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What is an ASP?
Advantages to ASP Model
Why do companies use ASP services?
How reliable is the service from an ASP?

What is an ASP (Application Service Provider)?

Application Service Providers (ASPs) offer applications as a service. That is, ASPs rent applications based upon a standard fee. This fee includes hardware, software, and the associated network infrastructure, support services, and remote hosting. Customers access their applications using standard browsers such as Microsoft's Internet Explore. Software-as-a-service is a new paradigm in the application industry that offers substantial benefits.

Advantages to ASP Model

There are many business advantages to the ASP model especially given the exponential rate of change in information technology and the associated shortfall in qualified IT personnel. ASPs allow organizations to utilize applications for their business benefit without requiring the large capital expenses and implementation risks associated with hardware, software, and implementation. In addition, the model allows an organization's most valuable asset, its people, to concentrate on their core business competencies.

Low Risk/Low Cost

Typical applications have large startup costs - hardware, software, infrastructure upgrades and implementation costs. In addition, these applications require ongoing support services in the form of help desk support, maintenance, and upgrades. These expenses are huge investments that do not ensure the success and/or return on an organization's investment. By contrast, the ASP model allows organizations to subscribe to an application without incurring the large costs of hardware, software, and, most importantly, IT personnel. The ASP model is particularly beneficial to organizations with budgetary constraints and/or whose IT personnel are over-utilized.


Return on investment is a function of value over time. The quicker an organization can get an application into the hands of its users, the quicker it can begin generating value. The ASP model allows organizations to get online quickly and focus on their core business. In addition, the ASP model significantly reduces and, in some cases, eliminates the huge initial investment of time, money, and personnel resources required to implement an application.


Planning a system for 3-5 years is incredibly difficult. Hardware and infrastructure will become obsolete, software will require maintenance and upgrades, and business requirements will change. The ASP model eliminates this planning and its inherent shortcomings by allowing an organization to grow at its own pace and stay within its budgets. Whole divisions can be added as easily as one user and an organization only pays for what it utilizes. Additionally, the risk of paying for poor planning is eliminated.


ASPs offer a new level of consistency by focusing on application performance. Service Level Agreements (SLA’s) offer specific reliability measures for organizations that require robust systems with little downtime. In addition, organizations eliminate the risk of having only one or two experts per system.

Why do companies use Online ASP services?

For several reasons:
  1. Companies can more quickly deploy a critical application by focusing solely on the implementation phase
2. Avoid major issues of hardware, software and middleware management, maintenance and upgrades
  3. Online ASP leaves a company with only minor issues of network connectivity to enable Internet access to the web-based application
  4. By minimizing the difficulty of managing applications, companies can focus on day to day business without distraction

How reliable is the service from an Online ASP?

When considering the case of a larger or mid-market firm with many employees using the system from remote locations, an Online ASP service will be as or more reliable than if the company had hosted the application on its own network. Only companies with extensive experience with web-based applications will be able to match the service performance levels of an Online ASP service provider.

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