The emergence of application service providers (ASPs) has stirred up misunderstandings and controversy throughout the IT world. Opinions about a new technology model's viability haven't diverged so sharply since Digital Equipment's Ken Olsen wondered why any enterprise would need PCs, while Bill Gates simultaneously argued that desktop PCs would make all other computing devices obsolete by 1985. Today's debate centers on the potential of ASPs to deliver IT capability.
Some market research companies forecast a dramatically shrinking ASP market during the next 3 to 4 years because companies simply don't want what ASPs have to offer. At the same time, the market research company International Data Corporation (IDC) predicts that worldwide ASP revenues, which reached $1 billion in 2000, will soar 89 percent annually through 2005, when ASPs will rack up $24 billion in revenues.
Who's right? According to an analysis of data from Survey.com, if ASPs are to prosper, they must overcome serious concerns about security and the robustness of the computer networks used to receive their services.
Graph 1 shows the rankings of the five top user concerns about moving to an ASP. Users expressed concern that the overall Internet infrastructure isn't secure enough to support the ASP model. As anybody who works with Microsoft Outlook knows, opening your system to the outside world invites risks. Because some of the world's presumably most secure computers have been compromised, many users feel uneasy about relying on a third party to supply applications.
Users are also justified in their concern that network infrastructures aren't robust enough to support ASPs. Many cutting-edge adopters have reported sluggish operation of applications delivered over large networks.
These results hint that ASPs might be offering a technology before its time. I risk sounding like a graybeard, but VisiCalc killed itself trying to develop a Windows-like product before PCs were muscular enough to support it. And should I mention Apple's Newton?
Ironically, when IT professionals name the potential benefits of ASPs, the list is similar to the list of ASP worries. Graph 2 shows the most important benefits IT organizations hope to realize by using ASPs.
Some benefits that didn't make the top-five list include faster access to new applications or upgrades. The least important benefit? Prolonging the life of PCs.
The data reveals another worry in the IT managers' fifth-ranked concern, lack of inhouse expertise, and the sixth-ranked one (unrepresented on the graph): fear of inadequate vendor support. IT managers worry that moving to an ASP model will start a hail of difficult problems that can't be remedied inhouse, and that vendors won't fix promptly.
The net result? It's too early to know whether companies will embrace the ASP model. ASPs, however, have their work cut out: First, they must combine secure services with high-level performance. Second, they must assure companies of top-flight customer service and demonstrate it, too.
