Application Service Provider (ASP) business models

Table of Content


Administrations have long embraced outsourcing as a manner to derive entree to new engineerings, procedures and best patterns. It can be the key to making it all ( McLoughlin 2007 ) . [ 1 ]

One of the well known outsourcing schemes is the acceptance of the Application Service Provider ( ASP ) concern theoretical account. ASPs are 3rd party entities that managed and administer different software-based solutions and services to a broad scope of clients. They provide these applications and services to administrations on a subscription footing. This packaged application is non sold or licensed to the administration and does non shack on the user’s system ( Turbanet Al, p. 476 ) . [ 2 ] The ASP theoretical account is highly appealing to concerns because it can drastically take down the cost of package and services (Application Service Provider ) .[ 3 ] This type of application hosting has several names in today’s calculating environment – including ‘applications on demand’ and package as a service ( Arif 2006 ) . [ 4 ] An illustration of an ASP is XyberNet. It was founded in 1979 and its growing can be attributed to its impressive client base and 15 ( 15 ) package merchandises. [ 5 ]

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XyberNet is an ASP which is marks a perpendicular market such as the insurance industry. XyberNet’s array of merchandises range from day-to-day disposal processing or concern intelligence solutions for today’s insurance companies. They host these merchandises in their informations centre and do these applications available to their clients through the Internet. They provide full and operational 24×7 client support services. The ASP provides a to the full managed environment where communications are invariably monitored, informations entree is to the full secured, and extended database direction services are provided. XyberNet besides provides information repositing services which include informations warehouse design, informations acquisition development, extraction, transmutation, and lading services, informations excavation, and concern intelligence consulting. XyberNet’s package merchandises process all premiums for recognition life, disablement, debt protection, and guarantee premiums for the fiscal insurance industry. For illustration, the company’s xyAdmin disposal system supports the underwriting, policy issue and charge maps. The xyCard recognition disposal system paths and measures recognition insurance premiums for recognition cards, debt protection, and go arounding lines of recognition in a real-time environment.

The Systems Development Life Cycle ( SDLC )

A system, whether it is a simple accounting system for a little concern or a web-based, multi-user application for a large administration has a lifecycle ( Beekman & A ; Quinn, p. 560 ) . [ 6 ] The systems development life rhythm ( SDLC ) is a logical attack to big scale systems development ( Lejk & A ; Deeks, p. 11 ) . [ 7 ] It is thought of as a traditional but highly comprehensive attack guaranting that all phases of the development of a system are thought about, well-planned, monitored, and completed. It normally involves the decomposition of the higher degrees of the system. The SDLC method has been around for some clip and it has garnered some unfavorable judgments over the old ages because of the drawn-out development procedure ( Norton, p. 487 ) . [ 8 ]

Systems development undertakings produce coveted consequences through squad attempts. Development squads or undertaking squads typically include users, system analysts, coders, proficient specializers, and employees from all functional countries and degrees of the administration who will interact with the system ( Turbanet Al,p.464 ) . There are at least seven phases or stages in the SDLC. Other theoretical accounts for the SDLC may incorporate more or fewer than eight phases. However, the flow of undertakings remains the same. Together, these stages cover the full “life” of an information system. In this stage, the administration identifies a demand which can be met by making a new information system or modifying bing 1s. This stage is supposed to assist contrivers derive a clear apprehension of current system and summarizing the findings to direction. In this stage, developers define the demands for new system, prepare systems requirement studies, evaluate options, and prepare proposals.

One of the most hard undertakings is to place the particular information demands that the system must fulfill. Information demands stipulate what information, how much information, for whom, when, and in what format. These can be done through different techniques such as interviews with users, document scrutinies, and direct observations ( Turbanet Al,p. 467 ).  In this stage, the undertaking squad tackles the “how” of the selected solution. The undertaking teams define the proficient design, set up controls, prepare design certification, and utilize different mold tools ( such as CASE tools ) to make paradigms and specify the informations lexicon.

