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Application service provider

Application service provider definition

An application service provider (ASP) is a company that delivers software services over the internet. It removes the need for users to install or manage the software on their own devices.

See also: application server, application hosting

History of application service providers

  • Before the 1990s. Most software applications were hosted locally on individual computers or servers. Businesses had to make significant upfront investments in hardware and software, leading to high IT costs.
  • Mid to late 1990s. The internet offered a new way for businesses to access software: remotely, via web browsers. ASPs emerged as companies that hosted software applications on their own servers and rented access to businesses. This eliminated the need for individual companies to buy, install, and maintain the software themselves.
  • Late 1990s to early 2000s. While the ASP model promised convenience, it faced challenges. Internet speeds were often inadequate, leading to performance issues. There were concerns about data security depending on third-party servers. Many ASPs struggled with business models, leading to a shakeout where only the strongest or most innovative survived.
  • 2000s to 2010s. Internet infrastructure improved dramatically, and broadband became more widely available. Businesses got more comfortable with outsourcing IT needs and storing data off-site. ASPs evolved and matured, with many specializing in niches like CRM, ERP, or e-commerce. Software as a service (SaaS) emerged, which is a lot like the ASP model but with more focus on web-native applications, multi-tenancy, and scalability.
  • Late 2010s and onward. With cloud platforms like AWS, Azure, and Google Cloud becoming popular, the lines between ASPs and cloud services began to blur. Modern software services often use cloud infrastructure for better performance and flexibility.

Application service provider use cases

  • Business applications: customer relationship management (CRM), human resources management (HRM), enterprise resource planning (ERP) systems
  • Communication tools: email, video conferencing, and other collaboration tools
  • E-commerce platforms: online storefronts, shopping carts, and payment processing
  • Learning management systems (LMS): online training and courses
  • Healthcare: medical record systems, appointment scheduling, and telehealth services
  • Financial services: online banking, wealth management platforms, and other financial tools
  • Content management systems (CMS): websites and blogs