Are your technical and operational costs squeezing out all hopes of profits? Are you looking for cost-cutting measures? Are startup costs limiting your potential to partner and operate remote office locations?
Then perhaps a fresh new look at options for your most costly expense line-item—your technology costs—should be on the horizon.
A new technology kid is on the block and it’s adding an option to every network and computer system available to the title industry. The new kid is application hosting or Application Service Providers (ASP). The application hosting idea is taking many industries by storm and begs the attention of the title and real estate industries.
With the speed of technology changes, we have been given some of the greatest gifts and curses our current title generation could have imagined. Application Service Providers allow us to harness and apply multiple technologies while cutting costs and standardizing and simplifying our technology tools. With minimal tech-nerd babble we will talk about the Application Service Provider (ASP) and the application hosting business model, and evaluate if it can provide benefit to your office(s).
The Business Problem
Network personal computers running in corporate offices are expensive to purchase, support, and upgrade. Software costs are magnified when software programs are run on multiple PCs in one or more offices. The cost of keeping PCs running currently exceeds $1,500 per PC unit per year, including upgrades, employee or consultant time, network licenses, and software loads and reloads.
Fast PCs running on slow or marginal networks with outdated file servers cannot be supported by our current vendors without extremely costly hardware upgrades. Expensive network licenses and complex network topology make it nearly impossible to maintain and upgrade the average title office network. All of this together leads to slow system performance, due to any number of the above reasons.
This is an example of the old business model for outsourcing. In the past, outsourcing has been limited in the title industry. We have a history of outsourcing, but not outside the traditional lines of business. We outsource our telephone systems, long distance, voicemail, and paging services. We outsource our mail services, including overnight, cross-town, and same-day carrier services. We are beginning to evaluate outsourcing key data entry functions and plant posting operations. But the title industry is just embracing the surface of technology outsourcing. Fortune 100 companies have outsourced network topology and system infrastructure for years, but the cost model has just recently enabled real estate transaction partners to weigh the pros and cons, and many companies are coming up with more pros for technology partnering and application hosting than cons.
Independent Application Service Provider companies are using their technical know-how and technical contacts to marry some of the sexiest technology wizardry and low-cost communication solutions into a hosting service company worthy of your partnership. Combining low-cost Internet and network communication cost, Thin-client technology and major innovations in network server hardware, ASP companies are attractive alternatives to the sight of your lead escrow officer or you contorted behind your company server.
The basic model of the hosting technology is quite simple. The center of the hosting option is the leveraging of cost, lowering cost to you and cost sharing by the Application Service Provider. Title companies must take the first steps to determine the Total Cost of Ownership (TCO) of their networks. Your ASP, outside consultant, or IT person can help you determine these costs using industry averages. The TCO is normally much more than you would imagine. An industry average can easily run $1,500 per PC, per year.
The Benefits of ASPs
Once you are armed with your TCO, you are ready to objectively evaluate technical partnering and application hosting. There are several benefits to working with an ASP. The cost benefit models start out simple enough. It can be simply cheaper to install, support, and maintain software on an Application Service Provider’s network than on your own PCs, desktop computers or branch servers. The technical staff of an ASP has a better opportunity to support software needs if the programs are running from a centrally hosted server, and not loaded on the desktop computer or branch level servers.
Partnering with an Application Service Provider offers much more than a cheaper way to conduct business. The expertise of the latest technology requires commitment and resource dedication to provide the most out of today’s technology. The ASP business model allows the customer the ability to pay as they grow without the normal major upfront expensive cost to deploy technology.
The ASP becomes a true partner with shared goals of your network and data. The success of the ASP is based solely on the confidence, service level, and commitment to the partnership.
Many of the current IT staff issues are reduced in an ASP model, because in a hosted environment, the software is loading on servers maintained by a technical group who specialize in high-end network management, not at individual PCs or branch servers. Network specialists are also able to better manage updates and system-wide changes of software applications through single server support.
