Application service provider

An application service provider is a business providing application software generally through the Web. ASPs that specialize in a particular application may be referred to as providing software as a service.

The ASP model

The application software resides on the vendor's system and is accessed by users through a communication protocol. Alternatively, the vendor may provide special purpose client software. Client software may interface with these systems through an application programming interface.
ASP characteristics include:

ASP hosts the application
ASP owns, operates and maintains the servers that support the application
ASP delivers the application to customers via the Internet or a thin client
ASP may bill on a per-use basis, a monthly/annual fee, or a per-labor hour basis

The advantages to this approach include:

Application costs are scaled over multiple customers
ASP may provide more application experience than the customer's staff
ASP may provide application customization for the customer
Application's version is likely to be kept up to date
Experts manage the application for performance
Experts research the application for new features

The disadvantages include:

The customer must rely on the ASP for a critical business function, including security and performance
The customer may have to accept the application as provided
The customer may have to adapt to possible application changes
Integration with other applications may be problematic