Application Service Provider (ASP)
An ASP (Application Service Provider) is a company that delivers applications - software - through the Internet and charges a monthly fee. Traditionally, software is sold. You physically receive a CD and you install it on your hard drive or your office's server. ASPs don't operate this way. They deliver software as a monthly service and use the Internet as the medium.
Here's an example: Many companies use QuickBooks or Peachtree as their accounting software. Today, there are ASPs that offer web-based accounting packages that businesses can subscribe to. So instead of using an application that runs on your own desktop, you could login via the Internet and use a web-based application to perform tasks online - entering bills, cutting checks, etc.
The benefits of a web-based application managed by an ASP:
- Your company is not responsible for upkeep of the service provided. You save money and eliminate the hassle that comes with support, maintenance and upgrades.
- It's web-based, so your organization will have access to the software from anywhere.
- The risk of a bad technology investment is drastically reduced.
- You generally guaranteed better application availability, better data security, more frequent data backups, disaster recovery and basic, centralized technical support.
- If you're a small business, you'll be able to rent software which might otherwise be impractical or unaffordable.
- You'll have more time, money and energy to focus on business issues rather than IT concerns.
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Dedicated Software Hosting
Just like ASP, software hosting will generally give you all the benefits listed above. However, there is a difference. When a company decides to hire an outside provider to manage and run a piece of software that could have been installed and run on-site, it's referred to as software hosting. "Hosting" means that the software has been loaded on the provider's equipment and is running from their physical location as opposed to the client's.
Here's an example: Many organizations use Exchange Server as their email management software. Today, there are companies that will host Exchange Server as a service. You don't have to purchase the software, manage the server, setup new users, etc. The software runs at the provider's location. They manage everything and users connect via the Internet or private connection. You pay a fixed monthly fee.
Software Hosting vs. ASP
Software hosting differs from traditional ASPs because the applications are different. Similar to a software vendor, an ASP will generally write and maintain its own proprietary applications such as an accounting application, a human resources program, etc. No other company can sell that application, nor would you be able to purchase the software to run on-site. Software hosting generally applies to software that can be installed on-site e.g. Microsoft applications, Siebel, etc.