Enterprise resource planning (ERP) applications will account for more than 70 per cent of the application service provider market in the future, an expert from PricewaterhouseCoopers said.
But it will be three years before large organisations start relying on application service providers (ASPs) to deliver their ERP applications.
PricewaterhouseCoopers (PwC) recently announced a strategic alliance with Telstra to deliver ERP and customer relationship management (CRM) solutions to Asia-Pacific customers via an ASP model.
Representing PwC's first foray into the emerging ASP market, the deal sees PwC join the growing list of Telstra ASP partners, which also includes Microsoft and Lotus Development (see below).
As part of the deal, Telstra will provide PwC with Internet service provider and telecommunication services in addition to hosting services.
According to Chris Bennett, ERP leader at PwC Asia-Pacific, the consulting firm's ASP offering will be an alternate delivery mechanism for customers seeking CRM and ERP applications.
He said PwC will also continue to implement the applications at customer sites.
Under the ASP model, customers can log on to a Web site and download appropriate applications they need via a browser-based front-end interface, he said.
Over a whole ownership contract, savings in the order of 50 to 60 per cent of current IT costs could be achieved by moving to an ASP model, Bennett claimed.
The service will initially be limited to ERP and CRM applications, an area where Bennett said PwC already has a 40 per cent market share.
But there are also plans to extend into other areas such as Internet software and e-business applications.
"The intention is to look at that if and when the need arises [but] the ERP and CRM applications cover a lot of ground," Bennett said.
PwC's ASP offering will be targeted at small to medium enterprises initially but will also be a viable option for larger organisations in the future, he said.
"We believe there is a major need in the SME market, but we also believe ERP and CRM software will be delivered via this model to large organisations three years from now."
Bennett said ASP services will contribute between 10 and 15 per cent of PwC's revenues over the next 12 months and will increase to 50 per cent over the next four years.
PwC currently has agreements with SAP, PeopleSoft, JD Edwards, and Oracle for the delivery of ERP solutions.
While an agreement only exists with SAP currently, Bennett said PwC is in discussions with the other vendors to amend the existing agreements to include ASP offerings.
According to Dataquest predictions, the global ASP market will total $US22.7 billion by 2003.
Telstra signs ASP deals with Lotus, Microsoft Telstra will offer applications software from Lotus Development and Microsoft on a trial basis under an ASP (application service provider) model.
The Lotus trial, scheduled to begin in April, will allow Australian customers to use Lotus' Quickplace, Learningspace, Sametime and Smartsuite applications through a standard Web browser.
Under the agreement with Microsoft, Telstra will rent Office and BackOffice applications, which was scheduled to selected customer groups under a pilot program expected to start this month.
Tequinox has also been chosen to join Microsoft's pilot program, which forms part of the vendor's strategy to test the ASP model in Australia and worldwide.
* PricewaterhouseCoopers has teamed with Telstra to deliver ERP and CRM applications via an ASP model* ERP applications to account for more than 70 per cent of ASP market* It will be three years before large companies adopt an ASP model for ERP applications