Application service provider
Encyclopedia
An application service provider (ASP) is a business that provides computer-based services to customers over a network. Software offered using an ASP model is also sometimes called On-demand software or software as a service (SaaS
).
The most limited sense of this business is that of providing access to a particular application program (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. , estimates of the United States
market range from 1.5 to 4 billion dollars. Clients for ASP services include businesses, government organizations, non-profits, and membership organizations.
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.
In addition to these types, some large multi-line companies (such as HP and IBM
), use ASP concepts as a particular business model that supports some specific customers.
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 multi-tenancy 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.
specific computer applications so they can focus on their core competencies
, ASPs may be regarded as the indirect descendant of the service bureau
s 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: http://www.inc.com/magazine/20000401/18093.html.
Software as a Service
Software as a service , sometimes referred to as "on-demand software," is a software delivery model in which software and its associated data are hosted centrally and are typically accessed by users using a thin client, normally using a web browser over the Internet.SaaS has become a common...
).
The most limited sense of this business is that of providing access to a particular application program (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
Business continuity
Business continuity is the activity performed by an organization to ensure that critical business functions will be available to customers, suppliers, regulators, and other entities that must have access to those functions. These activities include many daily chores such as project management,...
and flexible working.
The importance of this marketplace is reflected by its size. , estimates of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
market range from 1.5 to 4 billion dollars. Clients for ASP services include businesses, government organizations, non-profits, and membership organizations.
Provider types
There are several forms of ASP business. These are:- A specialist or functional ASP delivers a single application, such as credit card payment processing or timesheetTimesheetA timesheet is a method for recording the amount of a worker's time spent on each job.-Use:Originally developed for an employer to determine payroll, timesheets are not just for payroll any more. Timesheets may record the start and end time of tasks, or just the duration. It may contain a...
services; - A vertical market ASP delivers a solution package for a specific customer type, such as a dental practice;
- An enterprise ASP delivers broad spectrum solutions;
- A local ASP delivers small businessSmall businessA small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships...
services within a limited area.
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
PayPal
PayPal is an American-based global e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders....
was an instance of this type, and their volume was one way to lower the unit cost of each transaction.
In addition to these types, some large multi-line companies (such as HP and IBM
IBM
International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas...
), use ASP concepts as a particular business model that supports some specific customers.
The ASP model
The application software resides on the vendor's system and is accessed by users through a web browser using HTMLHTML
HyperText Markup Language is the predominant markup language for web pages. HTML elements are the basic building-blocks of webpages....
or by special purpose client software provided by the vendor. Custom client software can also interface to these systems through XML
XML
Extensible Markup Language is a set of rules for encoding documents in machine-readable form. It is defined in the XML 1.0 Specification produced by the W3C, and several other related specifications, all gratis open standards....
APIs. These APIs can also be used where integration with in-house systems is required. ASPs may or may not use multi-tenancy 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:
- ASP fully owns and operates the software application(s) - ALJO-IN
- ASP owns, operates and maintains the servers that support the software
- ASP makes information available to customers via the InternetInternetThe Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
or a "thin clientThin clientA thin client is a computer or a computer program which depends heavily on some other computer to fulfill its traditional computational roles. This stands in contrast to the traditional fat client, a computer designed to take on these roles by itself...
" - ASP bills on a "per-use" basis or on a monthly/annual fee
The advantages to this approach include:
- Software integration issues are eliminated from the client site
- Software costs for the application are spread over a number of clients
- Vendors can build more application experience than the in-house staff
- Key software systems are kept up to date, available, and managed for performance by experts
- Improved reliability, availability, scalability and security of internal IT systems
- A provider's service level agreementService Level AgreementA service-level agreement is a part of a service contract where the level of service is formally defined. In practice, the term SLA is sometimes used to refer to the contracted delivery time or performance...
guarantees a certain level of service - Access to product and technology experts dedicated to available products
- Reduction of internal IT costs to a predictable monthly fee
- Redeploying IT staff and tools to focus on strategic technology projects that impact the enterprise's bottom line
Some inherent disadvantages include:
- The client must generally accept the application as provided since ASPs can only afford a customized solution for the largest clients
- The client may rely on the provider to provide a critical business function, thus limiting their control of that function and instead relying on the provider
- Changes in the ASP market may result in changes in the type or level of service available to clients
- Integration with the client's non-ASP systems may be problematic
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:
- Loss of control of corporate data
- Loss of control of corporate image
- Insufficient ASP security to counter risks
- Exposure of corporate data to other ASP customers
- Compromise of corporate data
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
Cisco Systems
Cisco Systems, Inc. is an American multinational corporation headquartered in San Jose, California, United States, that designs and sells consumer electronics, networking, voice, and communications technology and services. Cisco has more than 70,000 employees and annual revenue of US$...
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:
- Port/Network service
- Application vulnerability
- ASP Personnel
Physical visits to the ASP to assess the formality of the organization will provide invaluable insight into the awareness of the firm.
History
In terms of their common goal of enabling customers to outsourceOutsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
specific computer applications so they can focus on their core competencies
Core competency
A core competency is a concept in management theory originally advocated by CK Prahalad, and Gary Hamel, two business book writers. In their view a core competency is a specific factor that a business sees as being central to the way it, or its employees, works...
, ASPs may be regarded as the indirect descendant of the service bureau
Service bureau
A service bureau is a company which provides business services for a fee. The term has been extensively used to describe technology based services to financial services companies, particularly banks. Customers of service bureaus typically do not have the scale or expertise to incorporate these...
s 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
John McCarthy (computer scientist)
John McCarthy was an American computer scientist and cognitive scientist. He coined the term "artificial intelligence" , invented the Lisp programming language and was highly influential in the early development of AI.McCarthy also influenced other areas of computing such as time sharing systems...
in a speech at MIT
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
in 1961. Jostein Eikeland, the founder of Telecomputing, is credited with coining the acronym ASP in 1996, according to Inc. Magazine: http://www.inc.com/magazine/20000401/18093.html.
See also
- Business service providerBusiness service providerBusiness service providers are companies that offer state-of-the-art business applications over the Web. These are Application service providers where applications are built as service-based applications...
- Communication as a service
- Hosted service providerHosted service providerA Hosted Service Provider is a business that delivers a combination of traditional IT functions such as infrastructure, applications , security, monitoring, storage, Web development, website hosting and email, over the Internet or other wide area networks...
- Multitenancy
- OutsourcingOutsourcingOutsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
- Service level agreementService Level AgreementA service-level agreement is a part of a service contract where the level of service is formally defined. In practice, the term SLA is sometimes used to refer to the contracted delivery time or performance...
- Software as a serviceSoftware as a ServiceSoftware as a service , sometimes referred to as "on-demand software," is a software delivery model in which software and its associated data are hosted centrally and are typically accessed by users using a thin client, normally using a web browser over the Internet.SaaS has become a common...
- Utility computingUtility computingUtility computing is the packaging of computing resources, such as computation, storage and services, as a metered service similar to a traditional public utility...