With the ASP partnership, your company has access to technical experts to complete crucial backups and disaster plans instead of depending solely on remote office personnel and semi-technicians. You no longer need to allow storage of important files on your PC’s hard drives or partially backed-up servers. With your ASP partner, you may elect to backup or store the data on secure independent central servers in highly controlled data centers. This reduces hard drive crash headaches because in most ASP models, programs aren’t loaded or executed on individual PCs. So, if and when a PC does crash, only the connection to the ASP needs to be quickly reinstalled.
With the ASP model you minimize the remote branch startup cost. Your business model could consider low-end PCs instead of full network servers and new monster PCs. With your ASP partner, your startup cost for a remote branch can be as much as 60% less.
Training and Support Options
The training and support options blossom with your independent ASP partner. Support and training can include conference calls, and short session trainings, taking over control of all of the desktops participating in the training. Because the training takes place without travel, you save money and time.
Independent ASPs are also able to offer training and partnering with multiple title vendor software. These independent ASPs are able to coordinate Internet training and demonstrations between different underwriter software vendors as well as vendors who aren’t affiliated with an underwriter. Independent ASP companies are adding online Internet training in more than escrow and plant system software. Enhanced and advanced training in e-mail products, word processing programs and scheduling programs are just a few of the options available for online training.
Title companies that host their systems with ASP companies are finding a direct connection to their vendor for updates, bug fixes, and general system support when needed. With customer approvals, independent ASP hosting companies are opening Internet portals to allow vendors access to the customer’s system during and after hours. This allows direct maintenance of corrupted databases, re-indexing options, and individual user support over the Internet. These portals can be opened and closed with user-ids and passwords at the customer’s request to the ASP. Online Internet support can include alternating control of the users keyboard and mouse. Delays to support are minimized with on- demand portal access. Vendors can access the software for support and upgrades much more timely via the Internet and using independent ASP hosting. The software company no longer needs to mail out update disks, or have the company ship their production files for support.
Title software developers and marketing and sales groups are becoming partners with companies. Innovative vendors are using ASPs to host, demonstrate, and train title users over the Internet. Software vendors such as Title Support Services and DTC are hosting their software with ASPs. This hosting partnership allows full-featured working versions of their software to be demonstrated to multiple employees of a customer, even if the employees are in different offices in different cities.
Online demonstrations are far more effective than traditional demo disks or PowerPoint presentations because the most knowledgeable users of the systems are demonstrating the product. Online demonstrations minimize cost as well. Not just the travel cost of the sales force from the vendor, but many times the sales force is also part of the technical or support team of the vendor.
Remote online demonstration allow these people to be more available after the sale, a cost savings I’m sure your vendor is willing to pass on to you. Your company benefits by allowing more employees in the decision-making process without incurring major increases in travel cost, and by taking additional advantage of the Internet and technology you already have in place. You also get an opportunity to evaluate the technology over a Thin-client Internet option. This allows you to see the product under one of the most innovative environments available to us today.
Online Internet training is also a new option available to real estate and title industry users. The concept is called shadowing and is being used as a conference call or short session training tool. Shadow training uses the Internet to connect to a trainer. The customer dials into a prearranged conference call with others being trained on the topic. The trainer has control of all of the desktops participating in the session. Because of the logistics of shadow training, the cost of quick itemized training topics are greatly reduced. ASP hosting of these types of training sessions provide development companies and customers a common meeting ground without leaving their office. The flexibility of time and resources greatly improve both customer and vendor cost-cutting partnering.
So is there an ASP in your future? Microsoft, IBM, EDS, and Virtual Desktop Inc. are betting so!
Randall Hood is EVP and chief technology officer for Virtual Desktop, Inc., in Dallas, TX. VDI is an application service provider specializing in the real estate industry. He can be reached at firstname.lastname@example.org or 972-960-6400. This article is excerpted from Randall's presentation during the 2000 ALTA® Annual Convention in Hawaii.