Application Service Providers (ASPs) are companies that provide software-based services over the Internet, replacing traditional standalone software applications. These services, such as email programs, customer relationship management (CRM) systems, and travel reservation systems, are offered as Web-based solutions that users can access via a web browser. Billing is typically done on a periodic basis, such as monthly or annually, making these services a form of subscription-based software delivery model.
Types of ASPs
Full-Service ASPs
Full-Service ASPs offer a comprehensive suite of services, including software applications, maintenance, support, and hosting. Clients benefit from a one-stop solution that manages all aspects of their software needs.
Niche ASPs
Niche ASPs specialize in specific software solutions for particular industries or functions. For example, an ASP may focus solely on providing CRM solutions for the healthcare industry or Reservation systems for travel agencies.
Vertical Market ASPs
These ASPs provide specialized applications for specific vertical markets, such as finance, healthcare, and manufacturing.
Horizontal ASPs
Horizontal ASPs offer general-purpose applications that can be utilized across various industries. Examples include office applications, email services, and collaborative tools.
Advantages of ASPs
Cost-Effectiveness
ASPs eliminate the need for purchasing expensive standalone software and the costs associated with maintaining and updating it. Users pay a periodic fee that covers all these costs, often resulting in significant savings.
Accessibility
Being web-based, ASPs provide the convenience of accessing services from any location with an internet connection, facilitating remote work and improving productivity.
Scalability
ASPs offer flexible scalability options, allowing businesses to easily adjust their service usage based on their current needs without the limitations of traditional software.
Maintenance and Support
ASPs handle all maintenance, updates, and technical support, freeing up businesses to focus on their core operations rather than software management.
Security
Many ASPs implement robust security measures to protect data and ensure compliance with industry standards and regulations, although this might vary depending on the service provider.
Historic Context and Evolution
The concept of ASPs emerged in the late 1990s with the rise of the internet and the increasing demand for hosted software solutions. Early pioneers in this field include companies like UUNET, which offered managed network services, and Salesforce, which became a leading CRM player through its cloud-based service model.
The ASP model evolved into what is now known as Software as a Service (SaaS), a broader and more modern incarnation that continues to gain traction across various industries.
Applicability of ASPs
ASPs are applicable across a wide range of industries and business functions, including:
- Small and Medium-sized Enterprises (SMEs): SMEs benefit from lower costs and access to sophisticated software without large capital expenditure.
- Large Corporations: Larger enterprises can streamline operations and reduce IT overheads.
- Healthcare: From patient management systems to telemedicine, ASPs provide critical services.
- Finance: ASPs offer secure and compliant solutions for transaction processing and customer management.
Comparison with Traditional Software
| Feature | ASPs | Traditional Software |
|---|---|---|
| Cost Structure | Subscription-based | Upfront purchase |
| Maintenance | Handled by ASP | Managed by the user |
| Access | Web-based, accessible anywhere | Device-based, limited |
| Scalability | Easily scalable | Fixed, requires upgrades |
| Security | Provided by ASP | User responsible |
Related Terms
- SaaS (Software as a Service): A software distribution model where applications are hosted by a service provider and made available to customers over the internet.
- Cloud Computing: The delivery of computing services including servers, storage, databases, networking, software, over the cloud (internet).
FAQs
What are the common pricing models for ASPs?
How do ASPs ensure data security?
Can ASPs integrate with existing systems?
References
- Laudon, K. C., & Laudon, J. P. (2016). “Management Information Systems: Managing the Digital Firm.” Pearson.
- Marston, S., Li, Z., Bandyopadhyay, S., Zhang, J., & Ghalsasi, A. (2011). “Cloud computing—The business perspective.” Decision Support Systems, 51(1), 176-189.
Summary
Application Service Providers (ASPs) revolutionize how businesses utilize software by offering web-based, subscription-based services that replace traditional, standalone applications. With cost-efficiency, accessibility, scalability, and robust support as their core advantages, ASPs continue to empower businesses across various sectors. The evolution from ASPs to SaaS highlights an ongoing commitment to improving service delivery models in the digital age.
