LEASING OF THE ASP MODEL FOR E-SHOP BUILDING – A CASE STUDY ON HINET

International Journal of Electronic Business Management, Vol. 3, No. 1, pp. 75-81 (2005) 75

LEASING OF THE ASP MODEL FOR E-SHOP BUILDING – A

CASE STUDY ON HINET

Tien-Hsiang Chang

, Wan-I Lee

and Pen-Yen Hsiao

Department of Information Management

National Kaohsiung University of Applied Science,

Kaohsiung (807), Taiwan

Department of Marketing and Distribution Management

National Kaohsiung First University of Science and Technology

Kaohsiung (811), Taiwan

ABSTRACT

Small and medium enterprises (SMEs) in Taiwan lack manpower and capital because it is difficult to keep pace with the environment of rapid innovations on information technology. Therefore, an application service provider (ASP), which provides low cost solutions for enterprises, especially for SMEs, has been developed. This paper discusses leasing of the ASP model of Chunghwa Telecom's HiNet, which provide enterprises with tools to build their e-Shop. In addition, this model compares and analyzes each Taiwanese communication company's ASP model. Finally, this paper proposes suggestions for ASPs. It is hoped that this paper will be a valuable reference for investment in e-Commerce by SMEs and for ASPs.

Keywords: ASP, SME, HiNet, e-Commerce, e-Shop

1. MOTIVATION

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The environment of the information technology rapidly changes, and the costs of maintenance and operation of hardware and software are high. Taiwanese small and medium enterprises (SMEs) lack manpower and capital to face new information technology or the transformation of business growth. [18] In addition, as the operation and management of information technology requires greater supporting resources and infrastructure, the risks for SMEs implementing the information system also increase. Therefore, the operation model of application service provider (ASP) has become the alternative information system implementation for SMEs. The ASP mainly provides a low cost solution of e-Commerce for enterprises.

As the need for the ASP becomes greater, the desire of SMEs to use the ASP model becomes stronger. Research shows that businesses, especially SMEs, would abandon the high cost and high risk of in-house construction of information systems and instead use the ASP model to accomplish their e-Business. According to analysis from the market information center (MIC) of the Information Industry Institute [16], by 2005, the values of ASP services will experience substantial growth in the American region as well as other regions. The growth margin in

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Corresponding author: u9225703@ccms.nkfust.edu.tw

the Western European region will grow from 93 million USD in 2000, to 5.7 billion USD in 2005, with a combined annual growth rate (CAGR) as high as 128%. In addition, in 2001 the value of the Japanese ASP market reached 37.7 billion yen, and Japan's Gartner estimates in 2006, the value will reach 252.5 billion yen with an average yearly growth rate of 46.2%. Facing the immense market, the greatest goal of Taiwanese ASPs is to provide users with a safe and secure business environment. And of the current Taiwanese ASPs, HiNet's HiB2B is more representative [13]. Therefore, this paper discusses the leasing of the ASP model of Chunghwa Telecom's HiNet that provides enterprises with tools to build their e-Shop model. Moreover, this ASP model compares and analyzes each Taiwanese communication company's ASP operation model. Finally, this paper proposes suggestions for ASPs. It is hoped that this paper is a valuable reference for investment in e-Business by SMEs and for ASPs.

2. RELATED WORK

Since the ASP is a newly arisen industry of only the past few years, the definition of ASP by scholars is not the same. The compiled definitions of an ASP are shown in Table 1.

Since the definitions of ASP shown on Table 1 are not alike, Gillan and McCarty [6] clearly induce the five characteristics of ASP as follows: 1.

76 International Journal of Electronic Business Management, Vol. 3, No. 1 (2005) application-centric; 2. "sells" application access; 3.

externally managed; 4. offers one-to-many service; 5. delivers on the contract.

