ASPs offer individuals or businesses access over the internet to
application and related services that would otherwise have to be
located in their own computers or servers. For some time, ASP
services have been expected to become an important alternative,
especially for smaller companies with low budgets for IT.
Gartner Group said: “The industry shift toward delivering
software as a service has created a gold rush stampede of vendors
entering the ASP market, most of which have no idea of what it will
take to survive for the longer term.”
Today, there are 480 retail ASPs playing in the emerging $3.6
billion (£2.4 billion) industry, with more entering the market
every day. According to the research, by the end of next year, 60%
of these ASPs will be gone because of bankruptcy, lack of venture
capital, mergers and traditional competition. By 2004, only 20 of
those 480 ASPs will remain as enterprise-class, full-service retail
ASPs, and less than 100 will offer successful point and product
solutions, sharing what will grow into a $25.3 billion industry in
2004.
Audrey Apfel, vice president and research director at Gartner
Group said:
"Today's dot.com collapses will pale in
comparison to the effect that the pending ASP meltdown will have on
organizations that use these ASPs. When dot.coms collapse, they
implode and have little effect on their customers and other
industries. The ASP consolidation will have a domino effect,
affecting business systems like ERP [entertprise resource planning]
and accounting systems for companies that have outsourced these
functions to ASPs. Then, those failures can quickly spread the
damage along supply chains.
"The failure of Pandesic is only the
tip of the iceberg. We expect many other major ASP brands will fail
during the coming months."
Ms Apfel added: "Many of today's ASPs make the mistake of trying
to do everything, including owning the data center. We believe this
is a critical mistake and not a sustainable strategy in most
cases."
