ASP market set for growth

A report published by the Aberdeen Group predicts the troubled application service provider market will overcome delivery...

A report published by the Aberdeen Group predicts the troubled application service provider market will overcome delivery problems to increase its value from $3bn (£2.11bn) in 2001 to $16bn in 2005

The figures suggest that in spite of delivery problems, the value proposition offered by the model could be too significant for many customers to dismiss.

Maxine Holt, a senior researcher at the Butler Group, said, "The ASP model was overhyped, and vendors over-marketed their products. CRM and ERP were overhyped, despite being viable business propositions, and the "one-to-many" model didn't happen.

"However, the industry is picking itself up. Vendors have started to listen to the customers and are realising that they have to customise according to the business. Delivering applications via the Web is definitely the way to go."

The Aberdeen Group figures will come as a significant boost to a market that has faced a barrage of criticism over recent months. A recent report from the Gartner Group warned of a major shakeout, predicting that 60% of ASPs would fail by 2001 with just 4% surviving through to 2004.

Tony Lock, senior analyst with Bloor, said: "The only issue that ASPs have had in the past was poor execution. ASP was sold in the wrong way. There were many problems with delivery, although potential customers are now beginning to realise that it is not about saving money straight away. It is about providing a service economically."

One UK start-up that is looking to the ASP model to deliver a financial e-business offering to smaller banks and building societies is Aspace. The start-up plans to offer an interactive service for around £500,000.

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