Is an ASP part of your CMMS/EAM future?
Sometimes it seems that paradigm shifts are a dime a dozen in the information technology (IT) world. One concept just feels comfortable when another one pops up and promises to revolutionize the industry.
Sometimes it seems that paradigm shifts are a dime a dozen in the information technology (IT) world. One concept just feels comfortable when another one pops up and promises to revolutionize the industry. In the computerized maintenance management system/enterprise asset management (CMMS/ EAM) world, a variety of system architectures have taken root. Some continue to thrive while others last a few years before giving way to new technologies.
By system architecture , I mean the combination of hardware and software operating characteristics that are used to categorize application systems. Over the past 20 yr, a number of architectures have dominated the CMMS/EAM marketplace, from mainframe/midrange systems to web-centric solutions. One constant has remained, however. Companies buy software and hardware to support their maintenance needs.
It wasn't always this way. In the good old days of computing, businesses called service bureaus made a living by selling computer time to other companies to run their applications. Using terminals and modems, customers connected remotely to the service bureau's mainframe computers. The terms "core competency" and "outsourcing" were only a gleam in a management consultant's eye. Computer hardware was too expensive for many businesses to purchase and operate, and software wasn't anywhere as sophisticated as today's applications are. Users didn't lose a lot by running them over low-speed phone lines.
Times have changed. Hardware and software costs dropped. Application functionality increased, making remote access a cumbersome and expensive process. More and more companies purchased their own systems. This model worked fine for many organizations and applications. But as software continued to evolve and diversify, it once again became increasingly difficult for companies to justify the acquisition and support costs of specialty software.
Recently, the CMMS/EAM marketplace has begun to feel the effect of this phenomenon. Most large operations have already acquired top-tier CMMS/EAM solutions. Small maintenance departments are supporting their operations with PC-based packages. Operations with needs that fall between these niches remain an untapped reservoir. Many maintenance departments are saddled with obsolete software and are desperately in need of an upgrade. Cracking this market segment is no easy matter for CMMS/EAM vendors.
Corporate demand for business applications has increased steadily over the years. Different applications compete for finite resources. The purchase-and-support model isn't so attractive in certain situations. It can be an especially difficult option for many maintenance departments to follow in their pursuit of CMMS/EAM solutions.
Despite continual improvements in hardware price/performance, the total cost of ownership (TCO) for CMMS/EAM packages remains relatively high. While the cost of raw computing power falls, demands continue to become more sophisticated. CMMS/EAM acquisition costs can entail much more than a license fee and the purchase of a central computer. CMMS/EAM TCO isn't restricted to purchase outlays. A system must be supported. Top and middle-tier packages typically require significant IT resources to implement them and keep them running.
For those for whom the purchase-and-support model is impractical, a lease or rent alternative is available through application service providers (ASPs). The ability to access a CMMS/EAM package operated by a third party is now both possible and practical. ASPs run data centers where customers remotely use application software for a fee. ASP customers have no setup and support computer networks and don't need to buy application and system software. The ASP sets up and maintains the required infrastructure.
Outsourcing computer services never really disappeared. Businesses have always hired third-party service providers to run their data center operations. Although these service providers are able to save money in certain situations, they still basically operate a private data center and private software for their customers. They are best suited for situations in which they take responsibility for all of a customer's data processing needs. Outsourcing specialty or departmental applications like a CMMS/EAM requires something more.
ASPs provide a different outsourcing model. They typically charge on a per user basis to run specific software applications. Two recent developments have made ASPs a viable alternative for specialty and departmental applications. The first is the internet, which provides a common, easily accessible communication medium. The second is the development of thin client architectures and terminal server technologies. These developments make it possible to off-load processing from client desktop to back-end servers.
ASPs have become popular for everything from e-commerce to customer management applications. The CMMS/EAM industry is just starting to embrace the ASP model as ASPs begin to give CMMS/EAM vendors the means to reach customers to whom they have not been able to sell a solution.
Players in the market
All top-tier vendors are currently working on ASP solutions. Indus, PSDI, and Datastream either have plans for or have announced ASP services or options. Mincom and Mainsaver have sister divisions or corporate parents that provide application hosting and outsourcing services.
Fluor Daniel has embraced the ASP model completely, packaging their TabWare product into an ASP offering called TabWare OnLine. The product is priced on a monthly per-current-user basis. No long-term contract is required; no initial fees or additional charges are assessed. The company has teamed up with MCI WorldCom's UUNET, an internet service provider, to operate a data center capable of meeting future product demands. A number of companion products and services are also part of the TabWare OnLine effort. These offerings include standard interfaces to ERP packages and data conversion services. Also being planned are best practices templates, PM/PdM libraries, and other information sources to facilitate rapid implementations.
The product currently boasts 300 paying users. Although Fluor Daniel still gets most of its software revenues from its traditional onsite product, the company predicts the online offering will account for 100% of their software income within 5 yr. I'm not sure of that prediction, but I do think the ASP model is an attractive approach for many prospective CMMS/EAM customers.
Looking at both sides
However, there are impediments to ASP acceptance. The purchase-and-support model is well ingrained as the way we view application software. It implies a certain level of control that renting doesn't appear to provide. While this control is probably more illusion than reality, it is still a factor in many minds. Furthermore, the ASP model may place some constraints on how maintenance departments use a CMMS/EAM package. Its shared nature limits customization. It can also restrict how end users access data. For example, TabWare OnLine's shared database prevents users from directly accessing the database through SQL or a third-party report writer. But with all the features and flexibility of today's CMMS/EAM packages, do most users need custom code or third-party report writers?
The ASP world also brings new considerations to the software selection process. There are service agreements, pricing models, and security and reliability factors to evaluate. Although up-front costs are significantly lower than a purchase-and-support model, maintenance departments will still invest considerable time and effort in making an ASP solution support their needs. Switching ASP solutions is definitely more difficult than moving from one apartment to another.
I don't know the exact impact ASPs will have on the CMMS/EAM industry. It will take time for all the talk to evolve into results. But I've seen too much interest in the topic not to believe that ASPs will make their mark. If an ASP approach really delivers a better, faster, cheaper CMMS/EAM experience, it will obviously flourish. It has all the elements of success. It may be only a matter of time before an ASP is in your future.
Tom Singer is an information technology consultant who specializes in designing, developing, and implementing systems solutions that meet client operational needs. He has worked both as a developer and integrator of CMMS solutions. He is a project manager with Tompkins Associates, a total operations consulting firm headquartered in Raleigh, NC. He can be contacted by phone at 630-472-1524 or by e-mail at email@example.com.
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