Application service providers: a model in evolution

Application Service Providers offer web-enabled software applications on a subscription basis revisiting the traditional service bureau model of outsourcing, promising additional business benefits of economies of scale, increased scope of business applications, and enterprise application integration. Yet small and medium enterprises have been very reluctant to adopt this model. Analyst predictions and expectations with respect to the growth of this new e-business model have not been realised. Although many Independent Software Vendors (ISV's) and other firms such as Finance, Travel, Healthcare, etc. have embraced the ASP business model, few have managed to deploy this business model profitably. Many firms that entered the market in the dot.com wave have struggled to stay in business due to the highly dynamic and turbulent nature of the ASP market. After all these years of struggle, the ASP business model has still failed to prove itself and accomplish what it was out to achieve. This paper provides the results from the first two phases of an ongoing research and helps in understanding the factors that inhibited the take up of the model.