Tailoring the Arab ASP model

Published May 22nd, 2001 - 02:00 GMT

An e-strategies white paper published this week by Pyramid Research reveals that although demand for ASP services in the Arab Middle East is still rather low ― a symptom of the region’s modest overall IT spending ― ASP revenues in the Egyptian, Saudi and UAE markets are soon to boom from a total of $7.1 million in 2001 to more than $209 million annually by 2005.  


Applications service provision (ASP) is the outsourcing of software applications and IT infrastructure to a centrally managed application center. It holds particularly great promise to small and medium sized enterprises (SMEs) faced with the ever-challenging requirements of meeting market competition.  


With their limited budgets and specific business needs, such enterprises must either pay for high-cost custom applications or restore to ill-fit software. ASPs allow businesses to rent application software via the Internet, thus promising to cut IT costs by 30-50 percent.  


Extensive research conducted by Pyramid Research in the Persian Gulf and eastern Mediterranean countries has determined that the region’s IT spending last year stood at $2.1 billion, a figure that is expected to reach $8.9 billion in 2005. Many first-time computer users as well as such accepted norms as software pirating, place the purchase of hardware at the top of the region’s IT shopping list, followed by software and support services. 


ASP pioneers in the region are now experimenting with a variety of business models integrating "pure ASP" and "virtual ASP" strategies with systems integration, security solutions and applications development, according to Pyramid’s white paper notes. 


Joseph Braude, Pyramid Research analyst, asserts that in face of competition from well-established international companies, many of the Arab ASPs will adopt a business model based on the assumption that tailored industry-specific applications would later allow to leverage client relationships to unroll standard packaged applications horizontally. 


Pyramid points to the Saudi health sector and the Egyptian pharmaceuticals industry as the most lucrative of these stepping-stone vertical markets. It also notes heightened demand for e-business applications within the telecommunications and financial services industries in the Middle Eaat, and the great ASP potential within Arab governmental and transnational bodies as they move online.  


Several obstacles however may impede the rapid uptake of ASP services in the region, among them the region’s still developing, at times slow and unreliable, Internet network, the technology-shy and often suspicious SMEs, as well as the fact that many of the applications currently available online do not offer sufficient support in the Arabic language. ― (MENA Report)

© 2001 Mena Report (www.menareport.com)

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