Application Service Providers

Computerworld - Organizations use computers to run applications that carry out specific business functions. Typically, organizations spend a serious amount of money to buy software. (Technically, of course, they don't actually buy programs but rather licenses to use them.) Whether it's a PC application that an information technology department has to supply to thousands of users, or a mainframe or server-based program of which it only needs a few copies, the overall cost is still very high - sometimes cripplingly high.

And that's just the beginning. Applications are typically upgraded every 12 to 24 months, and upgrades cost money, regardless of whether software is purchased anew or provided under an annual subscription or maintenance fee.

In the face of high software costs and as an offshoot of the development of two-tier client/ server computing, a new industry has emerged with startling speed: application service providers (ASP).

What Are They?

ASPs deliver a contractual service in which they deploy, host, manage and provide access to an application in a facility located somewhere other than the customer's site, says Amy Mizoras, an ASP and application group analyst at International Data Corp. (IDC) in Framingham, Mass.

In essence, the ASP buys and maintains the software (or develops it for the client on a custom basis). It also buys the server hardware and the network and then rents it to the client, typically for a fixed period of time at a specified price. This arrangement, somewhat akin to leasing a car, means the client doesn't have to bear the up-front capital costs of the hardware and software but instead can pay for their use more gradually.

The ASP transmits the application to the user through a dedicated T1, Internet or intranet connection. Ideally, says Mizoras, a service provider would like to serve applications over the Internet, but that isn't always possible for some customers.

Service providers host applications on back-end application/data servers. The back-end servers are usually Unix or Windows NT servers that house various programs.

Such providers often use a thin client to provide access to applications that can run mostly on a server, or they use a server-centric approach to provide access to applications that will reside mostly on a user's desktop.

Service providers also use a front end, which provides security, e-mail, Internet access, directions and other services but mostly acts as a connection to the back-end server.

There are three categories of applications that ASPs provide to users, according to research conducted by IDC.

Enterprise applications include those for customer relationship management, enterprise resource planning (ERP), e-commerce, data warehousing and programs to support vertical industries.