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This article was originally published in the Winter 2003 issue of Methods & Tools

ASP Tools for Software Development

Franco Martinig, Editor of Methods & Tools

What is an Applications Services Provider?

Once upon a time, when computers where so expensive that not all companies could afford them, most of the processing was performed by specialised firms that will rent computer time and services. Some of these organisations have a long history of providing such services like for instance ADP. The development of Internet and Web-based applications has offered these firms a new infrastructure to offer theirs services and these companies are known now as Applications Services Provider (ASP). ASPs provide mainly software applications for the basic business functions of a company: human resources, accounting or customer relations, but there are also some organisations targeting the software development domain.

The ASP model was presented at the end of last century as a major trend in the software market. This situation is confirmed when you research on the Net about ASPs. You will find a lot of material dated from the years 2000 and 2001 with impressive growth rate predictions from the traditional research firms. In 1999, Dataquest predicted that ASP revenues would top $22 billion by 2003. In 2001, the Gartner Group estimated ASP revenues at $2.1 billion and predicted that this number would climb to $7.3 billion in 2003. These were the days where you have to be in B2B segment, before the burst of the Internet bubble reduced the anticipated growth rate. Many companies operating in this area have been considered cautiously as their survival capability was questioned.

Even if there have been some costly failures, like for instance Pandesic (a joint venture between Intel and SAP), this market is still alive. According to IDC, companies spent more than $2.3 billion in 2002 for software delivered as services. Selling software as services is still an interesting idea for vendors that prefer a continuous revenue stream to variable licence deals. Software vendors like Oracle or SAP and systems integrators like EDS or IBM are also playing a larger role in this market. Siebel recently bought hosted CRM vendor UpShot for $70 million, even if it has already its own service, Siebel CRM OnDemand, in association with IBM. Peoplesoft added last month to its hosted software offerings the applications acquired through JD Edwards buyout. The company announced having about 60 customers using its hosted services.

In a worldwide study of the ASP Industry Consortium conducted in 2001, only 8% of the respondents were using an ASP application. Other surveys performed in 2000 and 2001 showed that between 26% and 31% of US businesses were using an ASP. The applications mostly used in 2001 were communication (e-mail, groupware) 34%, finance 25%, e-commerce (21%) and CRM (19%). In 2000, 90% of ASP users said that the service level agreement provided by their suppliers meets their needs.

In the business functions market, ASPs can offer third-party "branded" solutions like Oracle, Peoplesoft or SAP products, but in the software development segment, companies offer mainly their own solution. Some tools are provided only on a web-hosted basis. Other companies have developed web-based tools and offer hosting. Hosting is either managed by the tool vendor or by another firm specialised in web hosting. There are commercial services offered on a monthly/project/user fee, but you will also find some services available for free, either completely or on a limited functionality basis. In this article we will mainly focus on companies that offer externally hosted software development tools on a commercial basis.

ASP tools for software development target currently primarily functions that request collaboration or centralisation of data, like project management and bug tracking for instance. We can however expect that in near future more external services could be available for activities like code validation, code refactoring or language translation. These are the kind of activities than could use a tool on a rental basis.

The current market trend

There are many different views on the current trend for the ASP market. Here are how some vendors that are or have been active in the ASP market see it, sorted in ascending order of positive view.

"Hosted solutions will continue to struggle because they are hard to sell and administer, "
Simon Galbraith, Red Gate Software

"Most companies prefer to run the software themselves as there are security concerns that they are worried about. A big problem we have is that we are not an established brand, and some people have problems with trusting the intellectual property with us. Therefore the uptake on hosted solutions is a lot less."
Andrew Thomas, Inobyte Ltd

"It seems to be the case that there are legitimate reasons to want either solution. Given that the different needs are driven more by overall IT strategy (more control with in-house solutions, more flexibility and less maintenance with hosted ones) rather than by specific technologies, it seems likely this separation will continue. Non-browser-based applications, by comparison, must either come to use the Internet in the same way that browser-based applications do or die out because of their disadvantages in terms of collaboration and availability.
Luc Reid, Vermont Software Testing Group

"For a variety of reasons, some companies still prefer to implement in-house solutions. Over the past few years, we have seen a steady increase in new customers who are looking for a short-term hosted solution which can be implemented while they continue their evaluation of in-house enterprise-wide solutions"
Krishen Kota,

"On a wide scale, hosted software is continually gaining traction. However, there are companies for which it makes sense for them to host their own software. It is generally a balance between the business case and the comfort level of the IT department. Very often, a happy medium can be worked out. "
Mark Phillips, Standpipe Studios, L.L.C..

