In a few years, you may be able to change your supply-chain management software as easily as you can change your long-distance telephone services.
But for now, it might be best to wait and see how the chaotic market, fueled by a new kind of company, pans out.The new breed of companies - application service providers, or ASPs - allow their software to be used without being installed in the customer's local area network. About 100 ASPs are in operation.
Buying a license for a particular software package is expensive, even if amortized over three years for tax purposes. It often means a long and complex implementation. And if the software is superseded by a better version, the company is stuck unless it pays more money.
ASPs offer a deal that amounts to a rental option. The ASP ''hosts'' the software applications on its own server. There the applications are accessible to the customer through the Internet, and charged by the month.
''It's like the difference beying a generator for your house or hooking up to the grid,'' said Michael Mitsock, vice president of the application service provider business unit at Progress Software, Bedford, Mass.
Mitsock's company acts as a matchmaker between software companies and the ''bandwidth folks,'' the companies that provide the hardware and services to allow software companies to get online and become ASPs.
''For end-users, it's all good news,'' Mitsock said. ''It's hard to argue with a situation that would allow them to get access to top-of-the-line applications without having to make an investment in IT, servers and so on. You're not sitting there with a big server and a bunch of code. If you want to, you can just drop it.''
He added that the ASP model gives access to software package previously unaffordable to smaller users.
That's the theory.
The reality is that the market is in its infancy and the actual range of software offered is limited.
''The business model hasn't shaken out yet,'' Mitsock warned.
The APS business model has so far attracted enterprise resource planning vendors, according to Forrester Research Inc., Cambridge, Mass.
J.D. Edwards started off in 1998, and PeopleSoft, Oracle and SAP AG have followed. In each case, the ERP provider has formed partnerships with technology companies that can offer the Internet platform to support ASP services.
Aside from existing software companies offering their packages on an ASP basis, start-up and spinoff technology companies are creating one-stop shops that allow a customer to choose from a range of supply-chain software.
These include Corio in Redwood City, Calif.; FutureLink Distribution Corp. in Calgary, Alberta; Resource Partners Ltd. in Athens, Ga.; and USinternetworking Inc. (USi) in Annapolis, Md. Services they offer include personnel and customer management programs, enterprise resource planning and e-commerce applications, Forrester reports.
The current leader is USi, offering access to software from such companies as BroadVision (e-commerce), PeopleSoft (human resources), and Siebel Systems (customer service and sales force automation), and related implementation and support services.
Systems integrators such as KPMG International and IBM Global Services also have become interested in offering ASP services.
In theory, ASPs could host warehouse management systems, tracking and tracing software, transportation management - any application currently available. All a user would need would be the ability to send the ASP data for processing - whether it's purchase order numbers, tracking numbers, information on incoming freight or transportation requirements - and to receive the answers. Mitsock said only a computer with a Web browser would be needed.
Syntra Technologies, New York, hopes to offer all of its international trade logistics software services on an ASP basis. So does Celarix Inc., Boston, which is putting together a package of logistics software services to track and manage goods from raw materials to the store shelf.
''As far as the rental market is concerned, all software is equally interesting,'' Mitsock said.
But Forrester recently backed off its early prediction of ASP market revenue reaching $390 million in 1999.
''Vendors have dragged their feet in fully supporting applications for rental as the one-stop shops threaten to reduce their strategic importance,'' said Thomas Gormley, an analyst at Forrester.
He said companies such as USi and Corio must gobble up smaller regional companies to keep up with their own growth rates. It's unclear who will end up at the top.
''It has all the chaos characteristic of an early market,'' Mitsock said. ''No one's figured out the formula for success yet.''