Study On Risk Mitigation Policy Of ASP Model IT Outsourcing

With the continuous maturity of supporting ASP model IT technology, more andmore IT service providers enter the ASP service market. Using ASP model to provide ITapplication service has been the new profit model and development stratety of many ITservice providers, ASP model has become one of the important trends in IT industry.ASP customers, especially a large number of small and medium-sized ASP customerswish to adopt application service solutions of ASP model to reengineer and optimize theenterprise business process and reform the enterprise management, improve the overallinformatization level of the enterprise, then enhance the competitive advantage of theenterprise. Using ASP model IT application service, the ASP providers and ASPcustomers should get the win-win result, however the characteristics of the ASP modelitself determine that both ASP providers and ASP custmers face great risks during ASPmodel IT outsourcing, the risks have become the major obstacle to the development ofASP model. To mintigate the risks of ASP model IT outsourcing, and turn the potentialadvantage of ASP model into reality has been the urgent problem for the theory circleand practice circle to solve. For this reason, based on the literature review of IToutsourcing risks and IT outsourcing risks of ASP model, the incapacity of ASPproviders, the IT incapability of ASP customers, the information asymmetry betweenASP providers and ASP customers are pointed out to be the major risk factors, and studythe risk mitigation policies from the following three aspects.Firstly, to solve problem of the adverse selection that ASP customers may choosethe incapable ASP providers due to the information asymmetry of ASP service market,the risk migigation policy is studied. The major factors that result in low efficiency ofASP model IT service market are analysesed. The Signalling theory and Screeningtheroy of the Information Economics are adopted to explain the mechnism of the ThirdParty Certification of ASP providers’ capabiltiy. The critical elements of the Third PartyCertification of ASP providers’ capabiltiy are proposed. The results can lay a theoreticalfoundation for the establishment of the third party information internediary.Secondly, to cope with the problem of the ASP providers’ moral hazard duringbusiness critical application service outsourcing, the risk mitigation mechinism isstudied. To solve the issues of the capability construction and motivation of the ASPproviers when they provide business critical applicaion service, the multi-task pricipal-agent model is set up and solved when the ASP providers excute two tasks ofthe system operation service and the business consulting service. The incentivemechanisms of three capability construction models are analysesed. From the study, ifASP providers’ two-dimension tasks are motivated, the incentive results arerespectively different to ASP providers among three kinds of capability constructionmodels, this finally impacts ASP customers’ operation performance. The results can notonly supply a theoretical basis and guideline for the ASP customers to select andmotivate the ASP providers, but also can give the theoretical support for the ASPproviders to choose market entry strategies.Finally, to solve the problem of the ASP customers’ IT incapabity, the riskmitigation policy is studied. The significance of core IT capabilities for ASP customersto master their IT destinies during ASP model IT outsourcing is explained. Ninecapabilities consisting of core IT capabilities model are explained in detail. The formsand path of core IT capabilities construction is put forth, meanwhile, challenges of corecapabilities building-up are analyzed. The results can provide a theoretical basis andguidance for ASP customers to construct Core IT capabilities and choose the suitableconstruction form and path.