Application Service Providers
Stephen Culver
Emerging Technologies
Professor Layton
July 3, 2003
Application Service Providers
Table of Contents
What is an application service provider and what do they do?… … … 3
Application and Infrastructure Services… … … … … … 3
Benefits of Application Service Providers… … … … … … 4
Drawback of Application Service Providers… … … … … 5
Technical concerns regarding ASPs… … … … … … 6
Choosing an Application Service Provider… … … … … … 8
Current state of the ASP industry & its future… … … … … 9
Conclusion… … … … … … … … … … 9
Webliography… … … … … … … … … 10
Introduction
Application hosting is a quickly growing industry as
more and more companies begin to outsource the design and implement of their
business management systems. This report will define what exactly application
service providers (ASPs) do, list and describe the categories of ASPs, discuss
the benefits as well as draw backs of ASPs, describe concerns that companies
have with regard to using ASPs, and the current state of ASPs and their.
What is an Application Service Provider (ASP) and
what do they do?
Application Service Providers are companies that host
applications on their systems that companies can access via VPN or WAN (Wide
Area Network) connections to manage various aspects of their business. ASPs buy
applications, install them on their servers, manage them, support them, and
provide access to these applications often for a fee.
Application and Infrastructure Services
Application Service Providers are classified into two
categories: application services and infrastructure services. ASPs that fall
into the application service category host applications for such things as
email, office productivity suites, intranets and extranets, as well as
applications for business departments such as Human Resources and Accounting.
ASPs that fall into the infrastructure services category host more robust
applications that are used for such things as customer service, inventory,
processing of orders placed online, and data storage among others.
Infrastructure is commonly referred to as “‘end-to-end’ applications because
they encompass a complete procedure, such as a manufacturing process” (Booth,
2001, Internet).
Benefits of Application Service Providers
Application Service Providers have become an
increasingly attractive option for companies that are looking to outsource
certain aspects of their business and cut costs. Companies can reduce costs by
having an ASP host and manage business applications rather than bear the costs
of developing such applications, hosting, and managing them on their own.
Companies will also be able to implement solutions provided by an ASP much
faster because these solutions are pre-developed and can be quickly customized.
Company systems will be free of storage hungry applications and network
bandwidth will not be adversely affected. 
Courtesy Ananta Corporation, Copyright © 2001.
ASPs provide other benefits such as improved
accessibility of applications. Companies that have offices in various locations
can be assured that their employees can access the necessary applications
wherever they are, as long as they have access to the Internet. ASPs, as stated
earlier, can benefit companies because the solutions they provide can be
implemented much faster than those that are developed in-house. In-house
applications typically take upwards of a year to develop and employ, thus
increasing the total cost of the solution. Corporate I.T. departments benefit
from not having to implement and manage complex enterprise applications and
being able to concentrate on the management of the corporate network and systems,
as well as working on ways to improve the way the company uses technology and
implement new technologies. 
Courtesy Ananta Corporation, Copyright © 2001.
Drawbacks of Application Service Providers
The benefits of ASPs outweigh the drawbacks, but the fact
remains that there are some drawbacks that need to be considered. The key
drawback is that companies simply cannot be sure whether an ASP that they
choose will be around next year or even next month. The ASP industry is
continuously consolidating and some of the smaller providers are either being
swallowed up by their larger rivals or are going out of business altogether.
Application availability has been a problem and continues today, but to a
lesser extent than in previous years. ASP utilization can also increase the
possibility of system failure because ASPs become a layer of complexity all by
themselves.
Technical
concerns regarding ASPs
Security is a major concern for Application Service
Providers. TriActive, Incorporated identifies five (5) security related
concerns: physical security of data, owership of data within the ASP’s Network
Operations Center (NOC), accessibility of the data at the NOC, security of the
Internet connection between the ASP and customer, and accessibility of the
customer’s network by the ASP.
Physical security of a customer’s data is extremely
important. Customer data is housed in storage equipment that is not located in
the customer’s data center. The storage equipment is located in the ASP’s NOC,
which has tightly controlled access. Companies should always make sure that an
ASP has a strict policy in place for authorizing access to customer data and
equipment. Emergency contingencies should also be in place should a fire or
some other disaster occur at the NOC. Customer data should be regularly backed
up and the backup copies should not be located on the same premises as the NOC.
