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:
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Enterprise ASPs — deliver high-end business applications.
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Local/Regional ASPs — supply wide variety of application services for smaller businesses in a local area.
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Specialist ASPs — provide applications for a specific need, such as Web site services or human resources.
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Vertical Market ASPs — provide support to a specific industry, such as health care.
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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
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Single-tenant approach
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Customized solution for each user
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User has authority on the solution hosted by the vendor and can demand the type of service required.
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User data could be hosted at any jurisdiction per user’s requirement
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SLA is unique to user
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Cost is based on user’s unique needs
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Monthly subscription on an as-used basis
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Borrowed (third party) software used
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User has the luxury to pull out of the ASP, buy the software from a third party retailer and host it somewhere else
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Once signed up, the vendor may take long time to customize
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Each user requires customized training and orientation which makes its usability cumbersome
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Solution need not be internet based
SaaS
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Multi-tenant approach
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Same features and functionality to all users
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Solution is centrally managed, maintained and supported by provider. User is at the mercy of the provider and cannot demand any individual changes
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User data is hosted at a jurisdiction that the provider is comfortable
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Service Level Agreements (SLA) common to all
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Comparatively minimized cost than ASP
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Monthly subscription on an as-used basis
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Custom built software that is not available anywhere else is used
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User is unable to buy the software from a third party retailer and is limited to the SaaS vendor always
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Once signed up, the service is available immediately
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All users go through the same training and orientation making it easy to use
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Solution is always internet based.
