- Application service providers (ASPs) can help the millions of small and medium-sized businesses in Asia update their operations and eventually enter global markets, speakers said this week as the ASP World Conference and Exhibition 2001 Hong Kong kicked off.
The growing availability of ASPs, which provide software applications on a per-use basis over the internet or a private network, will give Asian businesses a chance to erase some of the lag between Asian and US adoption of IT, Toshio Matsuda, vice chairman of the ASP Industry Consortium of Japan, told attendees at the three-day conference.
However, the transition to ASP services by small and medium-sized enterprises (SMEs) in Asia is not likely to take place overnight, even with China's imminent entry into the World Trade Organisation, one analyst cautions.
ASPs are set to take off among the SMEs of Hong Kong and Asia even more so than in large enterprises, says SC Pang, senior vice president of the Field Services Group of Asia at Computer Associates International. In the US, ASPs have missed an opportunity by focusing on a relatively small number of large corporations, he says.
"One of the markets that has been ignored is really the base of the pyramid," Pang says.
The ASP model so far has had limited response in Asia, where trust and confidence in ASPs to deliver software safely and consistently has been especially hard to overcome, he says.
However, the option to hand off IT tasks and upgrades to an outside company, with low or no up-front cost, is proving attractive to an increasing number of companies in the region, Pang says. Buying applications on a per-use basis, like telephone service, works better for small companies than does hiring and trying to retain an IT staff.
Market research firm International Data Corporation (IDC) projects the ASP services market in greater China (Hong Kong, mainland China and Taiwan) will grow at a compound annual rate of 205% between 1999 and 2004, by which time the market will be worth $US205 million annually, while the market for ASP services in Asia-Pacific excluding Japan will be worth $US761 million annually, according to IDC analyst Caron Harrison.
Asia is likely to embrace local ASPs more than foreign ones, but there are opportunities for foreign providers with strong partnerships, she says.
However, addressing the vaunted mobile internet application market, Harrison voics caution.
"We're at the start of this market and we're not sure where it's going to turn," she says.
The biggest adopters have been young companies that are moving into new areas of business and outgrowing their current applications, according to an IDC survey, Harrison says.
Communications and media companies have led the field, with more than 20% of such companies in greater China signing up with ASPs, followed by specialised manufacturing companies and educational institutions.
Businesses across greater China are bound to use ASPs to move beyond their home markets via electronic commerce, but the wise ones will move gradually into one or two nearby markets, she says. In mainland China, especially following WTO accession, some companies will try to launch international business efforts through ASPs but may not have the business systems in place to succeed.
ASP services present the biggest opportunity for Asia's SMEs, numbering 14 million in greater China alone, Harrison agrees. Unlike large enterprises, they don't have existing IT operations that might be made redundant by an ASP. For these companies, the key is convenience.
"Clients aren't looking for a new technology. They're looking to forget technology," Harrison says.
ASP World continues through Thursday.