IDC Forecasts ASP spending in Western Europe will reach $850 million by 2004

COPENHAGEN – JULY 7, 2000 — The European market for application service providers (ASP) is taking off 'IDC predicts the market value will increase from $15 million in 1999 to $850 million in 2004, as many new and existing suppliers enter this market. Organizations are increasingly seeking outside assistance in deploying, managing, and enhancing their applications. This comes in response to the growing importance that applications play within a company and the increased time and skill needed to keep up with rapidly changing technology circles.


'As applications take on more business functionality, they become inherently more complex. Applications are evolving from those that facilitated a single business function to integrated application environments that facilitate business processes spanning entire organizations,' said Anne-Lise Wang, vice president of IDC's European Software research. 'This evolution requires more people, planning, and ongoing management, especially for mission-critical applications that must maintain a high level of availability.'

ASPs differ from the traditional IT outsourcer in that the ASP service offering is designed to be one to many, servicing many companies through a single IT operation, rather than implementing solutions at each customer site. The one-to-many remote operational model also means that ASPs will be less regionally focused than the typical value-added reseller (VAR). The ASP will differ from the traditional outsourcing company by providing value beyond the operational efficiency ' adding value in the areas of content and, in some instances, electronic marketplace management. 'Applications vendors generally have not considered traditional outsourcers as a strategic channel. Clearly, companies experienced in outsourcing are strong contenders to become ASP channel partners,' Wang said.

Key Market Drivers

* Networking technology and the Internet ' Continued improvements in networking technology and reliability of the Internet are crucial to the development of the ASP model of application delivery.

* Economies of scale ' The one-to-many model enables the ASP to generate significant economies of scale, which can be transferred to the end user. This leads to significant cost savings and a relatively lower cost of ownership than if purchased and rolled out in-house.

* Innovations in application architecture ' New ways of efficiently delivering application functionality remotely are hereby created. The large growth in the 1990s of client-server computing has enabled application processing to be shared between a desktop client and a network server.

Western European Application Hosting 1999'2004 Markets and Trends – A Software Vendor Perspective (IDC #LC01G) is devoted to the emerging ASP market in Western Europe. The report provides data for ASP software markets from 1999 through 2004 for 16 Western European countries. The study investigates which types of applications are being hosted as well as provides a five-year market forecast for the Western European ASP market. Included are profiles of leading enterprise application providers and an augmented strengths, weaknesses, opportunities and threats model for the emerging ASP market. This report is available to purchase from your local IDC office.

About IDC

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