Internet connection security is also a major concern. The
ASP and customer should jointly ensure that their systems are protected from
outside unauthorized access and potentially malicious activity. TriActive,
Inc., recommends that ASPs “deliver a solution that either enters through the
customer firewall or they should provide a custom VPN solution” (TriActive,
2003, Internet). TriActive goes on to state that VPNs are becoming the solution
of choice. VPNs offer a single method of accessing data from the ASP and
eliminate the need for the customer to make changes to their firewall in order
to accommodate multiple methods of accessing data by their employees.
Data security is without question extremely important.
Application Service Providers, under normal circumstances, should NOT have
access privileges to use customer data. The ASP stores the data, maintains the
storage equipment and applications, and makes routine backups. Personnel
responsible for carrying out the previous duties will have access to customer
data, but do not have authorization to review, manipulate, or in any way use
the data for any purpose. The customer retains ownership of the data in full.
Application Service Providers are implementing varying
forms of authentication to ensure that the security of customer data is not
breached. Shared Medical Services is an ASP that has implemented a system that
requires customers to use a token to login to the system. The token cycles
every 60 seconds and is backed up by a firewall that provides added protection
from unauthorized access. Shared Medical Services also offers dedicated servers
to customers who require even greater security. Dedicated servers are more
secure than shared servers because dedicated servers are used only be a single
organization.
Security should be the first priority for ASPs and their
customers when they begin discussing the terms of their service agreement. The
service agreement should take the form of a Service Level Agreement (SLA), the
Choosing an Application Service Provider
Michael Booth, director of global marketing and research
for CompTIA, provides the following guidelines to following when selecting an
ASP:
§
Inquire about
what methods of security the ASP provide to protect your data.
§
What
contingencies are in place for recovering data should a system failure occur?
§
At what intervals
will the ASP review performance, and will the customer have access to the performance
reviews?
§
What standards of
system uptime, availability, bandwidth, and redundancy does the provider have?
§
What procedures
are in place to record, report, and resolve technical issues?
§
What procedures
does the ASP follow to hire, train, and keep their professionals?
§
Is the ASP
financially sound, and how do they plan to attain and retain profitability in
the future?
§
How long will it
take for the ASP to get the application ready for service?
§
Will technical
support consultants be able to respond in a timely manner when problems arise?
§
Does the
negotiated Service Level Agreement (SLA) benefit the ASP and the customer?
§
Make sure the
§
Will the ASP
provide a risk-free trial to the customer, and if things do not work out allow
the customer to walk away?
Current state of the ASP industry & its future
The ASP industry has not grown to the extent that was
expected a few years ago. Companies have been more reluctant to use ASPs due to
concerns such as application availability, costs involved, and most
importantly, security. IStart, an ASP resource website based in New Zealand,
cites a survey from the Aberdeen Group that indicated that world-wide ASP sales
would increase “at a 52 per cent compound annual growth rate through to 2005
with spending increasing from $US3 billion to $US 16.1 billion over the next
four years” (iStart, 2003, Internet).
Conclusion
Application Service Providers provide application hosting
for applications that range from email, to Intranets/Extranets, productivity
suites, to applications for inventory management, human resources, and
marketing. ASPs host the applications on equipment in their Network Operations
Center (NOC) and the customer has access to the applications via the Web,
extranet, or VPN. Companies from a variety of industries are gradually
switching to ASPs to host enterprise applications because ASPs can provide a
solution that can be quickly setup and are cheaper than anything that the customer
could develop in-house. Technical concerns include physical security of
customer data, security of Internet connection between the ASP and customer,
and access to customer data. Overall, Application Service Providers can develop
solutions that can be implemented fairly quickly and that help companies reduce
costs. ASPs do have drawbacks, but it is widely believed that the benefits
outweigh the drawbacks.
Webliography
Booth, Michael. “The
ABCs of ASPs.” EbizQ
EbizQ.
TriActive, Inc. “Security
and Service Providers.” TriActive, Inc. Mar 2003.
TriActive, Inc.
Sweeney, Terry. “ASPs
Answer The Security Question.” Information Week.
Information Week.
Holohan, Meghan. “Application
Service Providers.” Computer World.
Computer World.
IStart Limited. “Application
Service Providers.” IStart. 2003.
IStart Limited.
<http://www.istart.co.nz/ASP-application-service-provider.htm>
ANANTA Corporation. “ASP
Benefits.” ANANTA Corporation. 2001.
ANANTA Corporation.
<http://www.ananta.ca/ASP%20-%20benefits.asp>