After the hype ASPs strengthen their role

Despite premature hype and many false starts the concept of application service providers (ASPs) in the marketplace as a viable solution is slowly gaining strength.

According to a recent Stratecast study, 35 per cent of 100 companies interviewed said they would never use an ASP. This is an improvement on the results of a November 1999 Network World survey in which 64 per cent of respondents said they would never use or even consider using an ASP.

ASPs offer companies a way to save money by outsourcing everything from payroll to e-commerce over the Internet.

David Bostock, Pricewaterhouse-Coopers ASP leader, said US results were consistent with the Australian market. "I think 35 per cent is pretty positive; that means two-thirds are open to the idea of ASPs. I actually think a higher percentage would consider the ASP solution.

"There are very few organisations we have found locally that are dismissing it out of hand. We are seeing interest from 80 per cent of small to large organisations." Bostock sums up the ASP market as still in the "embryonic form".

"I think if you asked the question [would you use an ASP?] in 18 months time, there may be a different answer."

Security, application performance, access to and availability of applications are cited in the Stratecast survey as the biggest concerns companies have with ASPs.

"Particularly for enterprise resource planning and customer relationship management marketspaces, the key issue is security," Bostock said.

Lisa Robinson, general manager marketing, Alta Internet Business Centres, said as medium to large organisations see the benefits and developments that are happening in the ASP marketplace, they are definitely overcoming their fears and going to an ASP model.

"ASPs are no longer simply something for small to medium businesses," Robinson said.

"I think the small to medium businesses will still be a market, but I think the enterprise market is moving towards the model. This is because they can see that they can outsource some of their applications, that it reduces their total cost of ownership because they may not need to have IT professionals on their own staff, and that they could also outsource some of the admin, like the e-mail application."

Bostock said that, given the size of organisations in Australia, the reality is even large companies could benefit from the ASP solution, that is "if they are not global".

Robinson said mergers, takeovers, IT systems reviews and the decision to add an online capability to a traditional business were listed as factors in considering an ASP solution.

"This is where we pick up a lot of enterprise customers; they outsource their e-commerce strategy," Robinson said. "Some are only starting out with one application or customer application, but there is absolutely nothing to stop them increasing the number of applications served."