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.