Large UK companies want apps on tap

Large UK companies are showing an interest in outsourcing their application hosting, contradicting the once-held belief that this service would appeal only to smaller businesses.

In its latest Quarterly Internet Report, Durlacher Research said its survey of 500 UK businesses with annual revenues of more than £75m showed an increased confidence in IP technology and a move towards the application service provider (ASP) model.

Durlacher found that 22 per cent of businesses surveyed were using or trialling ASP services, with a further 19 per cent reviewing such services.

Sarah Skinner, European internet analyst at Durlacher, said companies are looking to keep core applications in-house, but there is a significant latent demand to outsource inter-company applications, particularly e-procurement, supply chain management and messaging.

"It has always been thought that the sweet spot for the ASP market was SMEs [small to medium-sized businesses], but the shortage of IT staff and pace of technological change is encouraging enterprises to look at the model," said Skinner. "If attempts to use ASPs fail, companies feel they can bring functions back in-house."

Skinner said the survey revealed that the scale, reach and cost savings that can be obtained from investing in IP network are driving enterprises towards embracing internet technology. In the longer term, companies hope to turn this investment into fresh revenue, she said.

The survey also predicts that the number of companies which have invested in ecommerce applications will grow from less than 20 per cent to more than 50 per cent within 18 months. A growing interest in trading communities, particularly for indirect goods, and a doubling in extranet penetration were also recorded.

"Companies are looking to the internet to do electronic purchasing. This is in its early days and EDI [electronic data interchange] will still be around, but companies are migrating from EDI to IP networks," said Skinner.