An Exploration of the Application Service Provision Outsourcing Option

The third wave of IT outsourcing has reached small, medium-sized, but also large organisations, with a storm of interest via the Internet, in form of application service provision. Application service providers (ASPs) offer multiple users a subscription-based access model via the Internet or a virtual private network to centrally managed applications. The appeal of ASPs are the per-user-pricing models, accessibility to applications and capabilities, and value-added management services. This paper argues that although ASPs offer an electronic solution, it does not differ much in practice from classical outsourcing practice. Using a conceptual contingency model that combines resource dependency theory, resource-based theory, transaction cost theory and agency theory this paper explores the ASP option in a number of case studies.