Vital for companies
Depending on the type of business that you have or that you are starting up, the type of model of an application service provider will vary. It is vital to keep the type of business in mind, so that you do not get ahead of yourself and end up getting the wrong ASP for your business. You can also get a better grasp on the ideal of ASP your business needs by taking a look at the ones that are used by other companies that provide a popular service, such as shipping companies, telephone companies, and power companies; these companies are perfect are all perfect examples of application service providers.
There are also many Internet ASPs, and although these providers may be more popular than others, it does not necessarily mean that going with these will be the most profitable your business or bring the most value to your business. Many different factors must be taken Page# 4 into consideration, in order to truly be able to determine whether Internet or non-Internet application service providers would bring the most value to your business (Columbus, 2000). Computer companies will find the Internet ASPs as their best option, as this option will provide the most services and features, and can be an important part of any computer company.
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An ASP is able to make application(s) available to all customers regardless of where they are in the world via the Internet, and the application service provider is able to bill the application either on a part-time basis or on a monthly basis, depending on the owners needs. “Over the last year, the market for data warehouse software, data management tools and information access appliations has grown by approximately 26 percent, from a baseline of $5. 3 billion…this annual growth rate is expected to continue until at least 2004”. (Anderson, 1990).
There are truly a multitude of advantages that application service providers bring to the table, especially in regards to computer businesses, as they are able to bring much value to a business in the computer field. The great success it brings to business has been used to explain why the ASP model has evolved so much in the past few years. It offers many significant advantages that noother system or network can provide, and it is important to take note of the many different advantages. However, there are some advantages that are more significant to a business than others.
The greatest advantage is the low cost of entry, as companies are able to upgrade their systems, and provide faster applications at prices that won’t make or break their business. Application service providers also provide a short set-up time, which can be profitable and valuable for a company on a short-term and long-term basis, and is vital for companies in the computer field, because everything moves at an incredible pace in this field. Intergrating an ASP into their company will very valuable for them on a long-term basis, because an ASP can save a company a lot of time, and provide a greater advantage to customers.
The application service providers are also able to eliminate head count, which is fairly important, because head count can be expensive and costly to a business. A pay-as-you-go application service provider model is also available for business owners to choose from. The pay-as-you-go model is often significantly less expensive for businesses that frequently use the service, so this may be the best option for a computer business, which use the ASPs more than any other type of company.
Eliminating specialized IT infrastructure for the application itself and other applications, is also a feature of an application service provider. This feature is incredibly advantageous to businesses, as it saves time and money. The ASP model is quite capable of shifting Internet bandwidth, thus lowering costs for businesses(Factor, 2000). Although it seems that there are only positive effects that come from using an ASP, there are also many downfalls of using the service, which must be taken into consideration as much as the many benefits.
For instance, there is the issue of consolidation, which can be Page# 6 detrimental to a computer business, as consolidation is expected to continue in the application service provider market, so spending will be kept in check as prospects to see which companies will remain standing. Although the business of computer is booming and quite popular, consolidation will bring down consumer spending, which can cause a business to literally deteriorate, especially if spending on computers drops drastically in a short period of time.
For ASPs, there is also the matter of effective selling, which is also considered to be a challenge faced by the service market. Although most businesses understand that effective selling and marketing plays a serious role in consumer awareness levels of products and services, and understand how they can be raised and how consumer spending can be increased, effective sales strategies are not being used by many businesses globally, even though these strategies are essential for a business to be able to raise adoption and scale their own business.
“Today, a vast majority of ASP revenue is derived via direct sales efforts. ASPs need to engage the channel, but the best model for doing so is largely undecided, and it takes time to train channel partners. ” (Susarla, et al, 2003). Of course this is not unusual, as with any emerging market, in regards to their corresponding technology that is the driving force behind it; challenges are a normal part of the process that must be understood and eventually conquered.