Mike LaRocco, the CFO of ISO Healthcare Consulting, nearly gushes about the money he has saved by adopting a hosted customer relationship management (CRM) application last year. ISO, a division of The Interpublic Group of Companies, had wanted to automate its 12-person sales force. But the prospect of paying around $250,000 for a basic software package didn't make sense.

So LaRocco opted for an application service provider (ASP) instead. His choice: Salesforce.com, which charges only $5,000 a month for ISO's Web-hosted CRM. "It's flexible, saves me lots of money and is at our fingertips," he says.

The prospect of shaving off hefty software installation costs has companies like ISO Health jumping onto the ASP bandwagon. "There's a lower total cost of ownership with ASPs," explains Sheryl Kingstone, an analyst at Yankee Group. "This is more of a shared risk model so CFOs can justify their expenses."