AMR says ASP market will go sky-high by 2004

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AMR Research, the analysis firm specializing in e-business, predicts that the Enterprise Application Service Provider (ASP) market will reach $4.7 billion by 2004, with a compound annual growth rate of 153%.

But the distinctions will blur between traditional outsourcers, system integrators, application hosters, software vendors, and business process outsourcers .

The strongest growth in the ASP market is expected to occur in:
• e-business relationship management
• hosted business applications
• small business applications
• trading exchanges
• enterprise asset management
• product life cycle management.

“The ASP market has sped through a maturation process during the past year, and will continue to evolve,” said Dave Boulanger of E-Business Applications. “Most newer applications are now only being offered on a hosted basis. Combined with the increase in value-added services and application suites targeting specific verticals, hosted models present a viable alternative for mainstream companies to embrace leading technologies.”

AMR Research breaks down the ASP market into three major business segments: enterprise application service providers, e-commerce and web-hosting providers, and Business Process Outsourcing.

1999, ‘the year of the early adopters’, saw a number of significant trends, including:
• early adopters – the dot-com startups, high-tech manufacturers and small to mid-size companies – emerged
• ASP providers began to segment based on target company size and requirements
• go-to-market strategies focused on aerospace and defense, automotive, chemicals and consumer packaged goods
• business models focused on maximum value components
• smaller players began to consolidate
• role of IT changed, to focus on business development
• much ASP spending was done by e-business, sales and marketing departments in place of IT departments

AMR Research’s Report on Enterprise Applications expects that the highest growth rates will occur in the e-business relationship management market, hosted business applications, small business applications, and trading exchanges. The future of the ASP market will be driven by the expected growth of the BPO segment.

AMR Research

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