There are two types of ASP providers that are generally leading the current resurgence of ASPs. They are the net natives and the hosted solutions providers. They differ in the models they offer. The net natives are service providers with their own web-based software solutions that are ordinarily accessed through a browser. The hosted solution providers are companies that host existing CRM applications such as PeopleSoft 8.8 CRM or MSCRM 1.0. They are very different in the types of costs and benefits that they provide.
For example, when you use a hosted solution provider, you are buying the CRM applications licenses and then paying a monthly fee for services that are provided to maintain the applications. They are installed and customized as if it is a standard implementation. The difference is of course you are providing your data to them for use on their hardware and with their personnel. They remove a fair amount of overhead.
On the other hand, the net natives provide you with functionality for a monthly subscription fee that is based on what features and what modules you want to use and the amount of users or servers or machines or...well, it depends on the pricing model. But it is a subscription-based service with native applications.
There are many caveats and many concerns, but on the whole the ASP model is a good value proposition for smaller and medium sized businesses. The market is hot, and while of the net natives, only Salesforce.com is profitable, they are all doing very well and are worth the consideration.
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This was first published in August 2003