Determinants of ASP choice: an integrated perspective
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Determinants of ASP choice: an integrated perspective Bandula Jayatilaka1, Andrew Schwarz2 and Rudy Hirschheim2 1 School of Management, Binghamton University, SUNY, Binghamton, NY, U.S.A.; 2Department of Information Systems, E.J. Ourso College of Business Administration Louisiana State University, Baton Rouge, LA, U.S.A.
Correspondence: Bandula Jayatilaka School of Management Binghamton University, SUNY Binghamton, NY 13902 U.S.A. Tel: +1-607-777-6057 E-mail: [email protected]
Abstract With the rise in the availability of scalable network technologies and resources, Application Service Providers (ASPs) have become increasingly more feasible sources for obtaining IS services. ASP research represents an opportunity to integrate previous research on outsourcing, applied in the area of ASP choice. Historically, outsourcing research has adopted many theoretical perspectives, including transaction cost, resource-based, resource-dependence, and knowledge-based. We apply these perspectives in the ASP context. When obtaining IS services through an ASP, factors other than cost and those explained by the resource-based and resource-dependent perspectives can become paramount. The knowledge-based perspective enables us to examine knowledge risk and integration requirements. Drawing upon past research and an exploratory study conducted with 35 respondents in 11 firms, an integrated, theoretical model is proposed, which combines the transaction cost, resource-based, resource dependency and knowledge-based perspectives. The model is used to explain the antecedent conditions useful for making decisions on IT sourcing through ASPs. European Journal of Information Systems (2003) 12, 210–224. doi:10.1057/ palgrave.ejis.3000466 Keywords: APS; knowledge-based view; resource-based view; resource-dependence view; transaction cost theory; selective sourcing; IT decision making
Introduction The Application Service Provider (ASP) market has grown dramatically over the past few years, with many experts believing that it will re-shape both the software industry and corporate computing. Although the term ASP is new, the concept of application hosting dates back to the 1960s (Bernstein, 1999). This application hosting has evolved into the business model for the ASP market. While the ASP market has begun to see its share of consolidations and has evolved from its inception (Terdiman, 2000), indications are that the concept of ASP is here to stay (Hirschheim & Lacity, 2000). Consider the following (Demsetz, 1991; Fonseca, 2000; Gantz, 2001):
Received: 8 April 2002 Revised: 9 December 2002 2nd Revised: 22 April 2003 Accepted: 3 June 2003
IDC estimates that the ASP market will be $7.7 billion by 2004. The ASP Industry Consortium began with 25 members in 1999, but had more than 300 by the middle of 2000. In a recent survey of IT executives within America, the Information Technology Association of America found that nearly one-fifth of IT departments were already using ASPs, nearly 24% were planning to evaluate their use over the next
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