ASPs: Viaducts of Tomorrow

"The segment of retail IT spending that will grow the fastest is the ASP model," announced Mark Miller at the NACS-Tech presentation, "ASPs in Convenience ? Reality in 2001." Miller, manager at Cap Gemini Ernst & Young, went on to say that ASPs, or application service providers, will reach a market of $4 billion by 2004, almost four times the amount in 2001.

Miller compared an ASP to the viaducts of ancient Rome, which funneled water into the city and redirected its use. Like those water pipes, ASPs funnel information and direct it to where it is needed. On a more contemporary scale, America Online would be a good model of an ASP.

There are two types of ASPs: vertical, which is built around one type of business, such as retailing; and horizontal, which is built around a service, such as sales or accounting.

Miller added that the benefits of outsourcing an ASP are many. An ASP eliminates hidden development costs, as well as substantially reducing hidden support costs of software and hardware; reduces future cost of hiring IT personnel; requires less reinvention, with more value added; and creates a more level playing field.

One retailer already reaping those benefits is Mick Parker, vice president retail development, Tosco Marketing. Parker, an admitted "non-techie," oversaw the company's Retail Enterprise Program (REP), which was created to overhaul the c-store/ petroleum giant's way of doing business.

"We want to meet our shoppers' needs by building a site-friendly, efficient operating system," he said. "We want to take control of the whole decision-making process ? based on fact ? and build a retail information management system in the most efficient, cost-effective manner, with the ability for adaptable and continuous improvement."

Tosco employed the talents of a number of tech firms, among them Retek Inc. and PerformanceRetail, to realize its initiative. The company is still in the pilot phase, and planned to go live with the first store this past May, with 60 stores running the system by September. A nationwide retailer program is expected to launch in October.

The benefits Parker hopes to see from employing an ASP include revenue growth; site-controllable expense reduction; headquarters efficiencies; reduced IT costs; and soft benefits, such as taking the frustration out of people's jobs.

"An average Circle K spends four to four and a half hours a day on administrative duties. We want to get that down to about an hour, hour and a half," he said.

"It's not plug and play. It's much more complex than I ever imagined. But the benefits outweigh the difficulties." n