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The terms ASP and Application Service Provider are applied specifically to companies that provide services via the Internet. In most cases the term ASP has come to represent companies that supply software applications and/or software-related services over the Internet.
The most common features of an ASP are:
- The ASP owns and operates a software application.
- The ASP owns, operates and maintains the servers that run the software application. The ASP also employs the individuals required to maintain the application.
- The ASP makes the application available to customers worldwide via the internet.
- The ASP bills for the application either on a per-use basis or on a monthly/annual fee basis.
Advantages of ASPs
The ASP model has matured due to significant advantages over traditional approaches. Here are some of the most important advantages:
- Largely for small businesses and startups, the biggest advantage is low cost of entry and, in most cases, a short setup time.
- The pay-as-you-go model is often significantly less expensive
- The ASP model, as with any outsourcing arrangement, eliminates head count. IT headcount tends to be very expensive and very specialized which makes this option frequently advantageous.
- The ASP model also eliminates specialized IT infrastructure for the software application as well as supporting applications. For example, if the application you want to use requires multiple databases, you would have to support both the application and the database. ASPs do both.
- The ASP model can shift Internet bandwidth to the ASP who can often provide it at lower cost than if done yourself.
A main object that led to the growth of ASPs is the high cost of specialized software. As the costs of the software grow, it becomes nearly impossible for a small company to afford to purchase the software, so utilizing an ASP makes using the software feasible.
Another important factor leading to the development of ASPs has been the growing complexity of software and their upgrades. Distributing immense, compound applications to the end user has become expensive from a customer service standpoint, and upgrades make the problem even worse. In a large company where there may be thousands of computers, distributing software can cost millions of dollars. The ASP model eliminates most of these needless problems.
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