"There has been an interesting uptick in client signups with the service over the past 3 quarters. I am currently attributing this spike in activity to the many technical people who have been out of work for 6-12 months. Instead of finding new jobs with established companies, I believe that they are now starting up their own software companies. This effect has been especially noticeable in the United States, where the economy has been depressed for the past 2-3 years. As new start-ups, these small companies can ill afford to spend the time and money necessary to maintain their own source code control system. SourceHosting.Net fits their budget, so I believe we will help a large number of these early-stage start-ups during the initial product development phase. Even after that initial phase is complete, our clients typically stay with us because of the cost savings compared to hosting a source code repository internally and dedicating time and resources to maintaining it."
Greg Larkin, SourceHosting.Net

"At first, we expected only smaller companies and start-ups to use the ExtraView hosted solution rather that the in-house solution. We assumed that teams with smaller budgets would be inclined to use a pay-as-you-go plan in order to preserve cash flow. However, we found that it was the larger companies that preferred to cut server, database and maintenance costs and go with a secure hosted solution. Larger companies understood that their data is more secure on our collocation servers and were comfortable with our hosted security, reliability, and availability."
Michael Stebbins,

"At the present time IT community is shifting dramatically toward hosted solutions. As Internet infrastructure will grow further, this process will accelerate."
Val Karmazin,

As you can see the answers differ sometimes considerably. This difference can also be attributed to the type of services offered by the ASP. I think that two current trends can favourably influence the ASP market for software development tools:

  • The growing importance of geographically dispersed teams and collaboration between different organisations. As Internet becomes the place to share information and tools, hosted solutions provide the advantage of neutrality.
  • The benefit seen by management in ready-to-use short-term solutions. ASP solutions could be readily usable and their monthly fees allow a precise management of direct costs.

Working with an ASP

Working with an ASP could gives specific advantages, but also carries some risks. Here some of the differences between externally hosted tools and an internally managed solution

Specific advantages of ASP

  • Faster evolution of the product: instead of having to distribute patches or upgrades, the supplier can work directly on the centralised product.
  • Easier cost identification: all direct costs related to the tool are on your ASP bill.
  • Unique channel for all application support issues: your vendor cannot argue that the tool doesn't work because you have installed it with an OS or a database version that is not supported.
  • Formally negotiated service level agreement: you can set application availability levels and support response-time objectives... and discuss penalties in cases these objectives are not achieved.
  • Smaller initial investment: ASP products are often billed with a monthly fee payment scheme. You don't have to make an important up-front purchase investment.
  • Neutral solution for multi-organisation projects: if you collaborate with external organisations, an ASP provides a neutral ground to work with. It will also eliminate the problem of having outsiders accessing your information system to share one of your tools. Finally it can also be abandoned after the project completion if it is not needed.
  • Trial period for new software: if the vendor offer to sell or host its solutions, using the hosted solution initially can allow to seriously test the software and the vendor support before buying it and installing it internally.

Risks associated to ASP

  • External storage of data: your data is not on your hardware and you have less control on its management and who can access it.
  • Greater dependability on the supplier: if there is a serious problem with your ASP company (or the company your tool supplier use to host its services), you will not be in the situation where you have an application without support like internally managed apps. Access to your application and your data can be reduced or suppressed.
  • Sharing resources: processing power, bandwidth and support have to be shared between each ASP's customers that could have their own priorities, needs and agenda. If the number of customers increase, performance could suffer. Technical problems could also arise from many instance of the same application running on the same machine.
  • Internet related availability risks: even if things work usually fine, accessing net servers is always subject to specific risks like viruses or denial of services attacks.

Some question that you can ask when you choose an ASP

  • Is the hosting managed internally or performed by a third-party hosting company?
  • What are the security features of the application?
  • How is your data handled and what are the means you have for accessing it?
  • Are special measures (availability of source code for instance) provided in case of difficulties of the supplier?
  • What are the metrics for measuring the service level?
  • How much can I customise the application to satisfy my particular needs?
  • Would it be possible to bring the application internally again? Is there another exit strategy?
  • What are the staffing levels and the technical expertise of the supplier's staff?

