ASP: A Lost Opportunity?

The concept of business processing outsourcing is familiar to most companies. Less familiar may be the notion of online business processing outsourcing, also known as e-outsourcing or application service provision (ASP). Using such an approach, an organisation accesses its information systems applications via a web browser with the data and applications running at the remotely hosted site of an external party, known as an application service provider. The organisation is thus in theory freed from the effort of managing its own in-house applications, information technology staff and resources.

With a wide availability of ‘off-the-shelf’ online business processes offering a comprehensive range of functionality, it might be expected that businesses would readily have adopted this concept. However as identified by Scottish Enterprise (2003, 2004) this is evidently not the case. The uptake seems greater in larger companies than in smaller ones despite the fact that, in theory at least, an ASP approach appears to offer significant benefits to smaller companies.

ASP based applications have established a significant base in the USA but in Europe, including the UK, the market penetration of ASPs is low. Many of the barriers to uptake appear to be based on emotional considerations, rather than reasoned evaluation. If businesses can overcome initial barriers and evaluate the business case they may be able to gain potentially significant benefits.

This paper explains the pros and cons of the ASP model, discusses ways of overcoming initial barriers and highlights possible opportunities. The focus is more on smaller businesses than larger ones although some of the points discussed are also of relevance to large organisations.