Latest trends and issues in the ASP service market

Abstract

PurposeTo provide students and academia with an opportunity to gain an understanding of recent trends and issues regarding the application service providers (ASP) market.Design/methodology/approachA range of recently published (1999‐2003) works, which provide practical issues, is reviewed to explore the existing pricing models, selecting an ASP and risk/rewards associated with ASPs.FindingsProvides guidance to businesses in selecting an ASP in terms of key questions to be asked and discusses the importance of selecting reliable ASPs. It also recognizes key areas academia should emphasize in teaching students outsourcing of IT.Research limitations/implicationsIt is not an extensive study of the issues and trends of ASPs. The paper does not review in detail the impact of outsourcing on organizational participants, which perhaps limits its usefulness in a complex business world.Practical implicationsA very useful source of information for businesses making outsourcing decisions. The paper provides impartial advice for students and academia and for those who want to conduct research on outsourcing evaluation.Originality/valueThis paper provides important insights on recent trends and issues of ASPs, especially in evaluating the performance of ASPs.

Who is out there?

“…In both cases, systems unavailability threats entail substantial financial losses when strategic IT is at stake. Clearly, expectations that SaaS may jeopardize systems availability enhance transaction costs, thereby decreasing the positive intention to adopt SaaS (Gupta and Herath, 2005;Paraskevas and Buhalis, 2002). Hence, Hypothesis H1b: Perceived risk of systems unavailability as a result of transacting over the Internet negatively affects organizational intention to adopt SaaS.…”

“…Thus, SaaS customers are charged usage fees for remotely accessing applications and databases that reside on vendor-owned servers (Gupta and Herath, 2005;Susarla et al, 2003). SaaS was first introduced in the late 1990s under the name Application Service Provision (ASP), and is now also termed software on demand.…”

“…3 Furthermore, Oracle and IBM have lately established SaaS (preferring the "on demand" designation) as an important line of business, and SAP launched its new package Business ByDesign primarily as SaaS. 4 Evidently, although the full potential of SaaS has not been realized and its institutionalization has yet to be seen, the Web is now more strongly recognized as a valid IT delivery platform (Carr, 2005;Mustonen-Ollila and Lyytinen, 2004), albeit less so for delivering core, organization-wide applications (Gupta and Herath, 2005;Lockett et al, 2006). SaaS adoption requires major changes in organizational IT governance, especially when it involves replacing existing core applications.…”

“…Hence, the present study explores this type of trust belief, its interaction with the perceived risk of the Internet, and their mutual effects on the intention to adopt SaaS. perceived risk that dominate the atmosphere around SaaS adoption intentions (Gupta and Herath, 2005). The impacts of perceived risk and of trust on the intention to adopt SaaS are important because SaaS adoption, as an organization-wide, IT-driven innovation, is a risky move (Heart and Pliskin, 2002a;Paraskevas and Buhalis, 2002) that requires a certain amount of trust to make the leap of faith.…”

Pricing Strategies for Information Technology Services: A Value-Based Approach

“…The goal is to generate higher profits from the complementary components due to the additional special transaction costs, higher margins, and repeat transactions. For example, application service provider (ASP) software services minimize the front-end investment (and front-end transaction costs) by eliminating the need for purchasing software or servers [61] [30]. Profits are generated by the higher margins from complementary transaction-based services such as maintenance and support.…”