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Modeling Intention to Use an Application Service Provider

(ASP)

Tsipi Heart, Nava Pliskin, Noam Tractinsky

Heart, PliskinN, NoamT@bgumail.bgu.ac.il

Ben-Gurion University of the Negev

Information Society, February 3, 2004

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Topics

Application Service Providers Research Methodology ASP Drivers and inhibitors The ASP Intention Model (AIM) Limitations and discussion

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“The hospitality industry is two-three years behind other industries in IT adoption” (Hensdill, 1998, Heart et al., 2001)

Research motivation:

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Application Service Providers

“ASPs are third party service firms which deploy, manage and remotely host software applications through centrally-located services in a rental or lease agreement” (Currie and Seltsikas, 2001, p. 123).

5Heart, T. and Pliskin, N., 2002, "Renting Restaurant Applications from Application Service Providers", International Journal of Hospitality Information Technology (IJHIT), Vol. 2, No. 2, 45-61.

Customer Organizations of ASPs

Access applications and databases residing on ASP servers over networks

Avoid investment in server hardware and software

Pay monthly usage fee

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The Belief at Oracle:

in 10 years all business applications will be:“…delivered via the Web as a software service, rather than shipped as a product that customers must implement, manage, and maintain.” (Information Week, 2001).

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SMEs -- Candidates for ASP

Need to harness IT to enable growth Find IT adoption costly and risky (Bennett

and Timbrell, 2000) Do not have the resources internally

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Current Forecasts

Currently, according to IDC “Companies spent more than $2.3 billion last year for software delivered as a service, up from $1.8 billion the year before”1.

In 2000, IDC forecasted an ASP market size of $25 billion by 2005

The market will reach $8 billion by 2007 (Mears, Network World, 22/9/2003)

1http://www.nwfusion.com/news/2003/0922carrspecialfocus.html

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Why, actually,

ASP adoption is slower then anticipated

???

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Preliminary Research in the Israeli Hospitality Industry

One ASP vendor servicing Israeli hotels Sixteen hotels (out of 257 registered

hotels) adopted the “pure” ASP model Three hotel chains (managing 25 hotels)

adopted the “hybrid” ASP model

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Current ASP research

Mostly looking at the vendor’s side No modeling of ASP adoption decision No emphasis on SMEs

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Research Question

What are the factors affecting intention to use ASP, as perceived by a top SME

decision-maker?

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Research Methodology

Exploratory qualitative research: Field study (the Israeli hospitality industry) Case studies (two vendors, five customers) In-depth interviews (four interviewees)

Model formulation based on the literature and findings of the qualitative study

Quantitative survey to test the model (Unit of analysis: top SME decision-maker, sample: Israeli SMEs)

In-depth interviews with ten managers that have responded to the questionnaire, for triangulation purposes

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Driving and Inhibiting Factors

From the Literature and Qualitative Research

FactorSoftCo

HotelCo

DefCoChainCo

Drivers

Cost savings3137

Focus on core activities44

Improved business performance

7762

IT effectiveness251

Partnering with an IT expert

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Up-to-date applications79

Vendor reputation57

Interviews

FactorSoftCoHotelCo

DefCoChainCo

Inhibitors

Data security113

Response time6695

System availability258

Vendor opportunism6

Vendor trustworthiness

4324

CategoryFactorsSource

1 Usefulness to the

Organization

Business performance

Loh and Venkatraman, 1992; Currie and Seltsikas, 2001;

Reduced IT cost, reduced TCO, predictable IT cost

Loh and Venkatraman, 1992; Currie and Seltsikas, 2000; Currie and Seltsikas, 2001; Smith and Rupp, 2002; Ekanayaka, Currie and Seltsikas, 2002; Walsh, 2003

Better IT performance

Loh and Venkatraman, 1992; Walsh, 2003

2 Ease of Use

Focus on core activities

Currie and Seltsikas, 2001; Applegate, McFarlan and McKenney, 1996;

