Corporates are happy to rely on ASPs for apps

IT directors welcome application service provision, but only for a small percentage of their software requirements, according to the latest research from Ovum.

The IT and telecoms consultancy disagreed with the argument that IT directors would block the idea of renting applications from a service provider which also hosts and manages the software, because it would devalue their own role.

Katy Ring, senior Ovum analyst and author of the report, said: "Today's IT directors are overburdened with work, so if they can delegate responsibility for non-critical applications to a supplier that means they can concentrate on delivering the critical projects."

The research, which surveyed a range of UK small, medium and Fortune 500 companies as well as government departments, predicted that the ASP market would be worth $136bn (£85bn) by 2006.

Ring said that smaller companies liked the ASP model because it reduced the risk and expense of investing in different types of software and that it would cut staff costs. Larger companies liked the concept because it removes the headache of standardisation and mass upgrades.

She outlined three types of applications that would be suitable for the ASP model. Lightweight desktop applications like Microsoft Office fit the bill because they don't need customisation and are less mission critical.

However, these applications will be loss-leaders for ASPs as they can't offer any value add.

Ring suggested that middleweight applications which don't require heavy integration will be the most popular applications on tap. She rejected heavyweight ERP applications as potential ASP offerings.

She said: "The problem with most discussions of ASPs is its focus on the provision of integrated ERP suites. The ASP market is large but not for ERP suites."

See also:

ASPs - the next big thing?

Everyone is talking about application service providers and how much money and staff resources they should be able to save customers. The new outsourcing model has yet to be taken up to any great extent, however. vnunet.comlooks at the phenomenon and tries to inject a note of reality into the hype.  30 Nov 2000

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