Application Service Provider

Companies that offer access over the Internet to application programs and related services that would otherwise have to be located in personal or enterprise computers. ASPs enable small to mid-sized companies to enjoy the benefits of sophisticated software that could be difficult to manage in-house. ASPs can achieve much greater economies of scale and can make more efficient use of human resources in a tight labor market than can individual enterprises.

In other words, an "ASP" allows a company to have a software application hosted for a rental fee. It sells access to a suite of applications which is typically licensed from an applications vendor. As such, an ASP is a company that provides applications or services that are distributed through a network to many customers in exchange for ongoing smaller payments (as opposed to one fixed, upfront price).

This is a computing services niche made possible by the overwhelming need for high-speed communications and updated technology. An ASP is a breed of company that provides IT services for companies that need to reduce expenditures and alleviate the confusion that new technology often brings. These third-party entities manage and distribute software-based services and solutions to customers across a wide area network (WAN) from a central data center. Similar in structure to an Internet Business Service (IBS), ASPs are different in that they focus on ways for companies to outsource any or all aspects of their information technology needs.

There are five main categories of "apps on tap":

  • Enterprise: ASPs for high-end business applications
  • Local/Regional: ASPs for smaller firms in a local area
  • Specialist: ASPs that provide applications for a specific need (such as Web site services or human resources)
  • Vertical Market: ASPs that provide support to a specific industry (such as healthcare)
  • Volume Business: ASPs that supply small or medium-sized businesses with prepackaged application services in volume

A common scenario goes like this: A small business pays an ASP a monthly fee to rent access to remotely hosted applications over a secure network (see: in the cloud). The ASP does this for many customers and has large investments in high-quality data centers, networks, skilled engineers, and integrated hardware and software systems. For the small business, this translates into pay-as-you-go access to enterprises without up-front investment in software, hardware, networks, or an army of IT personnel.

Incidentally, the ASP business model is said to resemble strongly IBM's services in the 1950's and 1960's, before onsite application computing became an affordable option. ASPs differ from that model by removing the need for onsite hardware, depending instead on the availability of high-speed connections.

See also : cloud computing  
NetLingo Classification: Net Organization