March 26, 2001, 3:47 PM — At the most basic level, application service providers promise to efficiently handle applications management; they have the infrastructure and the technical resources to do so either using their own facilities or through partnerships with other providers.
Companies turn to ASPs for several reasons. Some of those reasons are to keep up with new technologies, speed up application development and deployment time, and overcome limitations in internal IT expertise.
But when it comes to deciding which applications to outsource, we've found companies think differently.
For example, there are those companies that turn to ASPs because they want to cash in on e-business. For that they need to have the right technical resources deployed and the skilled expertise to support those operations.
ASPs can supply companies, particularly emerging businesses, with the skill set to manage complex e-commerce applications. This eliminates the need to hire extra IT talent to run the new systems and frees up businesses to focus on their core competencies.
On the other hand, our research shows that many companies are seeking ASP support for more mainstream applications as well.
A recent EMA survey of 100 people responsible for selecting ASP services supports what we've learned through our own research and through conversations with vendors that supply ASPs with software and networking equipment: Many companies would use an ASP to support Microsoft applications.
Such businesses go to ASPs looking to get software up and running quickly for a fixed, predictable fee. This is how rent-an-app, Microsoft Office-type ASP models wind up succeeding.
This raises some interesting questions: Are companies turning to the ASP model for the right reason? And are ASPs effectively creating and marketing their services to meet the market needs?
Perhaps where an ASP would be most effective is in supporting an application that is less generic, more complex and more mission critical than Microsoft Office, for example. After all, ASPs have the technical expertise to manage such applications.
But not all companies are ready to hand over those reigns. We've found that companies that are reluctant to use an ASP often admit it's because they are concerned about handing control of a business-critical application to an outside source.
Customers need to look beyond economies of scale to see what skilled services ASPs can supply. This expertise is the best benefit ASPs can offer the marketplace.