Pre-Requisites for Successful Adoption of the ASP Model by User Organization

Abstract

Businesses are increasingly reliant on ICT to support their operations and to maintain competitiveness. At the same time, information systems and their ICT infrastructure are becoming increasingly complex and costly to implement and maintain. Advances in networking, and in particular Internet-related technologies make it possible to implement enterprise applications as services delivered from a remote location potentially in a more predictable and cost-effective manner than in-house applications. Application Service Providing (ASP) emerged towards the end of 90s with claims of extensive advantages for client organizations, in particular for SMEs. Notwithstanding many perceived advantages of the ASP approach, most of the early ASP providers have not been able to establish a viable business model. Factors contributing to the failure of early ASP providers included lack of a suitable technological infrastructure for hosting a large number of complex enterprise applications in a scalable and secure manner, poor customisation capabilities, and almost total lack of integration facilities. As a result of these shortcomings, early ASP providers failed to deliver major cost savings to their customers, resulting in poor acceptance of application servicing by the market place. Recently, however, a number of important ICT vendors have re-confirmed their commitment to application servicing in the context of the new Utility Computing approach, and have made massive investments in infrastructure for the delivery of enterprise application services (Dubie, 2004). However, given earlier experiences with application servicing most user organizations remain skeptical and are waiting to see if the benefits are going to be realized as claimed by the vendors. In this paper we describe the key differentiators of application servicing when compared to the traditional software-licensing model (Section 2), and then discuss the characteristics of the second generation of application servicing (Section 3). We then discuss end user organizations’ strategies for adoption of application servicing and the related critical success factors (Section 4).