, you use a standard web browser and an Internet connection to log onto the ASP. You enter your data; the ASP's host computer runs it through the program and returns the results to your browser. The ASP owns the software, takes responsibility for keeping it functioning, updates it when necessary and both stores and backs up your data.

As a user, you generally pay a monthly fee for the service, but bear none of the direct software ownership or maintenance costs. You only pay for the functions your fleet needs; development and maintenance costs are spread out among many users. You also avoid the costs of expensive hardware to run sophisticated applications and the IT staff to support them. Another advantage is that it's easy to extend applications to additional locations since all that's needed is Internet service.

While many ASPs are used by fleets as standalone services for chores such as dispatch, load optimization or vehicle diagnostics, the data received from the ASP is generally provided in a common format so it can also be integrated with other back office programs a fleet may already have in place.

While some “pure” ASPs, such as Nexiq's eTechnician remote diagnostics service and PeopleNet's InTouch dispatch and wireless messaging services, are currently used by fleets, hybrid services that combine some ASP attributes with the more familiar locally hosted software model are also beginning to crop up. This is somewhat of a gray area, with suppliers using a variety of loosely defined terms and names, but in general these hybrids attempt to deal with some fleets' resistance to storing their data on a remote server that isn't under their direct control.

For example, Transcore Commercial Services calls its Keypoint dispatch and accounting application “an Internet appliance,” according to sr.-vp and general manager Joel McGinely. “Dispatch is a mission-critical application, and that creates concerns for some fleets about the unreliability of Internet communications (with an ASP) and at least the perception that data not stored on their site isn't under their control,” he says.

Transcore's solution is to retain the monthly subscription-fee model for service, but to place the server with the application at the fleet's location. An Internet interface is used by Transcore to remotely carry out application maintenance and updates on the local server without any intervention from the fleet, as well as to initiate data backups.

“We find that fleets are willing to use ASP for transactional functions like freight matching because they don't involve storing a lot of critical data, but when it comes to storing proprietary data (like accounting and dispatch information), they're more comfortable keeping it local,” says McGinely.

Others want to avoid the application service provider label completely. “ASP has become a catchall term referring to anyone who hosts an application,” says Steve Matheys, CIO for Schneider National Inc. Instead, Schneider's logistics division sees itself as a business service provider with its Sumit suite of transportation management software (TMS) applications.

“It's not just about hosting software and outsourcing maintenance,” he says. “The real value lies in providing a business process solution.” Schneider Logistics' hosted service combines basic supply chain functions such as rating, routing, billing and analysis with integration for all the trading partners in its network.

“For example, if a manufacturer joins our network, their supply chain execution process is automatically hooked up to any of their suppliers who might already be in the network,” Matheys says.

“We don't think of ourselves as a software company. We are about transacting business and moving cargo. That takes more than hosting software. It requires people with expertise in the process.”

But whether it's a “pure” ASP or one of the new hybrids, the hosted application model “offers you a better solution while also lowering support and lifetime costs,” says Matheys. “If you want to be a leading-edge technology customer, it takes a fairly substantial investment in people to constantly evaluate, install and upgrade systems. But with an ASP, the (leading-edge) systems can be rolled out once for everyone. The ASP model is simpler, as well as cheaper to administer and support, for the supplier and the customer.”

While ASPs can offer significant advantages, especially for smaller fleets without the resources to support in-house IT staffs, they will control a vital portion of your business. So you need to ask a few pointed questions before trusting them with your future success.

First, is the company financially stable and do they have experience working within the ASP environment?

Second, can they protect your data and promise you around-the-clock access to that data? Do they have redundant data backup systems and a disaster recovery plan?

Third, have they developed the right system architecture and will it support growth? Does it use common standards for easy integration with other applications?

Finally, what's their track record? What's their history of system uptime and developing system innovations? How many customers do they have, and how many of them operate fleets like yours?

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