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.