Information Technology 6.5. Application Service Providers (ASP)

An Application Service Provider is a company that provides on-demand computer-based services to other companies over the Internet, usually software, typically for a usage fee. Because many small- and medium-sized businesses require specialized software but lack the resources to purchase or develop that software, ASPs provide a cost-effective way to integrate expensive software into even the most limited budgets. Most of the online software packages we discuss in Chapter 3 are technically ASPs―we find it easier to think of specialized ASPs as software rather than as an IT service.

ASPs fall into five categories:

  • Specialized―specialized ASPs provide one service, such as project management or payment gateways.
  • Vertical market―a vertical market ASP packages an entire set of services for an entire business type, like a law practice.
  • Enterprise―an enterprise ASP provides a complete range of software and computer services for a business―from small to super-large―in one big package.
  • Volume―a volume ASP provides the lowest-cost services possible by delivering these computer services over the Web (almost all the ASPs discussed in Chapter 3 fall into this category).
  • Local―a local ASP provides services for small businesses within a particular location.

As a small business start-up, you will focus mainly on volume ASP providers, such as those discussed in Chapter 3, to minimize your software costs. However, your business may require specialized software or even an integrated software package designed for your particular industry, so you’ll be spending time evaluating specialized and vertical market ASPs.

You will probably not need much expertise to find your way within the world of ASPs; in fact, you may already be an avid consumer of ASPs without really knowing it. However, using ASPs strategically will involve getting to know the industry more thoroughly.

  • Competitive advantage―one of your first concerns is how your software makes you more competitive. If you’re a virtual assistant, for instance, you’ll need Microsoft Word, but you’ll want additional plug-in software or ASP software that allows you to create feature-rich PDFs that you normally cannot produce using the Word PDF distiller. That gives you a competitive advantage, in terms of time and breadth of services offered, over other virtual assistants. Competitive advantage is often the number one consideration for considering application services.
  • Capability―one of the central reasons companies pursue a software service rather than installed software is custom capabilities; installed software is either made for everyone (and, thus, for no-one) or highly specialized and blisteringly expensive. ASPs often provide software that meets more of your needs at a low cost. For instance, Infowit ( provides project management software services specifically customized for creative firms.
  • Cost―your second consideration are cost-savings, in particular, how you can save money by purchasing application services rather than application licenses. Many highly specialized applications are too expensive to deploy and application services can give you access to these applications.
  • Security―the final consideration is security; often application services have levels of security and redundancy that you cannot afford on a shoestring budget. Why purchase a project management application service rather than a project management application? Because you’re less likely to lose your valuable data. In essence, by purchasing application services, you’re also purchasing (most of the time) a highly sophisticated, well-staffed IT back office. They take care of computers, back-up, security, network, and so forth for you, at least within the limits of the application service.

Negotiating the world of application services sometimes feels like swimming in alphabet soup. “If you’re looking for an RIA SaaS model, this ASP provides the most cost-effective solution.” And do you want fries with that? So before taking the plunge, it helps to be familiar with the ABCs of ASPs:

  • ASP―Application Services Provider: any company that provides software or applications as a service rather than installed software. Services are paid by subscription or on a pay-as-you-need basis.
  • SaaS―Software as Services: software offered on a “service” model rather than installed on your computer. The software resides on a server that you access over the Internet; you simply access the software as needed. Software as Services, when not structured on a volume model, tends to be highly customizable for individual enterprises, making it more suitable to large companies.
  • Ondemand Software―subscription software that you download when you need it; the software you download today may be a different version of the software you downloaded yesterday. This is often the ASP model that small- and medium-sized businesses choose for cost reasons.
  • RIA―Rich Internet Application: an application service delivered over the Web that has the feature-richness and interface of installed software, like Google’s Gmail.
  • SOA―Service-Oriented Architecture: a network and/or server architecture that makes services available to users.

Individual ASP solutions are discussed in Chapter 3 along with installed software solutions.

6.5.1. ASPStreet.Com is a highly-specialized portal, news source, and marketplace for ASPs and ASP clients. Designed primarily for an IT audience, ASPStreet offers breaking news on the subject, best practices, opinions, an RFP marketplace for ASPs and businesses seeking to hire them, and a directory of application services providers―almost 12,000 at this book’s publication date.

The online RFP marketplace allows you to post a Request For Proposal (RFP) and evaluate solutions to your business problem from ASP providers. Unlike other RFP marketplaces, ASPStreet does not have feedback or escrow services―it is simply a mechanism for transmitting RFPs and proposals between buyers and sellers.

If you are very seriously considering ASP solutions, then the ASPStreet directory should be one of the first resources you consult. The directory enables you to search by software specialty―it will be your first introduction to the ASP resources you may need.

6.5.2. ASPNews.Com

The Web site is the Web’s premier aggregator of information about the Application Service Provider (ASP) and Web services industry. Primarily designed for IT professionals, the site offers news, analysis, trend-spotting, strategies, and a searchable directory of ASP vendors and products.

Again, if you’re leaning towards ASP solutions near the outset, you should enthusiastically bookmark the ASPNews directory. Listing over 1,900 companies and 250 products, the searchable directory is a quick and easy overview of the ASP solutions world. Product categories include:

  • Customer Relationship Management
  • Financials
  • Information management
  • E-business
  • Human resources
  • Enterprise Resource Planning
  • Manufacturing
  • Desktop applications

6.5.3. All Business: Application Service Providers

AllBusiness is a Web-based business magazine providing news, trends, articles, and case studies for growing businesses. They offer a particularly rich set of articles on the strategies and tactics of using ASP solutions in their “Application Service Providers” articles section. Many of these articles are “how-to” articles for purchasing particular ASP services.

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