Contract ambiguity, long-term contracts

Currie and Seltsikas, 2000; 2001; Kern, Willcocks and Lacity, 2003; Kern, Lacity and Willcocks, 2002

Literature

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CategoryFactorsSource

3Risk of Technology

System availability

Tao, 2001; Susaria, Barua and Whinston, 2003

System response time

Tao, 2001; Susaria, Barua and Whinston, 2003; Interviews

Data securitySusaria, Barua and Whinston, 2003; Kern, Willcocks and Lacity, 2003; Kern, Lacity and Willcocks, 2002; Interviews, case study

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CategoryFactorsSource

4 Vendor Trustworthiness

Vendor integrityMayer et al., 1995; Mayer and Davis, 1999; Mcknight, Choudhury and Kacmar, 2002

Vendor abilityMayer et al., 1995; Mayer and Davis, 1999; Mcknight, Choudhury and Kacmar, 2002; Susaria, Barua and Whinston, 2003

Vendor reputation

Jarvenpaa, Tractinsky and Vitale, 2000; Susaria, Barua and Whinston, 2003; interviews.

5Overall risk

Overall riskGefen, Rao and Tractinsky, 2003; case study

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Results of the Preliminary Field Study

Cost Analysisfor a

300 room hotel with 30 users

ItemClient/ServerINITIAL ($)

ASP

INITIAL ($)

Server (with OS)8,000-

30 clients (with OS)36,00021,000

Database licenses4,500-

Application licenses65,50015,000 (*)

Comm. & Cabling10,00011,000

Peripheral equipment25,00025,000

Total initial investment149,00072,000

Monthly Costs

ItemClient/Server

Monthly ($)

ASP

Monthly ($)

Support fee - hardware800500

Support fee - software1,7004,050

Communications150250

IT personnel2,500-

Total monthly fee5,1504,800

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Bottom Line….

ItemClient/ServerINITIAL ($)

ASP

INITIAL ($)Total initial investment

149,00072,000

ItemClient/Server

Monthly ($)

ASP

Monthly ($)

Total monthly fee

5,1504,800

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The Suggested Model:

ASP Intention Model (AIM)

ASP usage

Perceived usefulnessof ASP

Perceived ease ofusing ASP

Perceived risk ofASP technology

Perceived ASPvendor

trustworthiness

H1 (+)H2 (+)

H5 (+)

H4 (+)

H6 (-)

H7 (-)

H8 (+)

H3 (+)

Focus on coreactivities

Contractambiguity

Improved ITperformance

Reduced IT costImprovedbusiness

performance

Intention to useASP

Perceivedoverall risk

Vendorreputation

Vendorintegrity

Vendorability

Organizationaldata security

Systemavailability

Systemresponse time

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Hypotheses

[H1] High perceptions of ASP usefulness enhance the intention of the decision maker to use an ASP

[H2] Actual ASP usage is also enhanced by perceived ASP usefulness

[H3] High perception of ease of use enhance the intention of the decision maker to use an ASP

[H4] ASP usefulness is enhanced by perceived ease of use

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[H5] A low perception of ASP technology risk decreases perceived overall risk of the ASP

[H6] High perceived trustworthiness of ASP vendor decreases perceptions of overall risk of ASP concept

[H7] Perceived overall risk negatively affects intention to use ASP

[H8] Intention to use ASP enhances actual ASP usage

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Done

A questionnaire has been composed reflecting the model constructs

Several (15) responses, so far

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Next Steps

Test questionnaire validity (few SMEs) Finalize questionnaire Run study Analyze results

(using a valid statistical tool, preferably structural equation modeling (SEM) which requires a large sample)

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Limitations and Doubts

Is AIM adequate for assessing intention to adopt technology by a decision-maker in an organization?

Are there other factors affecting the ASP adoption decision in an organization?

About 150 responses are required if SEM is to be used, might need to survey SME managers from other industries

SME definition