An Application Service Provider is a business providing computer-based
services to customers over a network; such as access to a particular software
application using a standard protocol. The need for ASPs has evolved from the
increasing costs of specialized software that have far exceeded the price range
of small to medium-sized businesses. As well, the growing complexities of
software have led to huge costs in distributing the software to end-users.
Through ASPs, the complexities and costs of such software can be cut down. In
addition, the issues of upgrading have been eliminated from the end-firm by
placing the onus on the ASP to maintain up-to-date services, 24 x 7 technical
support, physical and electronic security and in-built support for
business continuity and flexible working.
The importance of this marketplace is reflected by its size. As of early 2003,
estimates of the United States market ranged from 1.5 to 4 billion dollars.
Clients for ASP services include businesses, government organizations,
non-profits, and membership organizations.
Provider types There are several forms of ASP business.
These are: A specialist or functional ASP delivers
a single application, such as credit card payment processing or timesheet
services; A vertical market ASP delivers a
solution package for a specific customer type, such as a dental practice;
An enterprise ASP delivers broad spectrum solutions;
A local ASP delivers small business services within a limited area.
Some analysts identify a volume ASP as a fifth type. This is basically a
specialist ASP that offers a low cost packaged solution via their own website.
PayPal was an instance of this type, and their volume was one way to lower the
unit cost of each transaction. In addition to these types, some large
multi-line companies, use ASP concepts as a particular business model that
supports some specific customers. The ASP model
The application software resides on the vendor's system and is accessed by users
through a web browser using HTML or by special purpose client software provided
by the vendor. Custom client software can also interface to these systems
through XML APIs. These APIs can also be used where integration with in-house
systems is required. ASPs may or may not use multitenancy in the deployment of
software to clients; some ASPs offer an instance or license to each customer,
some deploy in a single instance multi-tenant access mode, now more
frequently referred to as "SaaS". Common features associated with ASPs
include: ASP fully owns and operates the software
application(s) ASP owns, operates and maintains the
servers that support the software ASP makes information available to
customers via the Internet or a "thin client"
ASP bills on a "per-use" basis or on a monthly/annual fee
The advantages to this approach include: Software integration issues are
eliminated from the client site Software costs for the application are
spread over a number of clients Vendors can build more application
experience than the in-house staff Key software systems are kept up to
date, available, and managed for performance by experts
Improved reliability, availability, scalability and security of internal IT
systems A provider's service level agreement
guarantees a certain level of service Access to product and technology experts
dedicated to available products Reduction of internal IT costs to a
predictable monthly fee Redeploying IT staff and tools to focus
on strategic technology projects that impact the enterprise's bottom line
Some inherent disadvantages include: The client must generally accept the
application as provided since ASPs can only afford a customized solution for
the largest clients The client may rely on the provider to
provide a critical business function, thus limiting their control of that
function and instead relying on the provider
Changes in the ASP market may result in changes in the type or level of service
available to clients Integration with the client's non-ASP
systems may be problematic Evaluating an Application Service
Provider security when moving to an ASP infrastructure can come at a high cost,
as such a firm must assess the level of risk associated with the ASP itself.
Failure to properly account for such risk can lead to:
Loss of control of corporate data Loss of control of corporate image
Insufficient ASP security to counter risks
Exposure of corporate data to other ASP customers
Compromise of corporate data Some other risks include failure to
account for the financial future of the ASP in general, i.e. how stable a
company is and if it has the resources to continue business into the
foreseeable future. For these reasons Cisco Systems has developed a
comprehensive evaluation guideline. This guideline includes evaluating the scope
of the ASP's service, the security of the program and the ASP's maturity with
regard to security awareness. Finally the guidelines indicate the importance
of performing audits on the ASP with respect to:
Port/Network service Application vulnerability
ASP Personnel Physical visits to the ASP to assess the
formality of the organization will provide invaluable insight into the
awareness of the firm. History
In terms of their common goal of enabling customers to outsource specific
computer applications so they can focus on their core competencies, ASPs may be
regarded as the indirect descendant of the service bureaus of the 1960s and
1970s. In turn, those bureaus were trying to fulfill the vision of
computing as a utility, which was first proposed by John McCarthy in a speech at
MIT in 1961. Jostein Eikeland, the founder of Telecomputing, is credited
with coining the acronym ASP in 1996, according to Inc. Magazine.
Comparisons The ASP model is often compared with
Software as a Service, but while the latter typically delivers a generic
service at scale to many users, the former typically involved delivering a
service to a small number of users. This meant that the many benefits of
multi-tenancy were not accessible to ASP providers, and their services were more
comparable to in-house hosting than to true multi-tenant SaaS solutions like
Salesforce.com. See also
Business service provider Communication as a service
Hosted service provider Multitenancy
Outsourcing Service level agreement
Software as a service Utility computing
References External links
Application Service Providers at DMOZ