Propagation of an alternative enterprise service application adoption model Richard Fulford and Peter E.D. Love The authors Richard Fulford is a Lecturer and Peter E.D. Love is a Professor, both at the We-B Centre, School of Management Information Systems, Edith Cowan University, Joondalup, Australia. Keywords Servicing, Outsourcing, Resource management, Customer relations, Value chain, Technology led strategy Abstract The much-heralded provision of enterprise resource planning (ERP) and customer relationship management (CRM) applications via hosting houses has been deemed to have failed. Many investigations have taken place, most of which have analysed the failure from the customer perspective, trying to understand why the end-user did not endorse the application service provision (ASP) model. This paper examines the ASP value chain and identifies the winners and risk takers within it. The supply side of ASPs is analysed and an alternative model for ASP adoption propagated. Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0263-5577.htm Introduction In today’s dynamic business environment, it is imperative for organisations to stay abreast of their competitors by leveraging the benefits that can be obtained from innovative information and communication technologies (ICT). Yet, the development and maintenance of technological infrastructures are costly and time-consuming (Holohan, 2000; Chandra and Kumar, 2001). The increasing popularity of enterprise applications such as enterprise resource planning (ERP), customer relationship management (CRM) and e-business technologies presents resourcing challenges for some businesses, especially small to medium-sized enterprises (SMEs) (Chen and Soliman, 2002). Organisations’ very success may depend on how they facilitate the interactions with their customers, suppliers, and partners using e-commerce (Soliman and Youssef, 2003). Given limited internal resources, outsourcing of applications has become a viable option for those businesses dependent on obtaining external expertise to provide and maintain organisational data-processing resources (McFarlan and Nolan, 1995; Currie and Seltsikas, 2001; Chen and Soliman, 2002). The delivery of information services over the Internet using application service providers (ASPs) has been identified as an effective business model for outsourcing (International Data Corporation, 2000). In contrast with traditional outsoucing, the ASP model involves renting access to core business applications over the Internet or some other network (Currie and Seltsikas, 2001). A plethora of ASP definitions can be found in the literature. For example, Coffman (2000) defined an ASP as “companies that deliver and manage applications and computer services from remote data centres to multiple users via the Internet”. Ambrose (2000) defined an ASP as a “company that provides application functionality and associated services across a network of customers”. Likewise, Currie and Seltsikas (2001) define as an ASP a firm that “manages and delivers application capabilities to multiple entities from datacentres across a wide area network”. Ekanayaka et al. (2002) suggest that an ASP may be a commercial entity that provides a paid service to customers, or a not-for-profit or government organisation supporting end-users. The ASP model was much heralded as the “next best thing in information technology (IT) innovation”. The International Data Corporation (IDC) (2001) reported that ASP revenues will grow at an annual compound rate of 89 per cent from US$986 million in 2000 to almost US$24 billion in 2005. Likewise, the Gartner Group Industrial Management & Data Systems Volume 104 · Number 6 · 2004 · pp. 450-456 q Emerald Group Publishing Limited · ISSN 0263-5577 DOI 10.1108/02635570410543762 450