Application Service Provider defined
An Application Service Provider, or ASP, belongs to a relatively new category of service providers that, as defined by the ASP Industry Consortium, "deploys, hosts and manages access to a packaged application to multiple parties from a centrally managed facility. The applications are delivered over networks on a subscription basis. This delivery model speeds implementation, minimizes the expenses and risks incurred across the application life cycle, and overcomes the chronic shortage of qualified technical personnel available in-house." (The ASP Industry Consortium site, http://www.aspindustry.org, is a good collection of information, including a glossary of terms. http://www.aspindustry.org/builder.asp?cname=glossary&cg=11&lvl=2.)

While this definition explains what an ASP does and touches on some of the benefits of using an ASP, not everyone would consider it the final word. It doesn't explain if the applications provided by ASPs were created by the ASP itself, or by another party. And the applications might be general programs that almost every business uses (accounting software, for example) or specialized applications suited to a narrow vertical industry. The ASP also might supply some or all of the related infrastructure, training, and support services necessary for complete implementation of one or more application.

Some ASPs provide their services through their own data centers, while others lease facilities. Some might deliver over a private network, but many deliver over the Internet. And ASPs may also provide services from other third-party providers (such as systems integrators and value-added resellers) besides themselves. Under this arrangement, ASPs act as the main point of contact, assuming responsibility for the services of the third-party providers with whom they work. Additionally, traditional software vendors such as Intuit, Peoplesoft and Oracle (among several others) have begun to "rent" many of their applications via subscription over the Internet, making them ASPs at least in this aspect of their businesses.

Obviously, the definition of an ASP varies, since not all ASPs provide the same level of service. But the following is a fairly typical list of services offered by an ASP:

• Application management
• User administration
• Network administration
• Hardware administration
• Application integration
• Support
• All other functions typically provided by a company's IT department.

ASP quick study
Organizations both large and small look to ASPs to minimize the overhead costs of running an IT department. For larger companies that have already deployed large-scale applications company-wide, an ASP might offer efficiency ­ the company is freed from frequent software updates and maintenance, and can concentrate on its core business. For smaller companies, hiring an ASP lets them reap the benefits of the latest technologies without taking on the expense and maintenance of owning applications or the networks needed to run them.

In fact, according to the ASP Industry Consortium, "many industry experts agree the most appropriate market for ASPs is small and mid-sized organizations." The FAQ on the Consortium's Web site says: "With the help of an ASP, small and mid-sized organizations can deploy enterprise applications that without an ASP would involve massive investments in software, deployment time and IT personnel. These businesses can then benefit from the efficiencies of integrated, enterprise applications that were previously not cost-effective to develop and use." http://www.aspindustry.org/builder.asp?cname=faqs&cg=9&lvl=2.

Regardless of your company's size, you will be searching for an ASP that provides the applications or services that have the most value for your company. This might mean finding a dependable provider for accounting or human resources software, so your highly skilled IT team can devote time to your home grown mission-critical applications. Or you might be seeking an ASP that gives your company a competitive edge ­ for example, your ASP might specialize in services with a vertical industry focus, or offer wireless technology integration or cross-application integration.

The following articles provide valuable information regarding the ASP marketplace and what to look for in an ASP:

• "An ASP for All Seasons," Information Week, July 30, 2001, http://www.informationweek.com/story/IWK20010727S0009

• "Sweating the Details," Network World Fusion, Jan. 22, 2001, http://www.nwfusion.com/research/2001/0122featside3.html

• "Getting Good Service," Network World Fusion, Jan. 22, 2001, http://www.nwfusion.com/research/2001/0122featside2.html