Why ASP?

The benefits of Application Service Provider (ASP) solutions have been widely noted by the IT media and industry analysts alike. Experts agree that there are a number of positive factors that set an ASP arrangement apart from a traditional software purchase, including:

• With ASP delivery, you do not need to purchase software up front.
• Your organization does not need to manage the day-to-day aspects of owning the application or the infrastructure,
• You do not need to staff up to support the application or infrastructure,
• You have access to more high-caliber solutions than ever before,
• The ASP Company is an expert in the field, bringing unsurpassed knowledge to the union at a high ROI.
• Easy to use web-based interface, available live online from any computer within the organization.

According to industry experts, the ASP alternative typically translates into a 30% to 50% annual savings for the business. The results of such investigations are that ASP alternatives are considered favorable because the use of their services positively influences a company's bottom line.

According to IDC, worldwide spending for the application outsourcing (AO) market, which represents both the ASP market, application maintenance outsourcing, and Vertical Service Providers, (VSP) will grow from $7.0 billion in 1998 to $16.2 billion in 2003. Estimates from Forrester Research are even higher, with the market reaching $21 billion by 2001. And, the Gartner Group, in a June 2000 analysis, predicts that through 2005, the ASP model will become increasingly popular throughout all enterprises, including the Fortune 1000; and by 2003, 30% of enterprise application software will be sold through ASP channels.

Information Week reported on the ASP market, the top five reasons ASP adopters gave for choosing an ASP solution were:

1. Predictable costs
2. Guaranteed performance levels
3. Free up IT staff to focus on internal issues
4. ASP has special unparalleled expertise in their field
5. Quicker to implement a hosted application

August 2002

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