ASP Use, Satisfaction Continue to Increase, According to Survey; ASP Industry Consortium Releases Second of Quarterly Tracking Studies.

Business/Technology Editors

WAKEFIELD, Mass.--(BUSINESS WIRE)--Aug. 21, 2000

More business are turning to application service providers (ASPs) for their computing needs, and are increasingly satisfied with the service they receive, according to the results of the most recent customer tracking survey released today.

The survey, the second in a quarterly series, was commissioned by the ASP Industry Consortium, an international advocacy group of companies formed to promote the application service provider industry by sponsoring research, fostering best practices, and articulating the measurable benefits of the ASP delivery model. It was performed by Zona Research, Inc., of Redwood City, Calif., at the direction of the consortium's Research Committee, which is chaired by Sheila Boughner of Hewlett-Packard.

At the same time that ASP usage is on the rise, customer service continues to improve, based upon the respondents' satisfaction with their ASP contracts and the average time it took ASPs to respond to customer support issues.

And, among the reasons for using an ASP, cost savings, the ability to focus on business objectives and speed of application implementation continue to be the most frequently cited factors influencing the ASP purchase decision.

"Given the relative youth of the ASP industry, these quarterly tracking studies are important because they allow us to gauge customer attitudes and receptiveness on an ongoing basis," noted Boughner. "The ASP Industry Consortium is very focused on end users, and staying abreast of their feelings gives our members the ability to act accordingly in providing the best service possible."

The sampling was done of 131 senior and executive level managers and IT

professionals in the U.S. who have purchasing authority for or involvement with general office productivity or software.

Among the key findings of the study were:

--  Of respondents meeting the survey criteria, 63.4 percent said
    their companies currently access applications that are paid for on
    a rental or as-needed basis through an ASP, up from 52.4 percent
    of respondents who answered in the affirmative during the first
    quarter survey.

--  Most respondents who are using an ASP model indicated that they
    are currently purchasing between two and six applications from an
    ASP. That number is consistent with responses seen in the first
    quarter survey.

--  An overwhelming majority - 90 percent - said their service level
    agreement provided by their ASP meets their needs, up from 81
    percent in the first quarter survey. Of the 10 percent answering
    in the negative, the answer most commonly given as to what changes
    could be made to their current SLA to meet their standards
    continues to be "greater guaranteed availability," followed by
    "better responsiveness to SLA violations."

--  In the second quarter survey, 53.1 percent of respondents using an
    ASP said the average response time to customer support issues was
    less than one hour. That figure was up from 43.6 percent in the
    first quarter survey. In addition, only 6 percent of the ASP
    customers said that response time to customer support issues was
    over 24 hours, as compared to 8 percent who answered in that
    fashion in the first quarter survey.

--  Respondents continue to rank "security of my data may be
    compromised" as the most important potential issue that could
    arise from using an ASP.

--  The most important factors in influencing the ASP purchase
    decision among the second quarter survey respondents were the
    ability to focus on achieving strategic business objectives; a
    reduction in the total cost of application ownership; and the
    ability to more quickly implement new applications. The ranking of
    these factors shifted somewhat from those cited in the first
    quarter survey (See table below.)

The Consortium's Research Committee this year will commission more than a dozen studies and/or survey's covering a variety of markets and topics relating to application service provisioning. Results are available free of charge to all ASP Industry Consortium members through the Consortium's web site, www.allaboutasp.org.

      Importance of Factors Influencing the ASP Purchase Decision

                                (Mean)

             Ranked on a Scale of 1 (Not Important at All)
                      to 5 (Extremely Important)

                                              First         Second
                                             Quarter        Quarter
Business Factor                               `00            `00

Reduces Total Cost of Ownership               4.3            4.2

Enables you to Focus on Achieving             4.2            4.3
Strategic Business Objectives

Frees IT Resources to Focus on Internal       4.1            4.0
Mission Critical Applications

Enables the Organization to More Quickly      4.1            4.1
Implement New Applications

Reduces or Eliminates Application Admin.      4.0            4.0
Tasks

Better Allocates Costs by Paying Monthly      3.8            3.8
Fees vs. Large Up-Front Purchase Costs for
Applications

Enables Seamless Access to Applications       3.8            4.0
from Remote Offices and Locations

Compensates for Lack of Internal IT           3.8            3.8
Resources

Provides the Ability to Have Fixed,           3.8            3.6
Predictable Application Costs

Enables Access to Applications the            3.8            3.8
Organization Would Not Otherwise Be Able
to Afford

Reduces Time-to-Market                        3.6            3.5

About the ASP Industry

An application service provider manages and delivers application capabilities to multiple entities from data centers across a wide area network. ASPs give customers a viable alternative to procuring and implementing complex systems themselves. In some cases, ASPs even provide customers with a comprehensive alternative to building and managing internal information technology operations. ASP customers also are able to control more precisely the total cost of technology ownership through scheduled payment schemes.

Though the ASP market is relatively new, computer industry analysts foresee rapid growth and multi-billion-dollar annual sales within the next few years. End users cross industry lines and include anyone from the small office/home office (SOHO) client to large corporations and from complex businesses to specific verticals.

About Zona Research

Zona Research provides market research and strategic consulting for the Internet industry, with a focus on Internet technologies, market opportunities and trends, and the new dynamics of the burgeoning electronic economy. For more information, visit Zona at www.zonaresearch.com.

About the ASP Industry Consortium

Founded in May of 1999, the Application Service Provider Industry Consortium is an international advocacy group of over 575 companies formed to promote the application service provider industry by sponsoring research, promoting best practices, and articulating the measurable benefits of this evolving delivery model. Its goals include educating the marketplace, developing common definitions for the industry, as well as serving as a forum for discussion and sponsoring research. Among the technology sectors represented among the ASP Industry Consortium membership are Independent Software Vendors (ISVs), Network Service Providers (NSPs), Application Service Providers (ASPs), as well as emerging business models and other sectors supporting the industry. Information on the ASP Industry Consortium - including a full list of member companies - is available at www.allaboutasp.org or by contacting the Consortium's headquarters at: ASP Industry Consortium, Inc., 401 Edgewater Place, Suite 500, Wakefield, Mass. 01880; Tel: [phone]; Fax: [phone]; e-mail [e-mail].