Cost and Service Capability Considerations on the Intention to Adopt Application Service Provision Services

The Application Service Provision (ASP) model offers a new form of IS/IT resource management option for which the vendor remotely provides the usage of applications over a network. Currently, the ASP industry appears to be more vendor-driven. But without a good understanding of how the ASP offerings might appeal to prospective customers, the industry might not survive. This study investigates empirically the intention to adopt an ASP service from the customers’ perspective, using survey data collected from a national sample of IS/IT executives. Based on the Transaction Cost Theory (Williamson, 1979, 1985) and service capability, a causal model is developed to examine the effects of perceived cost savings and service capability, as well as their antecedent factors, on the intention to adopt an ASP service. The results show a dominant effect of cost savings consideration on ASP adoption intention.