Application service providers: an application of the transaction cost model

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Information Management & Computer Security

ISSN: 0968-5227

Online from: 1993

Subject Area: Information and Knowledge Management

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Document Information:
Title:	Application service providers: an application of the transaction cost model
Author(s):	Alan D. Smith, (Department of Management and Marketing, Robert Morris University, Pittsburgh, Pennsylvania, USA), William T. Rupp, (Department of Management and Marketing, Robert Morris University, Pittsburgh, Pennsylvania, USA)
Citation:	Alan D. Smith, William T. Rupp, (2003) "Application service providers: an application of the transaction cost model", Information Management & Computer Security, Vol. 11 Iss: 1, pp.11 - 18
Keywords:	Electronic commerce, Information technology, Model, Software use, Transaction costs
Article type:	Literature review
DOI:	10.1108/09685220310463687 (Permanent URL)
Publisher:	MCB UP Ltd
Abstract:	Application service providers (ASPs) are expected to become a $25 billion industry by 2004. A firm’s decision to build or buy its IT infrastructure is dependent upon an application of transaction cost theory. These theories substantively explain a firm’s decision to outsource IT services to an ASP. This paper examines the ASP model through the lens of Williamson’s transaction cost model. The applications of this model explain many of the current market trends and provide insight into the continued success of the ASP model. The conclusion provides additional decision criteria for those practitioners who are in the decision process of outsourcing the IT function to an ASP.