Application Service Provider (ASP) - Growing Market For Asps

GROWING MARKET FOR ASPS

According to the Gartner Group, companies spent $2.7 billion on ASPs in 2000. That figure is expected to increase to anywhere from $16 billion to $22.7 billion by 2003. Application hosting has been driven by several converging technologies including the growth of the Internet, which permitted the linking of computers to a mostly IP standards-based server network; access to larger amounts of communications bandwidth, which made it easier to reliably send and retrieve large amounts of complex data; and a widely embraced user interface in the form of Web browsers.

The ASP Industry Consortium was formed in May 1999 by 25 leading technology companies. Founding companies included AT&T Corp., Cisco Systems Inc., Compaq Computer Corp., GTE Corp., IBM Corp., Sun Microsystems Inc., and UUNET Technologies. The consortium has grown to more than 700 companies and includes ASP companies, software and hardware companies, network service providers, ISPs, and others.

According to the ASP Industry Consortium, there were some 300 ASPs in business at the end of 2000, and that number has grown considerably. In addition to calling themselves ASPs, some also were known as managed (or management) service providers (MSPs), network service providers (NSPs), netsourcers, total service providers (TSPs), and software rental companies. A full-service provider (FSP)—also known as a total service provider—is an ASP that offers a wide range of Web-based information technology services, such as planning and creating a Web presence, software applications, and Web hosting and maintenance. Business service providers (BSPs) are similar to ASPs in that they provide customers with application packages over networks. However, BSPs differ from ASPs in that they tend to tailor software packages to a customer's needs and offer back-office solutions for processes like payroll and bookkeeping. A management service provider (MSP) provides the personnel to manage and administer IT services for other companies, thus saving clients the need to have their own administrative personnel.