|
|
Page 81 GO IT ALONE!
to the 100% obtained through a custom program. But in all likelihood, one year later (when the custom intranet would finally be installed), the out-of-the-box outsourced program would have added features so that it would meet 80% of the firm’s needs. And 6 months after that, the added features in the subscription offering would probably offer 150% of what the firm was specifying as its needs today. Finally, when something goes wrong with an ASP, it can be fixed at the provider’s site, because the service is provided to firms remotely via the Internet. It is not hosted on-site. This can lead to far easier maintenance. If something goes wrong with custom software—and it inevitably does—the developer typically must dispatch a team to the user’s site, figure out what is wrong with the unique code, and then fix it. That’s a far more time-consuming, costly, and disruptive process.
Providers of specialized outsourced services must constantly be working to make their offerings better, to continually earn their clients’ business. Anyone who has worked with such services has seen this phenomenon. Custom products are likely to be expensive and delayed and require constant reinvestment to maintain state-of-the art capability. Aren’t ASPs too good to be true? No. In fact, there is a sound economic basis for them. As noted earlier, the cost of an ASP is spread over many customers, so each customer effectively pays only a small portion of the development cost. The very largest U.S. companies are increasingly becoming ASP users, because even they cannot keep up with the benefits offered by specialized providers. For example, Fidelity Investments is widely known as a brokerage and mutual funds provider, but an increasing percentage of the company’s revenues are generated by the firm’s human resources and benefits outsourcing services. This Fidelity business unit now accounts for roughly one third of the firm’s total revenues, and the percentage is growing. Peter Smail, the president of Fidelity Employer Services Co., said that he expects this outsourcing
Search the complete text of Go It Alone!
Terms of Use
GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.
|
|
