Internet Technology and the Application Services Provider Business


IOM 590 Directed Research Project

Spring 2001

Prepared by: Hari Gupta, MBA candidate

Faculty Advisor: Professor C. Schlueter-Langdon

Marshall School of Business

University of Southern California



Project Description


Application Service Providers (ASPs) are an emerging category of firms, which provide a variety of digital business support services using the Web. These services range from the hosting of single applications such as databases or software suites such as enterprise resource planning (ERP) packages to supporting entire business processes such as corporate sales (e.g.,

ASPs may change the traditional business model of software companies: Subscription-based sales may cannibalize or complement the sale of software packages.

Throughout the economy ASPs may make it cheaper and easier for companies to pursue specialization strategies or develop large business networks with many participants and information system interfaces.

This research is primarily descriptive and focuses on emerging ASP segments and migration strategies. Based on these observations incentives of horizontal and vertical integration will be investigated. This analysis is based on transaction costs theory (Coase 1937; Williamson 1975) and its application in the information systems research literature (Malone et al. 1987; Gurbaxani and Whang 1991).



Exemplary Literature


Anderson, P., and M. L. Tushman. 1990. Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change. Administrative Science Quarterly 35(4) December: 604-633.

Gurbaxani, V., and S. Whang. 1991. The Impact Of Information Systems On Organization and Markets. Communications of the ACM, Vol. 34 No. 1, 59-73.

Hitt, L. M., 1999. Information Technology and Firm Boundaries: Evidence from Panel Data. Information Systems Research, June, Vol.10, No.2, 134-149.

Malone, T. W., J., Yates, and R. I., Benjamin. 1987. Electronic Markets and Electronic Hierarchies. Communications of the ACM, June, Vol. 30, No. 6, 484-497.

Scherer, F. M., and D. Ross. 1990. Industrial Market Structure and Economic Performance. Houghton Mifflin Company: Boston.




















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