The Application Service Providers Business Model: Issues and Challenges

In the last few years there has been much interest in the delivery of software-as-a-service. The concept of remote delivery of software by Application Service Providers (ASPs) has captured the imagination of many academics, practitioners and technology analysts. Yet analyst predictions and expectations with respect to the growth of this new e-business model have not been realised. Although many Independent Software Vendors (ISVs) and other firms such as Telcos’ have embraced the ASP business model, few have managed to deploy this business model profitably. Many firms that entered the market in the dot.com wave have struggled to stay in business due to the highly dynamic and turbulent nature of the ASP market. After all these years of struggle, the ASP business model has still failed to prove itself and achieve what it was out to achieve. This paper provides the results form the first two phases of an ongoing research and helps in understanding the factors that inhibited the take up of the model.