VideoIf you need new accounting or financial software, an ASP (application service provider) can be an easy and inexpensive option.
Instead of purchasing accounting software and computer equipment and bringing them in house, you outsource the entire project to an ASP via the Internet.
For this report, I checked out Intacct from Intacct Corp.(www.intacct.com), NetLedger from NetLedger Inc. (www.netledger.com), and Great Plains Accounting from the ASP ManagedOpts.com. Intacct and NetLedger are Internet-only accounting systems, while Great Plains is also available for traditional on-site licensing from Great Plains Software Inc. (www.greatplains.com). Other Internet-only accounting systems that you can check out for yourself are ePeachtree (www.epeachtree.com) and eLedger (www.eledger.com).
Internet-only systems like Intacct and NetLedger are easy to sign up for. You just go to a Web site, and sign up. For either service, you can play around with a demo account for a few weeks, in order to familiarize yourself with how the system works and decide whether it will work for you.
There are some concerns with ASPs. For example, if your accounting data is on someone else's computer, can you easily get to it? Can your competitors hack into the ASP's computer and see your data?
Even worse, what happens if your ASP goes under, as so many dot-com companies have been doing recently? If the ASP goes out of business, will you lose your accounting system? Will you lose the rest of your business, too? At the very least, you should have a plan in place to recover your data quickly from the ASP, if it goes under.
The risk of an ASP going belly up is certainly a concern to Richard Brenner, a business consultant in Cupertino, Calif., who evaluated the Internet-only accounting system from Intacct. He wanted to use it for his own business, replacing Intuit Inc.'s QuickBooks (www.quickbooks.com), which had served as his accounting software for ten years, and also to recommend it to some of his business clients who need a new accounting system.
But Brenner is also concerned about security.
"One of the biggest fears that we have and our customers have is that the system is not secure," says Brenner, CEO of the Brenner Group (www.brennergroup.com).
Brenner checked out Intacct's computer systems and found that although all customer data is stored in the same large Oracle database, the company is using Oracle's standard security features, with the result that Brenner believes that each customer's data is fully secure. He also checked out the firewalls and other features of Intacct's configuration. "I talked to all my customers about it, and they came away reassured," he says.
Indeed, Richard Stiennon, research analyst at Stamford, Conn., based Gartner Group, agrees that Intacct checks out for now, but indicates that every ASP must be given a thorough technical security check, and these checks must be repeated frequently during the life of the contract.
"Watch how the ASP saves on costs," says Stiennon. "The ASP will be trying to spread their cost by hosting their services on the same computer as other customers. If my financials are on the same database, on the same disk drive, as a competitor, then does someone from my competitor have access to my data?"
Stiennon and the Gartner Group provide a detailed "Security Test" that you should apply to any ASP. See the Security Test at the end of this column.
What about classical accounting systems?
While Intacct and NetLedger are brand new, Internet-only, ASP-only accounting systems, Great Plains Accounting is a classic midrange accounting system that's been around, in one form or another, since the early 1980s. These days, Great Plains and other classic systems are also being offered by ASPs. The ASP installs the accounting system on its own equipment and offers Internet access to its clients.
Folio Corp., a manufacturer of trade show exhibits, decided to go with Great Plains ASP service in early 1999, when the company needed a new accounting system after having acquired two other companies.
"We didn't seek new financial systems with the ASP model in mind initially," says Dan Lubin, VP of IS, for the Worcester, Mass., company, "But we had to put together integrated financial systems to support our recent acquisitions."
Folio hired outside consultants to select new financial systems, and narrowed the choices down to J. D. Edwards, Solomon Software, and Great Plains Software. Then Folio started talking to ManagedOps.com (at that time known as the Taylor Group), a Bedford, N.H. based Great Plains reseller which wanted to start an ASP service. Folio ended up being the first customer.
Although cost was a consideration in selecting an ASP, it wasn't the major consideration.
Lubin had originally planned to hire a staff and build a data center to house the computer equipment.
But by going to an ASP, "we had to add zero head count," says Lubin. The firm does have a small technical project team to manage the relationship, but "I didn't need to build a help desk, I didn't need to build a data center, and I didn't need to hire programming experts in Great Plains and SQL."
Pricing
Like Lubin, most people who go to the ASP model for accounting software are not doing so solely to save money. More important are factors like fast implementation, avoiding capital investment, and not having to hire an expensive, highly specialized technical staff that can install and maintain the software.
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