Dotcoms mean good news for ASP market

Tech talk

According to a survey by the ASP Industry Consortium (ASPIC), a third of UK businesses are aiming to use an application service provider and over half of all those surveyed expect to be doing this within two years.

Eighteen months ago you could identify what an IT company was and what it wasn't, with the exception, perhaps, of IBM - a company that attempts to be all things to all men. Choosing between an Oracle, a Compaq, and BT was still a relatively uncomplicated challenge. Now, through a number of strategic alliances, the boundaries are becoming increasingly opaque as software, hardware and telecommunications companies merge their ASP interests.

Extending the notion of "plug and play" beyond the geography of the office requires not only a remarkable elasticity in bandwidth services but a dramatic leap of faith on the part of businesses, prepared to surrender their IT infrastructure to the industry's next great experiment.

The arrival of the ASP is great news for the new generation of fast growing dotcom businesses based upon the principles of a new economic Darwinism, represented by rapid growth, virtual presence, lean management and tight business focus. Unhindered by familiar concerns over IT infrastructure and investment, these new plug and play businesses may yet provide the ASP's proof of concept.

The explosion of the information economy and the arrival of the ASP model will, in hindsight, represent two sides of the same coin. Business has been struggling with the constantly changing demands of IT for almost 20 years and in future, competitive advantage will require at least some unbundling of the familiar IT management responsibility.

Ultimately, cost and the availability of ASP-hosted applications will determine the matter. The market is still relatively immature, much like the ISP market once was.

Within 12 months I expect the hosting proposition to be sufficiently service and price-competitive to attract critical mass. Beyond that point in time, it will be interesting to see how companies will discriminate between their local and ASP-hosted services.