Renting enterprise applications could see companies slash their software costs by nearly half as well as considerably easing deployment, according to a survey from research firm Durlacher.
The report, on Application Service Providers (ASPs), claims that firms could save from 10 per cent to 40 per cent on the cost of an ERP (enterprise resource planning) system by going through an ASP. The company said that the ASP market is set to rocket from an estimated £8.75 million this year to almost £1 billion within five years.
The report's author, Richard Wendland, said: "As opposed to researching, building the infrastructure and buying and customising the applications, paying a subscription fee to use an application over the Internet can lower the cost of ownership for applications."
The ASP model, where applications are rented from a third party rather than implemented in-house, is already being supported by companies such as Microsoft, Sun and BT. Microsoft is building remote hosting capabilities into the next version of Exchange, while Sun is particularly keen on the concept, as it seems to dovetail with its idea of the network being the computer.
In a recent statement, Sun's chief executive, Scott McNealy, said: "Five years from now, if you're a CIO with a head for business, you won't be buying computers any more. You won't buy software either. You will rent all your resources from a service provider."
But Nigel St George, account director at Amdahl, said the rentable model only made sense for small applications, he was sceptical of the likelihood that large companies would adopt the model for their mission critical software.
"Where is your competitive advantage in the marketplace if you're using the same hosted application as your competition?" he said.
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