The data problem

Security of the data is the most important potential issue for companies using an ASP and vendors have put in place different measures to answer these fears:

  • Extended security administration
  • Encrypted data communication
  • Regular back-up
  • Functions to export data
  • Availability levels guaranteed in SLA (Service Level Agreements)

The overall message from ASP to prospective customers is that their data will be handled as good or better than in their internal data centre, because they are specialised in managing web-hosted applications. Many ASP offer a trial period, it could be wise to try before you buy.

What can you get?

You will find on Internet four major areas where web-hosted software development tools are available:

  • Bug and defect tracking
  • Project management/collaboration
  • Performance/monitoring/testing/checking of web applications
  • Source hosting/configuration management

Bug and defect tracking

Bug and defect tracking is one of the main areas for software development tools ASP. This can be explained by the development of many web-based tools in this area in recent years. External hosting of these tools was a natural extension for the development companies. This is also a function closely related to customer care (CRM) applications and external (Web) access could be part of the requirements. There is also a tendency to have multiple teams working on the same project, either to minimise costs or to find external competencies. Finally, the open source movement has completely integrated these activities, the main tool being provided by

Available services:

  • Track components and versions, incidents, bugs or issues
  • Configurable workflow-based, alternate, multiple, and client approval policies
  • Time-based escalation of defect priority
  • Automatic defect assignment routing
  • User-defined entry forms, fields, alerts, and notifications
  • Configurable email notification schemes
  • Attach files notes, documents, and links to items
  • Defect change history and audit trail

Project management and collaboration

Collaboration is a main issue of distributed teams since the Lotus Notes era of specific collaboration software. The widespread diffusion of the Internet has changed the vision of the market, but the needs remain the same. Many ASPs offer services related to distributed software project management.

Available services:

  • Planning: Gantt, WBS Charts, critical path analysis
  • Calendars
  • Tasks
  • Issue management
  • Risk management
  • Resource management
  • Time, billing, cost and rate management
  • Discussions forum management
  • Files and document management
  • Security
  • MS Project integration
  • Office software integration
  • Email notifications and alerts
  • Project dashboard reports
  • Project analysis

Testing web applications

If you develop a web-based application, it is not always easy to test internally your web site. There are so many web standards and particularities (different browsers for instance) that it can be helpful to be assisted by dedicated external test teams or software. After production release, external monitoring can help to monitor how a possible customer in Berlin can access your web site in LA as the database gets loaded with data.

Available services:

  • Download and verify pages
  • Error diagnostics
  • Performance tracking
  • Screenshots of errors
  • Contact escalation levels
  • Unlimited mobile alerts
  • Interactive reports
  • Performance of Web transactions
  • Transaction availability
  • Changes in Web site content
  • Secure page performance
  • Redirection sequences
  • CGI queries
  • Authentication

Source hosting and configuration management

This is a strange area of the web-hosted software tools market. This kind of application is now widely adopted by all open source projects, but the market for commercial projects seems more underground and it could be difficult to find suppliers in this area. There is still reticence from companies to let intellectual property like software code in the hands of third party. Some providers in this area are simply providing a hosted version and support of the open source CVS tool (

Available services:

  • Importing and exporting files
  • Merge of concurrent modifications on same files with conflict warnings
  • Versioning
  • User management


In these days, the availability of software through the Web is a considered as natural, even if this trend is still relatively weak in the area of software management and development tools. Security and data availability are still major issues when deciding to use a web-hosted tool versus an internally managed solution. As confidence will increase that hosting companies can provide adequate answers to these concerns and a good level of support, I think that web-hosted software development tools will become a naturally accepted alternative solution to internally managed tools. The tendency to charge internal IT infrastructure costs on specific projects will also improve the comparison between internal management and externally hosting of applications.

For some companies, the most important trend is toward web-based applications. Suppliers develop products to adhere to this architecture, so you can choose to install them internally or use them as externally hosted solutions. For the vendors, this is a nice way to play on both markets. For the customers, this could be a safer way to buy ASP services, because it could provide an exit strategy with internalisation.


Specific software development ASP sites

Listing of web testing and monitoring ASP

Listing of bug tracking ASP


Although I assume complete responsibility of the above text, I would like to thank the following persons for their contribution to the development of this article



Web site

Krishen Kota

Ian Harrison

MJI Consulting

Simon Galbraith

Red Gate Software

Michael Stebbins

Sesame Technology

Val Karmazin

SkyeyTech, Inc

Greg Larkin

SourceHosting.Net, LLC

Mark Phillips

Standpipe Studios, L.L.C..

Luc Reid

Vermont Software Testing Group

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