How do you tame the rapid change in technology that threatens to eat your company alive? It's a question that assaults every small-business owner today. Spending on technology alone reflects the scale of the challenge, soaring from $67 billion in 1995
to $85 billion last year. If a company with 20 to 49 employees, for example, wants to
stay up to date, it will spend an average $88,000 a
year on tech, a figure expected to rise at double-digit rates this year.
What every entrepreneur wants to know is how to manage
There are as many answers as experts. But one philosophy is expressed
clearly in a series of familiar techno terms:
plug-and-play, ease-of-use, point-and-click.
The latest claim for simplicityˇand limited riskˇcomes from a new
generation of Internet-based companies known as application
service providers, or ASPs. With many of them aiming at small business, ASPs
offer a way to outsource key functionsˇfrom hiring
and human resources to accounting, marketing, and supply-chain
managementˇand to access them smoothly through the Web from any
computer. While the idea is new (and the customers few,) it seems
to have legs. Indeed, Forrester Research in Cambridge,
Mass., predicts that the ASP market will top $6 billion by 2001.
An ASP can be attractive because few small businesses can afford to
license and customize the huge application programs that large
companies use to manage their accounting services and systems. Hardware
and software can easily run more than $1 million. Then, the
staff to operate it can rack up hundreds of thousands more. Moreover, it
can take more than a year to get such a system up and
running. And, in the fast paced world of e-commerce that can be far too
The rapid proliferation of ASPs in the past year gives small companies
access to these complex applicationsˇusually for a
monthly feeˇwithout having to own the infrastructure. Indeed, many ASPs
say they can have a customer up and running on their
system in a day. "Customers are coming to our service because they don't
want to take the risk," says Mary Alice Lawless, CEO
of ClickUpdate in Morristown, N.J. "All the debugging and integration
issues are ours to contend withˇthe customers just want
ClickUpdate, for example, was the among the first to provide clients
with a single service to manage their catalogs and sales
and promotion materials. The service consists of a suite of applications
that allow companies to store all their marketing and
promotional material, including graphics and video, and to easily
customize it. Where companies used to rush printed sales
pieces that were often generic to distant salesmen, they can now be
quickly tailored for one-on-one selling and downloaded to a
printer from any computerˇor sent directly to a printing plant.
Like other ASP execs, Lawless is painfully aware that holding onto her
company's customersˇwhich include some giants such as Lucent
Technologiesˇdepends on integrating the most advanced technology
available into a stable, seamless Web portal. ClickUpdate
constantly watches for new technology. When something comes along that
seems to fit into the company's product framwork,
ClickUpdate makes an initial assessment and then tests it.
Like its customers, ClickUpdate outsources noncore technology, such as
printing that customers may need, to strategic
partners. And the company is as demanding about the support it receives
for software as the support that it provides. "We test
the responsiveness of the vendor before we license products," she
says, referring to the products that the ASP's users will access through
her Web site. "If they can't jump through hoops for a prospective
customer, it tells us we should not expect great support if we
are a customer."
While ASPs are still in their infancy, the logic of one-stop shopping is
already overtaking the market. The ASPs themselves are
becoming integrated. CSPSource in New York, for instance, aims to make
its Web portal the gateway to dozens of "best-of-class"
services offered as a single service that it manages and maintains.
That's the promise of simplicity, at least. Whether these
companies will execute as well as they promise is another matter.