Finding the "e" in Procurement

Regardless of what procurement system they settle on, the company was ready to go the application service provider route. Why? They were certain they could save money.


Executives at Digital Insight are technically and financially savvy enough to help banks and other institutions deliver financial solutions and products to their customers. But when it came to its own procurement systems, the Calabasas, Calif.-based company had not kept up with the times. "Until recently we had no 'e' and no 'procurement'," jokes Howard Seligman, MIS director of Digital Insight. "We were operating in a 100 percent paper driven environment, with procurement staff walking around for signatures for purchase approvals."

Seligman and his colleagues weren't happy with the situation, but it took the acquisition of an Atlanta company to spur serious plans to implement a procurement system. A number of decisions had to be made, not the least of which was deciding which system to adopt. However, on one matter they were settled: whatever system they decided to use, it would be via the ASP (application service provider) route.

Eventually the company chose CoreHarbor, an ASP based in Norcross, Ga., that had recently partnered with Ariba. "Ariba is a proven product," explains Seligman. "And CoreHarbor's package of alliances are very good. We knew it would be easy for our existing suppliers to work with them."

Best of all, he says, after some conservative calculations it was determined that payback on the investment would be no longer than 18 months. But even without the math Seligman knew the ROI would be relatively fast. Being application service providers themselves, the folks at Digital Insight are well aware of the cost saving benefits of the ASP model.

Infotech's Latest Trend
Application service provision is the latest infotech craze, popular because it allows users to access certain applications online with minimum fuss and cost. Specifically, application service provision, or web application hosting, as it is sometimes called, allows a user to Œrent¹ a particular application instead of purchasing and licensing it. Installation and integration become minor issues instead of the headaches they usually are in a traditional deployment.

"ASPs allow companies to have access to leading-edge technology that doesn't have to be upgraded every six months," says Andrew Frost, senior research analyst and head of the ASP Stream for the Butler Group, an IT research and consulting house in the United Kingdom, with offices throughout Europe. "We're advising all of our clients to look at ASPs very seriously."

The applications themselves range from the complex - e-procurement, customer relationship management, ERPs, supply chain management, warehouse management; to the relatively mundane - Microsoft Office or e-mail for example. The level of sophistication among the suppliers tend to vary as well. Some may offer the bare minimum of software and hardware provision, while others provide a certain level of infotech management and a wide range of software packages.

The biggest attraction of ASPs is the relatively low cost. For example, a company could easily pay $300,000 to install a system from Clarus. Accessing that same system from USi, a popular ASP supplier, could be around $200 a month, according to an announcement made by Clarus and USi earlier this year. Another example is American Software, which reports that a typical mid-size company with 100 users can access its e-procurement software for about $50 per user per month using an ASP platform. In fact, many are calling ASP technology the door that opens opportunity for the small- and mid-market participants.

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