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An application service provider (ASP) is a business providing computer-based services to customers over a network; such as access to a particular software application (such as customer relationship management) using a standard protocol (such as HTTP).
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 2003United States market ranged from 1.5 to 4 billion dollars. Clients for ASP services include businesses, government organizations, non-profits, and membership organizations., estimates of the
There are several forms of ASP business. These are:
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.
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 (for example using Virtualization), some deploy in a single instance multi-tenant access mode, now more frequently referred to as "SaaS".
Common features associated with ASPs include:
The advantages to this approach include:
Some inherent disadvantages include:
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:
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:
Physical visits to the ASP to assess the formality of the organization will provide invaluable insight into the awareness of the firm.
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.Traver H. Kennedy, founder and ex-Chairman of the ASP Industry Consortium, has been known as the "father of the ASP industry".
The ASP model is often compared with Software as a Service (SaaS), 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 (often using separate single-tenant instances). This meant that the many benefits of multi-tenancy (cost sharing, economies of scale, etc.) 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.
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