Several historical shifts in information systems (IS) involved strategies from a mainframe to a client server, and now to application service provision (ASP) for intelligent enterprises. Just as the steam, electric, and gasoline engines became the driving forces behind the industrial revolution of the early 1900s, so the Internet and high-speed telecommunications infrastructure are making ASP a reality today. The current problem with the ASP model involves redefining success in the business environment of the 21st century. Central to this discussion is the idea of adding value at each stage of the IS life cycle. The challenge for business professionals is to find ways to improve business processes by using Web services. It took mainframe computers a decade or two to become central to most firms. 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 at considerably less costs. 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. During the 1980s the situation became even tighter when a new player entered the picture—the enterprise (McLeord, 1993). In the 21st century, information systems are developed in an enterprise environment (see Diagram 1). Beniger (1986) puts forth a seemingly influential argument that the origin of the information society may be found in the advancing industrialisation of the late nineteenth century. 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 21st century. 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 completed 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 emergence of the ASP model suggested an answer to prevailing question: Why should small businesses and non-IT organisations spend substantial resources on continuously upgrading their IT? Many scholars believed that outsourcing might be the solution to information needs for 21st century enterprises (Hagel, 2002; Kern, Lacity & Willcocks, 2002; Kakabadse & Kakabadse, 2002). In particular, the emergence of the ASP model provided a viable strategy to surmount the economic obstacles and facilitate various EPR systems adoption (Guah & Currie, 2004). Application service provision— or application service provider—represents a business model of supplying and consuming software-based services over computer networks. An ASP assumes responsibility of buying, hosting, and maintaining a software application on its own facilities; publishes its user interfaces over the networks; and provides its clients with shared access to the published interfaces. The customer only has to subscribe and receive the application services through an Internet or dedicated intranet connection as an alternative to hosting the same application in-house (Guah & Currie, 2004). ASP is an IT-enabled change, a different and recent form of organisational change, evidenced by the specific information systems area (Orlikowski & Tyre, 1994). ASP has its foundations in the organisational behaviour and analysis area (Kern et al., 2002).
Diffusion of Application Service Provision Among Smes