The much-feted application service provider (ASP) market, like many fashion trends of the IT business, is running just a little bit ahead of customer demand, analyst IDC has reported.
According to a new IDC survey, end users might be warming to the idea of applications management outsourcing in general terms, but actually shifting the process off-site is not nearly as attractive.
Two years ago, IDC began gauging buyer interest in a new application delivery model whereby buyers would "rent" access to the most popular enterprise applications. Since then, specific offerings have appeared on the market and in the third quarter of 1999 IDC Australia undertook a survey among Australian organisations to gauge their attitudes towards outsourcing the management of packaged applications to ASPs.
The result, according to IDC Australia market analyst Gianco Melcarne, was that 56.6 per cent of the responding companies indicated they are willing to consider outsourcing if the application is hosted at their site. Only 2.9 per cent indicated that they were already engaged in some form of application outsourcing at their site while 40.5 per cent of respondents indicated that this is not yet a consideration. That figure increased to 51.1 per cent when hosting at the vendor site was proposed, he said.
According to Melcarne, the findings suggest that no matter what size company an ASP is selling to, they need to emphasise benefits that fall outside of pure cost-savings in their value proposition. "Although it is tempting to move to a financially driven benefit discussion, especially when selling to the CFO, it is important to emphasise other, not as easily quantifiable benefits, such as the ability to free up IT staff to work on more strategic projects and to access professionals with business knowledge and the ability to rapidly deploy and manage applications," he said.
Melcarne concluded that while early signs of potential acceptance of the ASP model are appearing in pockets of the user community, the life signs were faint and would need careful incubation.