A synthesis of viewpoints from scholars [2,7,19,20,23] about the related benefits of businesses using the ASP model can be summarized as follows: 1. Fast implementation; 2. Cost savings; 3. Solves the difficulty of finding information professionals; 4. Faster return on investment; 5. Lowers the use threshold for high cost software and hardware; 6. Businesses can concentrate on their core competence; 7. Can prevent deliberate attacks from hackers; 8. Raises efficiency by professionally concentrating management of services; 9. Solves the problem of post-merger system integration.

Table 1: Definitions of an ASP

Provided Definition of an ASP Gillan

and McCarty

[6]

An ASP is a service with a stipulated contract, a concentrated management method for providing customers with the related system implementation, hosting, management and software user licensing. And it has the responsibility to directly or indirectly give special or professional assistance for the implementation and installation of software.

IDC [15] An ASP is a contractual service that

provides system implementation, hosting, management, and the use of applications, all from a location with concentrated management. An ASP is responsible for directly or indirectly providing all of the special activities and professional knowledge of the software maintenance system.

Cherry Tree & Co. [3]

Through a concentrated server with a lease contract style, an ASP provides the implementation of an application system, management, and acts as a remote installation service middleman.

3. CASE STUDY

Chunghwa Telecom completed the HiNet hardware construction in 1994. It officially began operations in 1995, becoming the largest Taiwanese ISP company. In Taiwan, HiNet owns the most dense, high-speed wideband wire infrastructure, and has an exclusive advantage in quality and speed. The system's stability is excellent, and neither earthquakes nor blackouts interrupt communications. It has many years of experience in the data communications and the Internet value-added services fields. The business philosophy of HiNet is courteous service, excellent

quality, universal use, and leading technology. The whole company's business direction, besides the ISP service, is faced towards the leasing services model of electronic commerce, and its current plans are (1) B2C, (2) B2B, and (3) G2B. The revenue includes: set-up fees, rental fees, or profit sharing [10]. The B2C model of e-Shop leasing is a classic ASP model. The discussion concerning this theme is below.

HiNet's e-Shop leasing model is mainly involved with assisting businesses in swiftly crossing the threshold of e-Commerce by building an e-Shop and possessing a business e-mail mailbox, a completely constructed website, and online sales tools. This is to allow the clients to unite their own expertise with the free use of the model. HiNet provides a diversified product (hi178, hiperMall, hiBoss) for the needs of different customers listed below.

A client that already has Internet, but does not yet have an e-Shop website.

A client that wants to build their e-Shop website and build up business opportunities on the Internet. A client that wants to have an independent e-mail mailbox.

HiNet e-Shop series products include three kinds of service models: building independent websites/e-Shops, building their e-niche in the market, and building independent e-Shop Internet marketing. These models of product positioning, product line, service function analysis and benefit analysis are shown in Table 2.

In order to support the normal operation of the three front-end service models, the back end must implement a complete common platform, including content management, shopping mechanisms, business management, shopping sales and enterprise resource planning (ERP). For more detail, see Table 3.

When a business establishes a website in-house, they usually do not consider the time spent developing it in the actual project cost. Thus ISP companies must address this problem by keeping the prices low and developing the website quickly. To assist the client in creating its own business website, HiNet introduced a set of DIY (do it yourself) tools that the client can easily navigate by going through the Web Base interface of the hiHosting webpage. The clients need only to enter the related company information and the product information, and then this information is applied to the system. Compatible with the previously listed content, the compiled HiNet E-Commerce ASP leasing model possesses the following functions:

Secure Environment: a highly effective firewall, intruder detection system, weakness analysis, prevents and defends against all the occurrences of attacks, guarantees that the website service will not be interrupted. At the same time it provides virus-protected mailboxes, and quarantines

T. H. Chang et al.: Leasing of the ASP Model for e-Shop Building – A Case Study on Hinet 81 cost instantly acquire an e-Shop website service

system with complete functionality and easy management. Even if the company runs more than one e-Shop website, it is not a big burden for the company. SMEs using e-Shop has become the tool of raising the competitive advantage, and this is still the trend. Therefore, this paper discussed the leasing ASP model of Chunghwa Telecom's HiNet, which provide enterprises with tools to build their e-Shop. Also, it compares and analyzes each Taiwanese communication company's ASP model. Finally, this paper proposed suggestions for ASPs. It is hoped that this paper is a valuable reference for investment in e-Commerce by SMEs and for ASPs.

