Understanding ASPs Introduction: Outsourcing of some or all of the IS related functions of an organization including application development and deployment has been widely accepted in the industry. This traditional model of outsourcing has its limitations. Significant investments and expertise is required to make the IT infrastructure which can support the distributed application of today's organization. The time required for implementation and risk involved with relatively new and sophisticated applications pose a severe challenge for organizations. With the advent of Internet as a cost effective and reliable means of communication, a new market of Application Service Providers has emerged. Application Service Providers (ASPs) are third parties, which rent the software application and take the responsibility for providing technical expertise to customize, manage and maintain the application. These ASPs are fundamentally about providing the businesses with the increased focus on their core competencies, faster deployment and high level of technical support while lowering the total cost of ownership.
This concept has created much interest in the market especially among the small and medium sized enterprise, which could get access to complex and costly application like ERP, CRM. With reducing bandwidth limitations and development of applications with robust functionality to support business practices across wide range of companies, ASP are proving to be a valuable proposition for small office and home office companies. The ultimate emergence of ASPs will lead to a utility-based model where organizations will pay for the specific applications used by them As with any emerging technology, the ASP model is facing a lot of challenges, which have kept the growth of market much below what was projected two years ago. The key inhibiting factors are concern for security, reliability, pricing structures and immaturity of the ASP model. The model is still not mature and in most cases, both parties probably know...