Researcher Says Everyone Will Use ASPs
techweb.com
(10/13/99, 6:48 p.m. ET)
By Ellis Booker, InternetWeek
It may not seem obvious right now, but GartnerGroup says it is sure someday every company will use an application service provider to host its applications.
"Over time, not tomorrow, the Fortune 1000 will use them," said Rita Terdiman, a GartnerGroup vice president and research director. And she said this kind of outsourcing, still in its infancy, will be attractive to an audience broader than the small and midsize organizations who have been ASPs' initial customers.
Well, maybe.
An unscientific poll of users prowling the floor at GartnerGroup's Symposium/ITxpo conference in Orlando, Fla., found none who thought an ASP would work for them.
"We're too big and diverse for an ASP," said Scott Robertson, a system analyst at $5 billion Con-Way Transportation Services. "I don't think we'd be interested in relinquishing control over mission-critical applications."
Even smaller companies expressed the same feelings.
"We haven't found a need," said Mike DeJong, chief information officer at Bil Mar Foods. "We have a good environment and good people." The Sara Lee unit has 15 application programmers.
However, some users are interested in seeing software vendors make their products friendly to ASP-like delivery, if only so they can deliver applications to internal users through a browser. "We could become the service provider to thin clients on our own network," said Bill Rodriguez, a systems architect at USAA Worldwide Insurance, which has an IT staff of 20,000 and an applications group of 3,000.
Short-term resistance is to be expected when you consider the inertia of large IT organizations, Gartner's Terdiman suggested. But she said it is unwise to overlook the value of the ASP model for faster deployment and lower total cost of ownership.
GartnerGroup's Dataquest research arm said the ASP market will hit $2.7 billion this year and $22.7 billion by 2003, a five-year compounded annual growth rate of 91 percent.
Among the most compelling reasons customers will turn to ASPs, Terdiman said, is the critical worldwide shortage of IT personnel, particularly for e-business integration and e-commerce projects.
Terdiman also said ASPs will evolve their pricing models from per user/per month toward usage-based or transaction-based metering. Likewise, she said she expects ERP services to evolve and become more flexible. "There will be tiers of service: basic, premium and super-premium," she said. Expect ASPs to add business process outsourcing or vertical-market processes to their portfolios, either directly or through alliances with IT services firms, she added.
Still, Terdiman sees a radically different market down the road. "By 2003, half of today's ASPs will no longer exist," many of them acquired by traditional outsourcers or systems integrators.
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