Background

Change usually takes a long time and the technology that transformed enterprises and the economy is no exception. Why should anyone be overwrought about the slow growth of ASP? It took mainframe computers a decade or two to become central to most firms. In fact, when IBM marketed its first mainframe computer, it estimated that 20 of these machines would fulfil the world's need for computation! Minicomputers moved into companies and schools a little faster than mainframes, but they were also considerably less expensive. Even the ubiquitous PC took five to 10 years to become an important part of work life. The road travelled by these pioneers was rocky. Actual accomplishments seldom matched those initially envisioned. There were several reasons for this shortfall—a general lack of computer literacy among users, a general lack of business literacy and an ignorance of the management role by information specialists, computing equipment that was both expensive and limited by today's standards, and so on (McLeord, 1993). Some IS reviewers believe that one error in particular characterized the early systems above all other. They were too ambitious. Firms believed that they could build giant information systems to support all managers. With the benefits of hindsight, one can now describe systems designed then as being snowballed or the task attempted being unmanageable. However, some firms stuck it out, invested more resources, and eventually developed workable systems—although more modest in size than originally projected, while other firms decided to scrap the entire Management Information System idea and retreated to Data Processing.

When the first computers were applied to business problems in the 1950s there were so few users that they had almost total influence over their systems. That situation changed during the 1960s and 1970s as the number of users grew. It, then, became necessary to consider the combined needs of all users so that the systems could function in an efficient manner. During the 1980s, the situation became even tighter when a new player entered the picture—the enterprise (McLeord, 1993). A stage of organisation/staff reliance on information systems started in the mid-1980s with demands that information systems increased operational efficiencies and managerial effectiveness. On the backs of such evolution, strategic information systems gained importance as systems expected to help organisations compete. In the 21^st century, information systems are developed in an enterprise environment (see Diagram 1).

21st Century: The Age of Information Society

Beniger puts forth a seemingly influential argument that the origin of the information society may be found in the advancing industrialization of the late 19^th century (Beniger, 1986). Accordingly, as industrial plants increased their processing speed, the need for increased resources to control manufacturing and transportation resulted to a feedback loop wherein enterprises had to process information ever faster. Fittingly, the demand for sophisticated information processing equipment resulted in the development of computers. While the subsequent new technologies further pushed the development of an information society, the continuing cycles of demand pull and supply push account for the progress in the field.

The Internet is simply a global network of networks that has become a necessity in the way people in enterprises access information, communicate with others, and do business in the 21^st century. The Internet contains a distributed software facility that organizes the information on it into a network of interrelated electronic documents called the World Wide Web (WWW). The WWW has changed the face of computing, both individual and enterprises, resulting in the expansion of electronic commerce attainment. The Internet is regarded in the 21^st century to be beyond a means of communication. It is also a source of information and entertainment that facilitates the development of electronic commerce. The initial stage of e-commerce ensured that all large enterprises have computer-to-computer connections with their suppliers via electronic data interchange (EDI) thereby, facilitating orders completely by the click of a mouse. Unfortunately, most small companies still cannot afford such direct connections. ASPs ensure access to this service, costing little and usually having a standard PC is sufficient to enter this marketplace.

The Internet has been a subject of enormous hype and speculation since its explosion in the late '80s. However, ASP can most certainly be said to be responsible for the latest debate surrounding its usage for purposes far beyond its original scope. By the late 1990s, ASP-like business models were applied by a proliferation of small businesses in the western world thereby creating what sometimes seemed a cult status with people from many parts of society talking about a 'New Breed of Intelligent Entrepreneurs.'

Beyond the problems that may arise from the systematisation of information, we suggest there is within the discipline of ASP a model of Infrastructure and Context which is foundational, but inadequate. This is the code model of ASP, deriving from the work of Sleeper and Robins taking a pragmatic look at the emerging Web services market (Sleeper & Robins, 2002). We will draw on a number of theoretical sources in a search for an improved foundation. A link is also made to the environment reality theory of perception proposed by Graham Little (Little, 1999).

What is ASP?

