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March 27, 2000

Solution Series:
More Realistic ASPirations
Sure, hype and doubts about ASPs abound, but don't ignore the benefits just yet

ou know the old saw: If something sounds too good to be true, it probably is. That may be how many users feel about the much-touted application service provider model.

The promises were grand: ASPs were going to be the silver bullet for IT managers crunched by time, labor shortages, and delivery deadlines. No wonder some of the luster is gone. Reality could never meet the high expectations of users or the unrealistic aspirations of the providers themselves. And let's face it, in the case of large enterprises, there's a competitive need to own and control custom apps. Then, too, many companies have had bad experiences with outsourcers that took more time and cost more money than they ever dreamed.

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It's not a forgiving market, either. Not long ago, it was OK for an industry to take a few years to establish itself, for buyers to test the water, for implementations to mature. No more. Even though E-services are in their infancy, ASP industry consolidation and shakeouts take place monthly, even weekly--forget about years.

So why bother? InformationWeek Research, with its partner Information Resource Group, conducted two surveys last month to take the pulse of the ASP market and compile a list of leading providers (p. 116). In interviews with 655 IT managers, we definitely found caution: 65% have no plans to use an ASP and 38% don't outsource at all, as free-lance writer Mary Thyfault explains (p. 90).

pie chart At the same time, 26% are plunging in and using the new services, and 9% are considering doing so in the next year. While improvements are needed, the benefits are too good to ignore. Many say ASPs deliver apps over the Internet quickly, with predictable costs, guaranteed performance levels, and without the infrastructure costs and hassles of running an IT department--just what many startups, lots of small businesses, and some larger companies want. As associate editor Jennifer Mateyaschuk explains (p. 110), ASPs include a wide mix of vendors--from those with broad vertical-market expertise to ones with narrowly defined single applications.

The disconnect, if there is one, may be in what users perceive, not in what they get. "The ASPs have to do a better job of selling the benefits." says Dataquest analyst Ben Pring.

Take a look at our advice for choosing a provider and a few best-case practices ("Different Needs, Different Approaches"). Additionally, we profile USinternetworking for an inside view of the ASP world ("USinternetworking Rides The Wave").

Let us know your thoughts at the E-mail address below.

Paula Klein
Managing Editor/Special Projects
pklein@cmp.com

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