Enterprise End Users in Latin America Provide Some Encouraging Signs to Aspiring Application Service Providers, IDC Says

MIAMI, FLORIDA – AUGUST 30, 2000 – The rumble surrounding application service providers (ASPs) has reached Latin America. Although enthusiasm and extensive press coverage for ASPs exist, that enthusiasm has largely been generated by the vendor community and not by end users. Are end users in the region ready to embrace this new way to pay for and access business applications?

 

Based on a recent survey of 400 businesses conducted as part of IDC Latin America's "TIPS" enterprise program, IDC found that, overall, most enterprises in the region are generally lukewarm to this new concept. Nonetheless, some encouraging signs exist. The survey confirmed the overall concept of outsourcing (business and technical functions) has lost its taboo status among most IT decision makers in the region. In addition, certain business criteria considered essential by many enterprises were found to encourage greater consideration of the application outsourcing and ASP model.

Although application outsourcing (of which ASPs are a subset) is the smallest revenue category of the IT services market in Latin America, IDC is optimistic about the future of application outsourcing in the region and is forecasting it to be a $418 million market by 2004.

"The ASP market is presently in embryonic form in the region," said Alex Manfrediz, senior analyst for IDC Latin America. "A few things are clear, however: Real customers are few, but interest is multiplying as are the number of ASP pilot or start-up companies. Today's one-to-one service provider will evolve into tomorrow's one-to-few provider and ultimately a one-to-many, true ASP."

According to IDC, one challenge that the ASP model is facing and will need to overcome is the need for a strong telecommunications (bandwidth) infrastructure. "The telecommunications infrastructure within the region is generally insufficient, especially outside the largest urban areas, to support large-scale, efficient ASP deployments," Manfrediz said. "Recent privatizations and continued foreign investments into the region are rapidly helping to build out the region's telecommunications infrastructure."

IDC Latin America's latest "TIPS" bulletin, Application Outsourcing and ASPs: Demand Among Enterprises in Latin America (IDC #LA1034G), analyzes the latest user survey results in Latin America and suggests ASPs may indeed have a legitimate latent market to tap and therefore a significant growth potential, but also may have a difficult row to hoe in the near term in selling their concept as a legitimate alternative to application access due to service offering unfamiliarity and weak telecom infrastructures. To purchase the report, please contact Jennifer Miranda at 305-718-3428 or jmiranda@idc.com.

With a network of six country offices in Latin America and two regional offices – in Silicon Valley, Calif. and Miami – IDC is the leading supplier of technology market research and consulting on Latin America. IDC provides full market coverage of PCs, mainframes, Unix systems and workstations, servers, desktop printers, professional services, local area networks, the Internet, telecom, RDBMS software, distribution channels, NT, and IT spending patterns in Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela. IDC Latin America also conducts primary research in Peru, Ecuador, Central America, and the Caribbean. For more information go to http://la.idc.com.

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 600 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

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