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Xenakis on Technology: Are Accounting ASPs your Friend or Foe?

Here's what we found when we looked at three accounting applications service providers.

“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.

That’s not to say that pricing is not a factor. It is. Keep in mind that these systems are all priced by the number of users who can access the system. So end users will need to be alert to every user linked to their system.

Intacct costs $49.95 per user per month, while NetLedger is priced at $4.95 per user per month, with an additional $9.95 per month to use the payroll module.

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