Benefits Extend Beyond Cost Savings
seeing benefits other than lowered costs, such as tightened security,
improved infrastructure, reliable backup, and easier access to new
are enjoying significant benefits from applications hosting and
outsourcing services, according to a new survey by the Information
Technology Association of America (ITAA). The most commonly cited
benefits include high return on investment, cost savings, enhanced
security, improved infrastructure, reliable emergency backup, and
access to new technology.
conducted the survey of current customers in multiple industries.
The March 2002 survey covered issues such as current use, market
differentiation, performance metrics, and return on investment.
The poll included 80 ASP customers, with 37 percent of respondents
describing their job title as either CIO or MIS director.
registered solid approval of the ASP value proposition in the survey.
Of respondents, 39 percent reported a return on investment of between
10 and 50 percent, while an additional 14 percent of respondents
placed it between 51 and 100 percent.
data suggests that much of the benefit of using an ASP goes beyond
simple cost savings, although respondents said cuts in staff and
cost were motivating factors in deciding to outsource (81 and 71
percent, respectively). These other benefits included security,
enhanced infrastructure, emergency backup capabilities, and exposure
to emerging technology.
than 60 percent of respondents rate the level of service provided
by their application service provider (ASP) as "high"
or "extremely high." Service availability was the most
commonly used factor for measuring ASP performance (74 percent),
followed by operational reliability (45 percent) and response time
out of four respondents said they're currently using an ASP for
the first time. Companies expanding their ASP use were most likely
to do so in areas such as database (27 percent), accounting/finance
(23 percent), and e-mail/office productivity (19 percent).
majority of survey respondents fell in the small to midsize range
(55 percent report less than US$100 million in annual revenue),
although most (65 percent) also said their firms operate more than
one multi-server data center. Another 57 percent said they have
been using their current ASP for more than one year.
Business Outsourcing Institute 03/02
Reprinted : September 2002