Real ASPs Are Stepping Forward!

It's time to take another look at ASPs as they will have a major impact on the human resources profession in the future. In considering ASPs, some logical questions should be:

1. What is an ASP?
2. Why should I be interested in an ASP?
3. What are the conditions I should use to determine a need?
4. How can I evaluate ASPs?

What is an ASP?
The Application Service Provider Industry Consortium (ASPIC) defines ASP as follows: "Application Service Providers (ASPs) deliver and manage applications and computer services from remote data centers to multiple users via the Internet or a private network." Looking at this and relating it to human resources perspectives, this translates into: An ASP offers human resource systems applications that they provide for your use, just as if they were running on your own PCs or in your own company's data center. The ASP may be considered a mode of "technology delivery." These ASP-delivered human resource systems applications may offer complete HRIS capabilities or they may address specific human resource functional areas, such as employment/recruiting, benefits enrollment/administration, training enrollment/administration, EEO analysis, etc. The ASP delivers its technology via the Internet, so the customer only needs to have a commonly used (and free) Internet browser on their computer, as well as access to the Internet in order to access and use the HR systems applications anytime agreed upon. Most often the pricing for ASP service offerings is based on use, the functions used, and/or transactions processed. In a pay-for-use environment, attractive fee structures can be established for evolving organizations that are downsizing or growing rapidly.

Why should I consider using an ASP?
There are several reasons the ASP delivery model is important and will be successful over the long term for human resource applications.

• There are no up front costs for software licenses and hardware (assuming you at least have a PC and Internet access).
• There are no software maintenance costs or upgrades that need to be implemented.
• The time to get a new application up and running is much faster than when performed internally.
• Pricing is typically based on use. Companies only pay for the functionality being used or transaction volume, so you can forecast and budget accurately for the service.
• The ASP will have industry and applications experts to provide the most up-to-date technology and support available.
• The ASP will provide service level agreements (SLA) that address the system availability, performance, customer support, and other related issues.

When should I consider an ASP?
Is it time for an ASP for your firm's human resources organization? Here are five clues that it is:

1. You have identified a need for a new system and need a solution implemented sooner than later or never.
2. You have requested support from your IT organization and have been told there isn't anyone available to address your issues at the moment.
3. Your IT organization wants to install a system requiring a major investment in hardware and software, as well as additional IT employees, for which you don't have budget.
4. Your company doesn't have the IT or functional competencies required to address the situation internally.
5. You have a defined budget and must be able to control expenses over time.

How should I evaluate an ASP?
The most common reason given for not using an ASP is they are too risky and often go out of business! This has some truth to it, however the "dot com" failures that were prevalent over the past year have largely subsided and with prudent evaluation criteria you should be able to mitigate the risks involved. The following are some criteria to consider when evaluating an ASP:

• Management and key personnel - they should have functional expertise and experience with the application you are seeking.
• Technology - the application should be designed and developed as a true Internet application, not an old legacy system with a browser "front end".
• Data Center - the company should have an "industrial strength" data center, with appropriate servers, backup processes, Internet connectivity and routings, disaster recovery procedures, and appropriate security and privacy controls.
• Operations and Customer Support - the company should have sufficient and qualified personnel who are performing the day-to-day operations and support activities.
• Implementation - the company should have a well-defined and structured approach to implementing the service and making changes that may be required later.
• Service Level Agreement - reasonable service level items, such as system availability and support responses, should be available; SLA items are always negotiable, but be prepared to pay more if you really want more.
• Pricing - be sure the fee structure meets your needs, for implementation, which is usually a one-time cost, and ongoing services, which are typically based on a per employee, per month and transaction fee structure.
• Data Integration - if you need to provide information from your system to the ASP's system, be sure the integration facilities are appropriate for your use; this also might involve returning information from the ASP to your system, such as payroll deductions for benefit enrollments.
• Data Availability - the ASP should have facilities for you to extract and download your data (remember you own the data) at any time you want it, usually for other processing purposes or reporting.
• Financial Stability - the ASP should be well funded and be able to demonstrate they will be in business for the long-term.

The ASP business model is here to stay and it will continue to expand. Human Resources continually need to demonstrate value-added services with less staff. ASP solutions offer an excellent tool for HR professionals to accomplish this goal with industrial strength systems for which they don't have to rely on their IT departments to implement or service. ASP solutions are easier for HR professionals to budget for given their scaleable use based pricing structure. This scaleable pricing is also key, as most HR professionals know, to gaining their CFO's buy-in. It also helps, in obtaining this buy-in, that many of the available ASP solutions can demonstrate monthly savings in excess of their monthly fees.

About the Author

Sidney Simon is the Director of Product Management at BenefitAmerica.

Sid is an HRIS industry veteran with experiences in internal technology development, HR practitioner roles, software vendor, consultant and services delivery, especially in an Application Services Provider model.

Sid is founder and first president of the International Association of Human Resource Information Management (IHRIM) and has been a member of SHRM's national human resource technology management committee since its inception.

Sid holds an MS in Management Science and BS in Industrial Engineering.

Contact Sid Simon ssimon@benefitamerica.com

info@benefitamerica.com
http://www.benefitamerica.com