REFERENCES

2. Apicella, M., 2000, “Alternatives to the traditional ASP model,” InfoWorld, Vol. 22, No. 26, pp. 65-67.

3. Cherry Tree & Co., 2000, 2nd Generation ASPs – Spotlight Report, September.

4. Csopping, 2004, http://www.cshopping.com.tw. 5. Eshop, 2004, http://eshop.hinet.net.

6. Gillan, C. and McCarty, M., 1999, ASPs Are for RealBut What’s Right for you, International Data Corporation (IDC).

7. Gurley, J. W., 1999, “The new market for rentalware,” Fortune, Vol. 139, No. 9, pp. 142-145.

8. Hi178, 2004, http://eshop.hi178.com. 9. Hiboss, 2004, http://hiboss.hiNet.net. 10. Hinet, 2004, http://www.hinet.net/. 11. Hipermall, 2004, http://hipermall.hinet.net. 12. Hsiao, R. L., 2003, “Technology fears: Distrust

and cultural persistence in electronic marketplace adoption,” Journal of Strategic Information Systems, Vol. 12, No. 3, pp. 69-99.Hsu, W. T, 2002, “The critical success factors of adoption with ASP model in information outsourcing,” Yuan Ze University, Masters Thesis.

14. Hung, S. Y., Ku, C. Y. and Chang, C. M., 2003, “Critical factors of WAP service adoption: An empirical study,” Electronic Commerce Research and Applications, Vol. 2, pp. 42-60.

15. IDC, 1999, ASPs’ Impact on the IT Industry: An IDC-Wide Opinion, IDC.

16. III, 2004, http://www.find.org.tw/.

17. Kaplan, S. and Sawhney, M., 2000, “E-Hubs: The new B2B marketplaces,” Harvard Business

Review, pp. 97-103.

18. Ke, M. H, 2000, “A study of decision factors in adopting ASP by SMEs,” National Kaohsiung First University of Science and Technology, Masters Thesis.

19. Maselli, J., 2000, “Growing pains,” Informationweek, No. 796, pp. 42-45.

20. Mateyaschuk, J., 1999, “ASP helps small companies afford ERP applications,” Informationweek, No. 761, pp. 201-202.

21. Shop, 2004, http://shop.url.com.tw.

22. Skjott-Larsen, T., Kotzab, H. and Grieger, M., 2003, “Electronic marketplaces and supply chain relationships,” Industrial Marketing Management, Vol. 32, No. 3, pp. 199-210.

23. Torode, C., 1999, “Start-e-online not new to ERP,” Computer Reseller News, No. 858, pp. 48-49.

24. Yahoo, 2004, http://www.yahoo.com.tw.

ABOUT THE AUTHORS

Tien-Hsiang Chang is an associate professor at

Department of Information Management, National Kaohsiung University of Applied Sciences. She holds Ph. D. from Department of Industrial Management, National Taiwan University of Science and Technology. Her current research interests are in operation research, stochastic and international business management.

Wan-I Lee is an assistant professor at Department of

Marketing and Distribution Management at National Kaohsiung First University of Science and Technology. She received her Ph. D. degree from Department of Mathematics, Colorado State University, USA. Her current research interests are in customer relationship management and electronic commerce.

Pen-Yen Hsiao is a graduate student at Department

of Marketing and Distribution Management at National Kaohsiung First University of Science and Technology. He is the Director of business customer department of Kaohsiung Brench Office at Chunghwa Telecom Co., Ltd. His current research interests are in electronic commerce and customer relationship management.

(Received September 2004, revised November 2004, accepted December 2004)