According to the ASP Industry Consortium, an ASP is a third party service firm which deploys, manages and remotely hosts software applications through centrally-located services in a rental or lease agreement (ASP Industry Consortium, 2000). Such application deliveries are done to multiple entities from data centres across a Wide Area Network (WAN) as a service rather than a product, priced according to a license fee and maintenance contract set by the vendor.

ASP is considered by many to be the new form of IT outsourcing, usually referred to as application outsourcing. While the IT industry has become accustomed to selling software as a service, the ASP business model is different due to its scale and scope of potential and existing application software offerings to small, medium and large customers. In addition, this model enables ASPs to serve their customers irrespective of geographical, cultural, organisational and technical constraints. The apparent complexity of the ASP model led to a taxonomy including Enterprise ASP, Vertical ASP, Pure-play ASP, Horizontal ASP and ASP Enabler. An earlier evaluation of different ASP business models resulted into four broad categories of delivery, integration, management and operations and enablement.

Emergence of ASP

The early phase of the ASP model appeared to revisit the service bureau model of the 1960s and 1970s (Currie, 2000). During this period, many companies signed outsourcing contracts with a service bureau. The fashionable term "outsourcing" was rarely used, as the more narrow facilities management contracts involved mainframes, data centres and bespoke software. The service bureau model was moderately successful although there were many technical, communications and financial problems which precluded it being a viable option for many companies.

In this era, outsourcing will continue to undergo a significant shift from the centralised computing of the 1960s and 1970s, the distributed computing of the 1980s and 1990s, through to the remote computing in the 21^st century. ASP will play a central role since they will increasingly offer a utility model to customers where they will purchase applications on a pay-as-you-use basis (Currie, 2000).

As these historical stages have evolved, the basic strategic resources and tools of economic activity have shifted, as has the nature of work and culture. In the Post-Net Era, a term coined by editors of Issues of Strategic Information Systems for its special issue in 2002, the application of knowledge and intellectual technology in response to the organized complexity of technology, organizational and social institutions become the critical factor of production and services.

The findings of our previous study provided substantial evidence for the reality of the ASP industry in the U.S. and the transitional phase which the national economy has moved through in progressing to the ASP technology (Currie, 2000). Moreover, the study also provided support for the notion that the basic sources of wealth had shifted from capital to information and knowledge resources. If ASP is a technological and economic reality, then what is its impact on business? At the outset, it is clear that the Internet's impact on business will evolve over time and redefines our understanding of business management, competition, and productivity. While we have been living with the consequences of the Internet for many years, our understanding of these shifts in human events has lagged behind the reality.

Ironically, this delayed effect has been particularly acute in Europe in recent years, as compared to Japan and the U.S. For example, in the U.S., preliminary planning in moving IT outsourcing toward an ASP model emerged as a general business goal in early 1980s and by late l990s had been translated into a full-scale economic development strategy. Moreover, by the late 1990s, the U.S. was beginning to assess its economic development strategies in the ASP industry and the impacts such pronounced shifts in IT industry priorities would have on business.

Even today, European business and political debates over IS strategic policy remain tied to traditional views of outsourcing. Many senior executives still remain sceptical or openly critical of the ASP phenomenon. These attitudes among corporate executives and senior managers betray some fundamental misunderstandings not only of the current state of the ASP industry in Europe, but also of the terms and conditions under which the advanced ASP industry in the U.S. will compete with European business in the future.

Nearly every participant in our research with small and medium size companies (SME) in the UK agrees that implementing the ASP solution (which sometimes results into automating certain work flows) without first making necessary fundamental changes and improvements are the wrong way to go about business improvement. That's because new and better products often replace existing ones. At the same time much needed skills may not be backed up by position descriptions and functional statements. And, too often the pooling of parallel and similar operations is not considered when implementing an ASP solution.

Preliminary findings of our research show some conflicting stakeholders perceptions for a successful implementation of such a model. This not only leads to a better understanding of the ethical issues involved but also of the complex relation of these ethical issues with other technical, organizational and social issues that need to be managed effectively.