/vnd/media/agency_attachments/bGjnvN2ncYDdhj74yP9p.png)
Even though market predictions range from conservative estimates to the all
pervasive role of ASPs in the world economy, hosted applications are a big
business opportunity — provided you are more interested in market development
and convincing your target that it definitely works. IT research firm, IDC,
expects the ASP market to grow to $7.75 billion by 2004. Hosted applications are
expected to appeal to SMEs that don’t want the headache of maintaining their
own enterprise-wide software systems and want to cut operational costs.
So, is there an opportunity in India? According to IDC (India), the ASP
market would touch $23.02 million in 2001 as against just above $1 million in
the previous year. This would go up to $131.93 million in 2004. This is an
optimistic extrapolation that takes into account such developments as coming up
of high speed data centres and entry of players like Microsoft and Lotus in the
ASP market. Even though a minuscule one compared to the global market, it has
not deterred software vendors, ISPs, systems integrators and data center
operators from exploring the ASP model. This is because they strongly feel there
are too many drivers to propel the nascent Indian ASP market into the big
league. "The primary driver would be the increase in the functionality of
applications that is pushing both the software purchase and services budget of
the corporates," argues Vibhas Amavate of IDC (India). The past year saw a
number of players announcing alliances. Frost and Sullivan’s India, ASP
Markets end-user study has pegged the number of players including ISPs, systems
integrators and independent software vendors at around 35. NASSCOM’s newly
formed ASP Forum has fast added 40-members. Computer Associates, Pentasoft
Technologies, Satyam Infoway, I-Flex, Global Telesystems, Intelligroup, Consign
Technologies, Eastern Software Systems and Citrix are some of the players which
have shown interest in the market by offering a range of applications including
banking solutions, financial packages and ERP modules.
There is definitely a need for application services especially in the SME
segment. Many of them would like to avail of the benefits of software
application without actually spending on building an infrastructure or owning
costly software. It is a fact that Indian SMEs are highly price sensitive and
the application maintenance skills and budgets of the SMEs are also low, leading
to slow adoption of new enterprise applications like CRM. This can be an
opportunity for the ASPs. "It would be very difficult for SMEs to manage
their business without IT," remarks Sumeet Kapur, CEO, Global Groupware
Solutions. Besides, he adds, many SMEs who are part of a larger chain of
business that includes big partners would be forced to adopt software
applications just because their bigger business partners are heavily into them.
"IT was not all pervasive earlier but things have changed now," he
says.
ASPs would definitely need to concentrate on market development and education
activities. An IDC report found that concept awareness about ASPs and their
services among CIOs is low, especially in the SME segment. IDC (India)
statistics found sixty four percent of small enterprises were unaware of the
concept, while fifty nine percent of medium sized organisations did not know of
the service.
Benefits like substantial cost reduction and minimized installation time
would be the usual stuff that every ASP could offer. To be successful in the
business, especially in a country like India, with a weak outsourcing culture,
ASPs must pack their services with a lot of value-additions. They must provide a
powerful solution that combines software, hardware and expertise into a
comprehensive Internet application solution. Before entering the ASP market, a
vendor must assemble several components critical to its success. This would
include: one or more data centers for hosting applications and providing related
services; high speed Internet connectivity that delivers acceptable application
performance; software applications that customers want to use; and an
application server that provides a robust, secure engine for deploying
applications. In today’s circumstances of bandwidth shortage, ASPs in India
could do better if they offer shrink wrap applications that do not need too much
bandwidth.
Security, a key concern, could be addressed, among other things, by offering
insurance cover for the data.
Ravi Shekhar Pandey