The rental industry is rich with success stories. From inception, these successful ventures shared a clear vision of their businesses and the markets they would serve. The founders and managers of these companies emphasized the importance of focusing on that vision rather than on the distractions and expenses of tasks outside their core businesses.
Seldom has our industry seen greater distraction and expense than that involved in building and maintaining an information technology infrastructure. Countless small to medium-size businesses find the process of selecting, implementing and maintaining a total IT solution daunting.
The greatest challenge probably is trying to recruit and keep today's high-priced IT professionals. Most of these individuals are atop the salary and benefits list and increasingly seek corporate officer appointments and equity positions.
In addition to staffing issues, the capital requirement to fund the architecture itself can be significant. The demand for extreme reliability in an online hosting environment creates the need for redundancy and fault-tolerant system design, driving the price of these complex systems skyward.
For small to medium-size rental companies, these challenges can seem insurmountable. But regardless of company size, the technology is essential to remain competitive with their larger counterparts.
Enter the application service provider. Essentially, an ASP provides one or more enterprise software solutions, centrally hosted and delivered to the customer via one or more connectivity options - frame relay, integrated services digital networks (a high-speed circuit), satellite, dial-up and the Internet. This definition applies to a broad spectrum of service providers, ranging from "garage operators" to "mega-alliances" among software vendors, data-center providers and major interexchange telephone companies. Across this range, however, the concept is essentially the same: provide application hosting on an outsourced basis for a fixed monthly fee, and allow the customers to remain focused on their core businesses.
For many small to medium-size businesses, this fundamental definition falls short of a total IT solution. Their requirements demand that a service provider assume the role of the IT department, complete with a strong working knowledge of the industry they serve. Industry-focused ASPs possess experience and IT solutions specific to the vertical markets in which they specialize. More than simple Web-hosting services, these providers typically offer enterprise software solutions suitable for the unique requirements of their chosen markets, such as rental management, equipment sales, service management, inventory, warranty and financials.
These specialized service providers frequently support areas not typical of traditional ASPs, such as business process engineering, application-based training, and business disaster recovery planning and documentation.
A smaller but rapidly growing subset of these specialized ASPs are also providing a total solution approach that includes design, implementation, and around-the-clock management of wide and local area networks.
Recent estimates by Framingham, Mass.-based International Data Corp. show the compound annual growth rate of the ASP market will reach 92 percent, from $296 million in 1999 to $8 billion by 2004. Other studies estimate the growth to be significantly higher.
But the advantages of the industry-focused ASP model are difficult to ignore. Allowing the customers to focus on their core businesses is one advantage that's not difficult to remember.
