What we have discussed so far have been arguments put forth from the developed market perspective. Let us now shift gears and consider the emerging markets and why Application Service Providers will have a key role to play as enterprises adopt IT.
First, there is a growing recognition in the IT companies that the next untapped frontier for growth is in the emerging markets. As these countries develop and build their physical infrastructure, the digital infrastructure and information pipelines also need to be put in place. This is where time needs to be compressed and scale needs to achieved rapidly. Making business process portals which cater to the next enterprises is the fastest way to reach out in an environment where the alternate distribution channels are not fully formed.
Second, there is an entire category of users who are completely underserved in these markets. I call them SMEEMs Small- and Medium-sized Enterprises in Emerging Markets. They have been largely unaffected by the Internet other than email usage and in some cases, a minor web presence. The software they use for their business remains almost identical to what they used five or more years ago. [In India, this is limited to mostly pirated copies of Microsofts Windows and Office, and Tally for accounting.] They are the weak links in the information value chain.
Third, the growing availability of reliable and affordable broadband connections in emerging markets means that the Internet is now becoming an extension of the local network. People have become comfortable with using the Internet in their lives as consumers. Even in India, broadband connectivity is becoming available across the country through the phone companies and cable operators.
Fourth, the dramatic growth in mobile phones has shown people the value of instant and always-available connectivity. Mobiles have hastened the pace of business people can call or SMS each other. In many ways, mobiles are becoming the computers of the East. But the mobiles have limitations and need to be complemented by desktop computers along with applications and services. The need for multi-device access will drive the shift from desktop-based and LAN-based computing to centralised computing platforms.
Fifth, in the avatar as consumers, people have already started trusting their data to centralised services. Email service providers like Yahoo and Microsofts Hotmail are used by hundreds of millions of users. Various ecommerce providers have our credit card information. ASPs like Salesforce.com have also demonstrated that even businesses are willing to host sensitive customer data on central servers outside the firewall.
Finally, there are a number of technologies like web services and Ajax which can serve as the foundation to create applications that are modular and integrated at the backend, and have rich user interface not traditionally associated with web-based programs. These may be old technologies, but they are being applied in new and innovative ways by companies who dont have a legacy to protect and sustain.
The ASP ideas have tremendous potential in the context of building out the IT infrastructure in emerging markets. They are the only way to rapidly bridge the gulf that separates the SMEs from their larger brethren. Today, the lack of IT usage by SMEEMs poses a threat to efficiencies that companies need to generate across their value chain. So, how do we get the ASP model right this time around? Let us start by taking a closer look at the SMEEMs.
TECH TALK The Coming Age of ASPs+T