Definition: An Application Service Provider (ASP) is a business that offers software services to customers, using computer networks and the Internet as the mechanism to deliver and manage the service. Among the most well-known Application Service Providers are Clickability, Salesforce.com and WebEx.

The goal of an ASP business is to reduce the cost of software distribution and maintenance. Using a client/server model (often Web-based), network software can be installed in a centrally-controlled place and hosted - accessed by the customers over remote links. This method to providing software solutions is sometimes called the software as a service (SaaS) approach.

Common ASP Applications

These classes of network applications are often hosted by ASPs:

human resources (accounting and payroll)

sales (sales force automation)

enterprise resource planning (ERP)

office and workgroup productivity tools

ASPs have had success selling these types of applications on a subscription-based model. Smaller businesses cannot afford to pay large sums of money to acquire a full-featured ERP tool, for example, but they can very possibly afford to rent these applications on a monthly or yearly basis. In this way, Application Service Providers function much like automobile leasing services: ASPs allow businesses to use application software for a known up-front cost using a periodic payment schedule.

Networking Issues for Application Service Providers

A successful ASP must have robust technology for:

network security - protecting the business data flowing through the network

network monitoring and troubleshooting - ensuring the hosted applications remaining running. Often, ASPs will be under contract to meet network uptime and performance goals.