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Enterprise ASP Spending on the Rise

Worldwide enterprise ASP spending will top $13 billion in 2005, up from $693.5 million in 2000, according to Framingham, Mass.-based market intelligence and advisory firm IDC.

IDC defines enterprise ASP services as those that consist of managed or extended services around enterprise resource management, industry-specific, customer relationship management and ecommerce applications.

"Despite a lot of negative publicity, 2000 was actually a good year for ASPs and for the enterprise segment specifically," said Jessica Goepfert, senior analyst with IDC's ASP research program. "Spending on enterprise applications in the United States exceeded expectations."

Additionally, end-user awareness of the ASP business model is up, revealing the payoff of a year's worth of educational efforts from ASPs, industry associations, IT vendors, and the media in general. Along with the increased awareness have come several conditions that have driven enterprise ASP spending. "The IT skills shortage remains a problem that many companies are struggling with. This is compounded by their need to focus on their core business. As a result, they're turning to ASPs for help," Goepfert said.

According to IDC, the United States represents the largest opportunity for enterprise ASPs. In 2000, it was responsible for 79 percent of worldwide spending with $547 million. Through 2005, however, the United States will grow slower than any other region, and its share of spending will decrease to 48 percent of the overall enterprise ASP market. Western Europe, meanwhile, is expected to dramatically increase its spending from $74.4 million in 2000 to $5.1 billion in 2005.

"Some ASPs indicate that the slowing economy in the United States is helping to expand their sales pipelines. As businesses look for ways to increase their return on IT dollars spent, many are turning to ASPs for access to enterprise applications," said Amy Mizoras, senior research analyst with IDC's ASP program.

IDC's report forecasts spending through 2005 in five regions: the United States, Canada, Western Europe, Asia/Pacific, and the rest of the world. The U.S. forecast is segmented by enterprise application type, company size and vertical industry. The report analyzes market trends and growth drivers and inhibitors.