Do costs matter in ASP sourcing decisions?

Abstract

This paper on Application Service Providers investigates why organizations select an ASP as a form of IS sourcing. To achieve this, we set the ASP within the context of literature on Neoclassical and Resource-Based View (RBW) theories. The results revealed that costs matter little in ASP sourcing decisions. The ASP is chosen not simply as a cost reducing alternative, but moreover, when companies detect an IS gap. Our study presents some managerial implications that affect both customers and ASPs.