As Published in The Monitor
Technology Edition

ASP’s - the B2B e-volution

Why it's the hottest thing in Internet Leasing

By Steve Lundergan
Vision Commerce, Inc.

We are at the height of the HYPE curve regarding the role of the Internet and how it relates to the future of the Equipment Leasing Company. Many Internet Service companies would have Lessors believe that without Internet leasing, the small to medium sized companies will not be able to compete and therefore will be cast off into some “Chasm of Doom”. This hearty industry has created a tough breed of true survivors. For decades, equipment leasing professionals have faced the never ending stream of competition, federal, state and local tax reform and ever changing legislation. Avoiding the Internet will not be the means to their demise.

Nonetheless, there is no doubt that the evolution of technology has played a major role in boosting our industry to new heights over the last twenty-five years. The equipment leasing industry is one which relies heavily on the world of communication. Look back at the communication tools we have used to build our business over the years; the telephone, teletype, dictaphones, fax machines, computers, LAN networks, voice mail and e-mail. These tools have all been accepted as necessary and useful tools in business communication. Similarly, the Internet will be just as useful and just as accepted as those other communication tools in the “not too distant future. And don’t lose sight of another valuable tool that has made business more efficient – Software. Now, we combine the Internet with software to provide a service. The very good news is that, like technology, it gets less expensive as the product matures. At least – It should.

At a recent economic outlook Luncheon in St. Louis, Alice M. Rivlin, currently a senior fellow in the Economic Studies program at the Brookings Institution and former vice chair of the Federal Reserve Board was asked if the Internet would play a significant role in productivity in the upcoming year. She said "It is the old economy using the Internet that will drive productivity". In other words, it will be the experts and professionals in their respective businesses doing what they know how to do best, and using the Internet as a tool by which to do it more effectively and efficiently. It is the opinion of most that using the Internet as a business facilitation tool will help the equipment leasing industry continue its impressive growth.

Now that the potential values and benefits have been established, let’s identify the options available right now and in the future.


The Lease Exchange is a third party company managing the Lessor’s information and advising them where it is best to sell their business. These entities have the Lessor's credit applications, vendor data and a lot of corporate capabilities under their control. The model requires Lessor’s to make their most valuable assets available and at the same time vulnerable to the multiple parties interacting within these exchanges.

Some key questions to get answered from these exchanges are:
  • Do they and can they give adequate protection to the Lessor?
  • Will they guaranty to protect or not to use or make your valuable data available to others?
  • Are their participating funders going to be “long term players” in this scenario of Lowest Cost Providing?

The Lease exchanges have posted numerous press releases about the raising of many millions of dollars of venture capital. What will be the cost to users in order for these companies to achieve the venture capital returns? Customers of these exchanges are charged either by the application, a percentage of their profit margin or in some cases, both.


Self development or custom programming has been utilized by several major Lessors in the past few years. Applications required by Equipment Lessors are complex and time consuming to develop. With the high cost of technology personnel, this is not an inexpensive project. It is very normal to spend anywhere from $250,000 to $1,000,000 depending on the platform in which the code is written. A custom program is designed specifically for the company paying the bill. Many attributes to a custom Internet Leasing program would overlap or be duplicated with an “off-the-shelf” product, if one existed. It would be like everyone writing their own lease accounting software program or maybe develop their own e-mail software. For enough money almost anything is attainable. Is that economically prudent? For companies with a product very unique from the majority, it may make sense, but not for the majority.


The ASP model is the hottest weapon in the escalating B2B web wars. ASP is an acronym for Application Service Provider and is just what it sounds like: Outside providers that deliver software applications over the Internet. The ASP not only delivers but supports the service with value added benefits such as required hardware, technical support, Internet familiarity, hosting, security, periodic updates and technology enhancements to their clients.

The software is developed for many to use, but independent of the other users. What this promotes is a simple economy of scale with which the other two products cannot compete. The ASP model gives the Lessor the same power of the internet without jeopardizing the integrity of their independent business practices and identity with clients

The growth in software development keeps new applications and innovations coming at the business executive from all angles. With the host of new software applications, company executives have a tough time keeping up with both their decisions and their in-house IT needs. Another cost benefit of the ASP is the savings on both hardware and Information Technology staff. The ASP will store and protect the Lessor's data on their hardware and support it with the ASPs technology staff. The ASPs are more familiar with Internet software and applications than most in-house IT employees. The ASPs could antiquate if not eliminate software packages in fancy oversized boxes found on the shelf of retail stores. With increasing bandwidth, faster speed capacity and more reliable connectivity, the economic value of the service provided by the ASPs is magnified and the ultimate savings to subscribers are staggering compared to the other products offered.

In short, the ASPs combine a tantalizing allure of the paperless and software-less offices with shared access offered by corporate intranets. By adding the ease and efficiency of the web based applications, (the strengths of traditional outsourcing) they allow businesses to pass on their technical back-office functions and instead allow the Lessor to concentrate on its core competencies.

Lessors that have adopted and subscribed to the ASP model are very excited by the fact that they have no upkeep and no worry. They can keep up with the most important aspect of their business, customer service and building relationships. According to David Heyl, President of King Commercial Credit, “Our e-commerce program through (an ASP) has been a huge success for King. We have the Internet power and product to equal or beat anyone on the net and it costs me less than the salary of one receptionist. Aside from the cost savings we don’t waste anytime with internal IT issues. It’s all handled by the ASP. This not only gives us the tool, it gives us more time to get new business in the door with that tool. And that’s what we do best.”

Paula Hunter, President of ASP Industry Consortium in Wakefield, Massachusetts claims that "Right now, ASPs work best for any company looking to add new technology but facing concerns about how they are going to staff up on IT workers. ASPs allow them to buy into what's essentally a software collaborative that's providing services to dozens of customers and taking advantage of the tremendous economies of scale."

The ASP market is a very young 4 years old. However, according to Denny Waylan Vice President and chief analyst at Gartner Dataquest in Stamford Connecticut, “Software will become a service, not a technical application, sort of the way in which the telephone has evolved. There's no question the ASP model is quite valid and valuable. It represents a fundamental change in how service is delivered and it's here to stay.”