What is an Application Service Provider and how is an ASP different from SaaS model?

An Application Service Provider is a third-party entity that manages and distributes software-based services and solutions to customers across a wide area network from a central data center.

In essence, ASPs are a way for companies to outsource some or almost all aspects of their information technology needs. They may be commercial ventures that cater to customers, or not-for-profit or government organizations, providing service and support to end users.

ASPs are broken down into five subcategories:

• Enterprise ASPs — deliver high-end business applications.
• Local/Regional ASPs — supply wide variety of application services for smaller businesses in a local area.
• Specialist ASPs — provide applications for a specific need, such as Web site services or human resources.
• Vertical Market ASPs — provide support to a specific industry, such as health care.
• Volume Business ASPs — supply general small/medium-sized businesses with prepackaged application services in volume.

The differences between ASP and SaaS models are as follows:

ASP

• Single-tenant approach
• Customized solution for each user
• User has authority on the solution hosted by the vendor and can demand the type of service required.
• User data could be hosted at any jurisdiction per user’s requirement
• SLA is unique to user
• Cost is based on user’s unique needs
• Monthly subscription on an as-used basis
• Borrowed (third party) software used
• User has the luxury to pull out of the ASP, buy the software from a third party retailer and host it somewhere else
• Once signed up, the vendor may take long time to customize
• Each user requires customized training and orientation which makes its usability cumbersome
• Solution need not be internet based

SaaS

• Multi-tenant approach
• Same features and functionality to all users
• Solution is centrally managed, maintained and supported by provider. User is at the mercy of the provider and cannot demand any individual changes
• User data is hosted at a jurisdiction that the provider is comfortable
• Service Level Agreements (SLA) common to all
• Comparatively minimized cost than ASP
• Monthly subscription on an as-used basis
• Custom built software that is not available anywhere else is used
• User is unable to buy the software from a third party retailer and is limited to the SaaS vendor always
• Once signed up, the service is available immediately
• All users go through the same training and orientation making it easy to use
• Solution is always internet based.