The P is for Proliferation

Study finds ASP market on the rise

PRNewswire  January 18, 2001  Feel like your head is spinning from all the new ASP suppliers out there? It's not your imagination. A recently released study conducted by Interactive Week and revealed that ASP's are flooding the market with hosting services and will continue to play a major role in the B2B space.

Of close to 1,500 ASP supplier respondents, nearly 47 percent reported that they were already offering application-hosting services while the remainder were still in the planning stages. In addition, a companion study on ASP users showed that slightly less than 50 percent of ASP-user respondents had engaged ASPs for hosting services, while the rest intended to do so in the near future.

It comes as no surprise that the prospect of high growth in the application hosting market has attracted many entrants, from brand new start-ups to established IT suppliers. In addition, the variety of applications that are moving to the ASP model is greatly increasing. According to the studies, customers are progressively more willing to move beyond the more common Web site and email/messaging application hosting, and the opportunity for suppliers is opening up considerably. It's evident from our analysis of both customer and supplier sides of the market, the potential exists for very positive growth in the ASP market, even though it will certainly go through some growing pains in the near term, added Interactive Week publisher Janett Kennedy.

Customer willingness to use the application-hosting model is likely a function of the ease with which mid-tier businesses can take advantage of applications previously thought to be too expensive or complex to acquire and run. As a result, increasing numbers of ASPs are targeting medium-sized organizations.

Yet, users still have plenty of reservations. The hottest issue for customers and prospects as they engage ASP's revolves primarily around security  internal and external, said Nancy Stewart, program director with Customers are also highly concerned about the network and resources, both their own and their providers. Fortunately, most hosting providers have recognized these as customers' foremost concerns. Unfortunately, one area where the customers and supplier communities need more cohesiveness is regarding pricing methods used for different applications.

There are two studies available from and Interactive Week on the ASP market. Testing Out the ASP Market: An Analysis of ASP Customers and Prospects assesses the state of the market from the current and potential customer aspect, examining hosting plans for specific applications, pricing models, service and feature desirability, and benefits and concerns. A similar assessment of application-hosting suppliers is presented in Jumping on the ASP Bandwagon: An analysis of Current and Future ASPs.