Today, the term ASP is probably overused, but it is primarily used to refer to a service provider that hosts applications for their customers at the ASP's data center and provides access to those applications via a network. The hosting services can range from an outsourcing model to that of a shared environment with hosted applications. In an outsourcing model, the ASP dedicates hardware and resources to each individual customer. In a shared common environment, the ASP hosts applications for many customers, each in their own secure, private environment. A shared environment reduces the total cost of ownership for the ASP and helps the ASP offer profitable services.

In the hosted application model, the ASP selects a set of solutions that they offer to potential customers. This model is about applications, or solutions, which the potential customers need; it is not about the infrastructure. The hosted applications business is geared to allow the small office, even the home office, to get a hosted application up and running quickly, instead of being forced to support the application in-house. The ASP service model is helping customers by reducing their costs, eliminating the need to hire the IT staff, and enabling them to quickly deploy applications that would have taken months to deploy in-house.

Delivering the Value of Software as a Service

Today, organizations both large and small are bypassing complex IT issues by either partnering with an Application Service Provider (ASP) or acquiring software directly from vendors via the web. They're finding that the software as a service approach is easier, more cost-effective and allows them to focus on their core business.