ASPs: The Next Wave

P atience is a virtue. Time and time again, the IT industry gives credence to this tired old adage. While early adopters struggle to exterminate the bugs in fresh-out-of-the-shrink-wrap applications and operating systems, fashionably late organizations sit back and wait for the dust to clear.

In the case of the application service provider (ASP) market, organizations who have put off outsourcing applications until now will probably be glad they came late to the ASP party.

While the ASP market has been steadily growing in Canada – nearly tripling in size in the last year, according to IDC Canada – a number of players have exited the market or been swallowed up by larger service providers. In particular, pure-play ASPs have realized they are unable to build the revenue base needed to support their substantial investment in application infrastructures.

The result is end-user organizations that adopted the ASP model a year or two ago may now find their service provider is no longer there to support them, leaving them with an application gap to fill – an application gap that may span one or two generations of the product.

The fortunate few who picked an ASP with staying power can now benefit from a more mature market, as successful ASP pioneers revamp their services and business models to ensure future growth and stability. New ASP customers have the added advantage of being able to choose from a new wave of market entrants who have observed and learned from past ASP mistakes. These second-generation ASPs will likely be very familiar to most end-user organizations as they largely come from the ranks of Canada’s biggest telecommunications companies, such as Telus, BCE Emergis, AT&T Canada and Sprint Canada.

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Jim Love, Chief Content Officer, IT World Canada

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