Essay About Use Of Hosted Enterprise Applications And Dual Perspective Paper

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The Use of Hosted Enterprise Applications by SMEs: A Dual Market and User Perspective
This deliberately dual perspective paper seeks to deepen
our understanding of the engagement of SMEs in hosted
enterprise applications in the UK. The emergence and
development of the ASP sector has attracted much interest
and highly optimistic forecasts for revenues. The paper
starts by considering ICT adoption by SMEs in general
before reviewing the provision of hosted enterprise
applications in the US and UK (market perspective). The
study is extended by qualitative empirical data collected by
semi-structured interviews with SME users of hosted
enterprise applications (user perspective) and subsequent
analysis in order to develop the key findings and
conclusions. From an SME user perspective the key
findings to emerge from the study include: i) confirmation
that ICT infrastructure was no longer a barrier to adoption,
ii) the pragmatic approach taken to security issues, iii) the
use of both multiple information systems and multiple
service providers, iv) the financial attractiveness of the
rental model and v) the intention to continue or extend the
use of hosted applications. It also highlights the
opportunity for gaining competitive advantage by using
hosted enterprise applications to reduce costs. There are
very few empirical studies of hosted applications which
take deliberately market and SME user perspectives – this
paper makes an important contribution in this emerging
field.
Introduction
The broad relationship between small and medium sized
enterprises (SMEs) and their use of information and
communication technologies (ICT) is problematic. On the
one hand the most recent survey by the EC E-Business
Watch, which tracks e-business engagement across 15
industry sectors throughout all EU member states,
concludes that access to ICT is no longer a barrier to ebusiness
uptake by small businesses with connectivity at 84
percent. Simple applications such as e-mail and Web
access are virtually ubiquitous (EC, 2005). On the other
hand, however, usage by SMEs of higher complexity
applications, such as integrated financial ledgers, supply
chain applications, and customer relationship management
(CRM) applications (DTI, 2004) and hosted applications
(Scottish Enterprise, 2002) is much lower. It is against this
background that our paper reports some current research,
which aims to deepen our understanding of the factors that
are relevant to the adoption of these higher complexity
applications by UK SMEs. This research is characterised in
three ways. Firstly, it focuses on hosted applications since
this mode of provision is growing and is potentially of
significant interest to SMEs. Secondly, it includes a market
perspective of the emerging service offerings targeted
specifically at SMEs in the US and to a limited extent in
the UK. And finally, the research incorporates an explicit
user perspective. This latter element is important and is
revisited later in the paper. The presentation and
interpretation of the research is structured into four main
sections. The paper starts by considering the nature of a
hosted applications environment and within this context
explores ICT adoption by SMEs in general, and the
importance of application complexity in particular. The
methodology and the empirical design are detailed in
section two. In the third section a market perspective on the
provision of hosted services is summarised. Finally, section
four brings together the data analysis and its interpretation
of the user perspective to produce the key findings and
conclusions. The dual market and user perspective which is
central to this study is important in increasing the relevance
of this research. Firstly, because whilst recognising the
provision of hosted enterprise applications is dominated by
US provision it establishes a link between the two UKbased
service providers who assisted in providing access to
SME users.