The Rationale Behind Strategic Alliances in Application Service Provision

Abstract

Application service provision, which consists of deploying, managing, and remotely hosting software applications through centrally located servers, is emerging as a new form of application outsourcing that is attractive to many sectors. Partnering in this context has gained major importance among practitioners and researchers. Although this article demonstrates the importance of strategic alliances for the development of the ASP model, the included cases display relatively contradicting ideas, where in one of the two illustrated cases strategic alliances were not part of the business model. This article establishes a discussion on the pre-formation phase of strategic alliances, focusing on the rationale behind entering strategic alliances, and offers a set of guidelines for ASPs to consider when entering the partnering arena. OrGAnIZATIOn BACKGrOUnDCompany A is an e-business solution provider, specializing in front office applications for sales, marketing, and customer service. It also focuses on four key vertical markets, being financial services, life sciences, retail and distribution, and telecommunication, media and technology. Founded in 1999, Company A aimed at targeting the ASP model for delivering integrated front office and e-commerce. The company has also targeted WAP-enabled mobile Internet services, becoming Europe's first wireless ASP. Its offerings consisted, therefore, in offering both mobile and desktop users access to managed e-commerce and front office services for a fixed monthly fee.Company B is a leading provider of administrative software to performing arts venues and organisations, as well as the conferencing and banqueting industry, stadium and sports venues, local authorities, and councils. Initially, Company B's products began by a simple product, which was designed by one of the company's founders, for a classical music agency. The product offered an interesting solution that most music agents were looking for; it consisted in easing the administrative burden that this concert agency's staff was suffering. As Company B's product grew further, and started being seen by others, it was expanded, developed, and was eventually adopted by most of the leading artists' managers and concert agents in the UK and subsequently by many in Europe, the USA and the Far East.