ASP Model Powerful Despite Small Size

SINGAPORE (04/19/2000) - Although ASP (application service provider) business only amounted to US$300 million worldwide last year, the ASP model will shake up the IT world because of the high expectations it has already created, according to Clare Gillan, group vice president for applications and information access research, International Data Corp. (IDC).

"ASPs are conditioning end-users to expect applications quicker and more reliably," she said at the IDC Directions Asia conference here today. "The market is very small but the opportunities are very large. It will result in a dramatic change in how complex technology is delivered to market."

A key benefit of the ASP approach is that it may help end users overcome the chronic IT skill shortage, which does exist in developed IT markets such as the U.S. and Europe, but is even worse in Asia. This is one reason for the heightened awareness of ASPs in Asia, according to Gillan.

An IDC study conducted earlier this year in the U.S. showed that only around 5 percent of IT professionals had detailed knowledge of how to apply the ASP approach to their businesses, Gillan said.

Evidence collected by IDC in Malaysia suggests that the figure is closer to 20 percent there, and the country is home to ASP pioneer BizTone.Com Sdn. Bhd., Gillan said.

"The Asia-Pacific region could prove to be an early adopter of the ASP model," Gillan said.

Certain types of companies are more likely to use an ASP and certain applications are proving especially popular to ASP end users, according to Gillan.

One group of companies to favor the ASP model includes those seeing rapid changes in their industries, particularly telecommunications companies, media companies and professional services firms. Another group consists of those who are already heavy outsourcers of IT services such as insurance and finance companies, and government organizations, Gillan said.

Demand is highest for groupware, sales and marketing, human resources and customer service applications, according to the IDC survey.

The ASP industry will grow at a 91 percent rate year-on-year to reach a value of $7.8 billion in five years' time, but this will still only represent 1 percent of the overall global IT spend, Gillan said.

It will still prove disruptive to the IT economy because of the change in perceptions it brings about software delivery, she said.

IDC is owned by International Data Group Inc., the parent company of IDG News Service.

IDC Asia-Pacific, in Singapore, can be contacted at +65-335-0711 or online at http://www.idc.com.

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