Tuesday, 09 November 2004 10:34

ASP can mean big bucks

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A few short years ago, when broadband was just a pipe dream (thanks to our innnovative carriers for many it still is), the ASP model of delivering sophisticated applications online in real time was unthinkable.

Today, it is not only only a reality but some businesses are actually reaping mega-bucks in recurring income. Yet ASP is no longer the buzz word it was two or three years ago - may be that's a good sign that the model actually works and, even more importantly, makes money.

Micronet Systems Australia has about 2000 clients around the Australia, to which it delivers its online franchise management solution, a suite, which includes POS and back office financials. Pirtek (the hose and fittings company) for instance recently signed a three year ASP agreement, believed to be worth close to $1million for Micronet, to supply its front office and back-office applications online to 65 stores. The new online solution replaced a centralised in-house Unix multi-user system, involving dumb, terminals, leased data lines and so on.

Think about the ASP business from a provider like Micronet's point of view. Firstly, rollout to multiple locations is relatively simple. All you need is a centralised server, PCs with a broadband connection at each location and virtually everything else can be done online.

Then there is the revenue model. Once you have a customer, you get monthly payments for as long as they use your system (which is usually a long time given the normal reluctance of users to change) - recurring revenue that software companies on the non-ASP model dream about.

From the user's point of view, using an ASP solution also makes sense, since the software becomes an ongoing operational cost rather than an upfront capital cost. Given the fact that most applications users are still on a non-ASP model, it does not really take a research analyst to figure out that ASP is going to be a growth market for some years to come. We won't hear much about it, however, because the research analysts have moved on to the next buzz word.

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Stan Beer

 

Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

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