Rent, don’t buy: the benefits of an ASP

Imagine if you, as a car owner, had to buy a petrol station – complete with pumps and maintenance engineers – before you could use your motor on the road.

It sounds crazy, because we’re used to just paying for the petrol we use. But this is what companies are doing when they spend big money on software, hardware and IT maintenance staff.

There is an alternative – renting software on a pay-per-use basis, which could be anything from an office suite to a supply chain management package. Basically, the user turns on the PC and uses an application via a web browser over a broadband or private link, hosted by an application service provider (ASP) or perhaps the vendor itself. This has already become very popular in the US, particularly with smaller firms, and is likely to take off in the UK over the next few years.

As a customer, there are big benefits. If you decide to rent software, the applications are up and running right away because you access them through a browser. You regularly pay a small amount of money, rather than a lump sum up front for a licence or implementation. You can therefore try out software cheaply. You only have to pay for what you use, and get it when you need it.

There is no need to worry about upgrading software – you always access the latest. You can leave the mucky business of software management to the ASP, so if a virus runs rampant across the system it’s not your problem.

The drawbacks are that you need a lot of bandwidth, and this can prove costly for smaller firms and home workers. Dial-up lines are just too expensive and slow.You also need a secure and reliable link to the service provider, and a watertight service agreement to guarantee access to the application whenever you need it.

However, the future will see more applications available to rent, and the big guns are backing it. Vendors the size of Microsoft, Oracle, IBM and Sun Microsystems are moving to this model and are renting out software and hardware because they stand to gain regular revenues – think Blockbuster video. At present, there are many ASPs around, like Mi8 or FutureLink for online office applications, Access Accounts for accounts systems, ITNET for tools like SAP and FairMarket, for auction software on tap.

Oracle says it can squirt sophisticated software down the wires today, such as customer relationship management, procurement, and manufacturing tools.Microsoft has put the mantra ‘software as a service’ at the heart of its .Net initiative, which should eventually mean more complex applications will be available over the internet. As soon as broadband connections become prevalent, rentable applications will hit prime time.

Arif Mohamed is news editor of IT Week.