The Use of Hosted Enterprise Applications by SMEs: A Dual Market and User Perspective

Abstract

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: 1) confirmation that ICT infrastructure was no longer a barrier to adoption; 2) the pragmatic approach taken to security issues; 3) the use of both multiple information systems and multiple service providers; 4) the financial attractiveness of the rental model; and 5) 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.

Keywords:

• SMEs
• e‐business
• application service provision
• IT adoption

ACKNOWLDEGEMENTS

The authors would like to acknowledge the constructive feedback and suggestions of the two reviewers which improved the overall quality of the paper. Additionally they wish to acknowledge the assistance provided by The Research Engine with elements of the data collection (www.theresearchengine.co.uk).