What Are The Benefits of Choosing An ASP?

There are many reasons why so many companies of all types choose to work with an ASP. Here are some of the benefits that working with an ASP can offer you:

• Continuous access to the latest technology you need to run your business--without the risks, costs and administrative responsibilities associated with developing and maintaining the required IT infrastructure
• Improved ability to focus resources on core business issues, rather than IT concerns
• Faster implementation of new applications and technologies–with reduced risk to your existing systems environment and bottom line
• Easy application scalability
• Access to comprehensive security, back-up, disaster recovery and support services

Preservation of existing investments in legacy computers, since the ASP’s servers will handle the intensive processing required by today’s sophisticated applications

• Reduced total cost of IT ownership
• Greater predictability of IT costs
• Increased IT flexibility

Research indicates that a sizeable proportion of organizations expect that ASP services would allow them to adopt new applications they could not have previously cost justified.  When asked, 45% said “yes”, 40% said “no” and 15% did not know. 

While 51.2% of companies use outsourcing services, overall, just over 23% of business applications worldwide are currently outsourced (i.e., run, maintained or managed by a third party).  

The highest rates of outsourced applications are seen in Brazil (39.3%), Italy (34.5%), Mexico (31.9%), Singapore (34.8%) and Spain (28.8%).  Most other markets have a 15-25% outsourcing rate, including the USA (19.1%), Germany (18.0%), Canada (22.4%), Hong Kong (20.9%), Japan (25.4%), the UK (26.9%) and Holland (26.5%).  Lowest among all country markets in terms of outsourced applications are France (9.4%), Belgium (12.2%) and Norway (13.8%). 

Larger companies have an average rate of 27% of applications outsourced while smallest companies have an average of 23.2% of applications outsourced. 

The chart below shows future trends of outsourcing--asked if they expect the proportion of applications in their organization to increase, decrease or stay the same, overall 27% said the number would increase.  This figure was highest in Brazil (64%).  Second was Singapore (46%), then Mexico with 44%.  Other countries were Hong Kong (38%), Japan (37%), Italy (30%), Spain (27%), Germany (25%), Belgium (23%), USA (22%), UK (21%), Australia (21%), Holland (19%), Canada (17%), Sweden (14%), France (12%) and Norway (10%). 

Use of Conventional Outsourcing

Research results show that 51.2% of companies contacted outsource one or many business software applications.  The highest incidence of companies outsourcing occurs in Norway (83%), Brazil (72.1%), Singapore (67.6%) and Italy (66.7%).   There are disparities between outsourcing incidence and the volume of actual outsourcing activity.  While the majority of countries show higher levels of incidence when compared to volume, this can be seen most strikingly in Norway (16%), which demonstrates relatively modest volume usage despite the fact that the highest proportion of companies are making use of outsourcing in that country compared to anywhere else.  The opposite is true in countries such as Canada, France, Sweden and the UK.

Interestingly, when asked how likely they would be to consider using ASPs, Brazilian and Norwegian companies (48% and 36% respectively) show the highest propensity to do so.  There does appear to be a correlation between willingness to use ASP services and current use of outsourcing.  The data also shows (at a 99.9% confidence level) that those organizations making moderate and those making significant use of outsourcing, demonstrate a significantly higher propensity to consider using ASPs.

The chart below shows the average percentage breakouts of business applications run, maintained or managed by a third party within a subset of companies using outsourcing services.  The total average percentage of applications outsourced across the world is 43%.

Viewed by sector, the highest incidence of current outsourcing activity appears within the public sector (60%), followed by distribution (55%).  The distribution sector (48%) demonstrates the highest average percentage of applications outsourced overall, closely followed by public services (46%).