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Prognosis Good for Healthcare ASPs

Looking for a sign to indicate that the future of the ASP market is healthy? Look no further than the healthcare industry, according to Dataquest, a market research firm and unit of Gartner.

According to Dataquest findings, the U.S. healthcare ASP market will grow from $125 million in 2000 to more than $500 million by 2005. Healthcare organizations are beginning to understand the value of the ASP proposition and view ASP solution as part of their external strategy, the research says.

As ASPs bring more sophisticated solutions to the market, new segments of the healthcare industry that previously didn't consider using of IT services will invest in ASP solutions, Suresh Gunasekaran, senior analyst for Gartner Dataquest's IT services worldwide group, said. "Over the past two years, many of the major ASP suppliers have improved their solutions and developed a quality track record they can demonstrate to clients. For a traditionally risk-adverse industry, this standard operations experience is key."

According to Gartner Dataquest research, by 2005, more than 50 percent of the healthcare ASP market share will be owned by fewer than five companies. Due to this consolidation, healthcare ASP suppliers will need to align offerings with solution partners to offer a comprehensive portfolio. The dominant delivery model for ASP solutions will be bundling with other outsourcing and business services.

While Gartner Dataquest forecasts strong growth for the healthcare market, it said that vendors must clear significant hurdles to achieve success. ASPs must ensure adequate security of medical data and HIPAA-compliant privacy protection. They need to offer integration capabilities and build significant reference accounts in major segments of the healthcare industry.

"The healthcare ASP marketplace will remain a highly fragmented market for the next 18 to 24 months. Market leaders will understand that implementations in the next two years will be crucial, but strong application and infrastructure partnerships combined with a strong industry segment focus will yield the greatest results over the next five years," Gunasekaran said.