Exploring ASP as sourcing strategy: theoretical perspectives, propositions for practice

Application service providers (ASPs) offer multiple users a subscription-based access model via the Internet to centrally managed applications. The appeals of ASPs are the per-user-pricing models, one-to-many access possibilities to applications, IT expertise and capabilities, and value added management services. This paper argues that although the ASP model offers an electronic outsourcing solution, there are in fact many similarities with more traditional IT outsourcing. Using four case studies from exploratory research into ASPs, we illustrate the applicability of a little used contingency model from the research literature that combines resource dependency theory, resource-based theory, transaction cost theory and agency theory. From this, we develop six major propositions that customers should bear in mind when considering an ASP option. Similar to outsourcing services, ASP sourcing offers some interesting benefits, but equally entails a set of risks that practitioners should carefully evaluate when considering the 'netsourced' ASP option. (C) 2002 Published by Elsevier Science B.V.