ASP: Strategy or Tool?
By Cheryl Currid
Perhaps the best Web development tool today is no tool at all, but a partner who has all the tools. Renting software and services could be the next wave for information applications. Today, it's a decision that many CIOs make as they grapple with the typical set of resource constraints and the perennial need for new applications.
Application service providers (ASPs) are growing in number and affiliation. According to Dataquest, ASPs are already raking in close to $3 billion per year and revenues could climb as high as $22.7 billion by 2003. Market researchers at IDC see the business a little differently, but still with an impressive growth curve. According to a white paper published in May 2000, IDC sees ASP services going from a $296 million market in 1999 to $7.7 billion in 2004. Wherever the numbers net out, the prospects for ASPs are huge.
One thing is certain: ASPs offer a new way to do business. If a company chooses carefully, it can get a good partner with technical expertise and a real bonus for the CFO.
ASPs have special allure for overstressed or undertrained IT staff who need to develop production applications quickly. Pragmatic CIOs who understand the limitations of their internal staff can use ASPs to develop new applications that would otherwise bury existing operations.
Choosing an ASP that already has critical applications running for other clients removes much of the risk from the development cycle. For example, if the ASP is running SAP or PeopleSoft for other clients, the outsourced organization has already tackled implementation issues.
