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October 06, 2002 at 08:00 PM
Application Service Providers Put A Different Spin On Outsourcing
Orlando
Application service providers (ASPs) are assuming a new role, allowing insurers to outsource the development of software applications that help boost productivity and bolster the bottom line, says one expert.
Henry Padilla, manager, management solution services for New York-based Deloitte & Touche LLP, said that thanks to ASPs, instead of outsourcing processing of insurance policies and claims, carriers can outsource the development, deployment and maintenance of key software applications. He spoke at techDEC, the Tech Decisions Exposition & Conference, sponsored by the National Underwriter Company, and held here last month.
“ASPs have proliferated in recent years,” said Padilla, citing “a lot of growth in that area.” He added that a number of ASPs have specialized in vertical markets, such as insurance and specific functionality.
An ASP provides access to and support for software applications–”from e-mail packages to incident reporting to full policy and claims administration,” Padilla explained. He cited Yahoo! as an example of an ASP, along with Internet Service providers such as America Online.
The ASP will usually host these applications at a remote facility on an infrastructure that is maintained by them, he continued. Access is typically gained via the World Wide Web or a virtual private network.
Driving the growth in ASPs is the fact that software vendors see it as a way to enhance their revenue and support capabilities, said Padilla. On the customer side, companies see value in outsourcing certain applications to reduce costs and to enable the company to move focus and manpower away from software development and maintenance, and toward other, more critical areas.
“You usually dont see a company totally outsourcing everything to an ASP,” Padilla remarked. “ASPs arent going to totally transform the way we do business. Where it makes sense [to use an ASP], it will streamline operations.”
Historically, said Padilla, ASPs have catered to smaller companies that needed additional IT support. The growth, however, is expected to be in large companies that want to cut IT support costs. In insurance, he added, many ASPs are reporting growth in the “small-to-mid-market.”
Typical services delivered via the ASP mode include e-mail, payroll, document storage and online collaboration, Padilla observed. “In insurance, claims applications have been a traditional focus.”