In this stage, coders begin to develop the assorted parts of the system from the given design specifications into a existent working system. This means composing plan codifications from abrasion or doing the necessary alterations to any bing package. At this phase, one time the development has already started, a big portion of the development agenda is devoted to proving the system. In this stage, the new package is tested in an existent working environment and evaluated whether it meets the demands of terminal users and the company in general. The undertaking squad proctors assorted indices of system public presentation and validate whether the system is executing consequently. When there is a demand to do alterations, accommodations are made until the package merchandise produces the right sort of terminal consequences for specific users.  n this stage, the undertaking squad sets up the hardware and installs the package in the user environment. For commercially developed systems, this stage involves extended preparation and proficient user support to supplement the usage of the system for selling and gross revenues intents.

At this phase, the undertaking squad will go on to supply support, monitoring, and mending services throughout the life-time of the system or as the system continues to run for a certain period of clip. Once the system’s operations are stabilised, audits are performed during operation to measure the system’s capablenesss. Finally, clients and other terminal users may desire to suggest and integrate alterations and alterations in response to altering concern demands. The undertaking squad can execute these maps at this phase.

ASP Advantages over the SDLC Option

The ASP theoretical account has continually evolved and grown over clip because it offers a batch of important advantages over traditional systems development methods such as the SDLC. The SDLC attack is frequently seen as disused and at par with rising criterions because of the built-in costs and complexness.

The doctrine of outsourcing has been switching invariably as engineering evolves from clip to clip. For most change witting administrations, it is now clip to get ‘On-demand Software’ instead than put to a great extent and wait for their application systems to be ready. It may take a long clip for this to go on. The determination to outsource will non merely be based on a desire to cut down costs but will be built around a consideration of whether a piece of engineering can profit them in the long term (Application Service Provider) . [ 9 ]

The followers are some of the specific advantages of the ASP theoretical account over the in-house development of package:

  1. There will be individual entree to the database. The ASP provides all the integrating mechanisms for their client’s database systems and other application-related integrating concerns. In this instance, package integrating issues are eliminated from the client site. In-house development of applications over the old ages has unwittingly raised some integrating jobs because non all applications ( including bequest applications ) were carefully tailored for enterprise–wide ingestion. In-house applications were developed over clip and there is ever the possibility that informations may differ in format and construction. This makes it highly hard for different applications to hive away and entree informations from a individual database.
  2. Sellers can construct and number more on their application development art and experience every bit compared to the in-house staff. Subscribers should anticipate a high quality degree of services from ASPs because of their perceived IT and support competences. Administrations subscribing to an ASP can go forth all their IT concerns behind and let their staff to concentrate more on their nucleus competences and nucleus concern maps.
  3. There will be a important decrease of internal IT disbursement because administrations will merely travel for a more manageable monthly subscription fee. By outsourcing some or all of their IT operations to a hosting service supplier, an administration can guarantee that the IT section keeps working within its allotted budget while person else takes attention of the smooth tally of their different applications ( Arif 2006 ) . [ 10 ] This is particularly applicable to little and moderate-sized concerns. Since ASPs run multiple waiters for their hosted applications and services, economic systems of graduated table are gained because cost nest eggs are passed on to stop users. The issue of upgrading application systems has been virtually eliminated from the end-firm because these concerns now rest on the shoulders of ASPs.
  4. The ASP theoretical account can switch Internet bandwidth to the ASP who can supply it at a much lower cost. Bandwidth is expensive and since ASPs frequently rely on the Internet for presenting their application services to their clients, they are in the best place to do certain that velocity should be one of the hallmarks of their offerings.
  5. There will be guaranteed functionality and quality of IT-related services. A Service Level Agreement ( SLA ) allows both parties to anticipate a certain degree of service and compensation. It besides protects the involvements of both parties. When concerns contract the services of ASPs, they will be guaranteed with the highest quality of applications developed by extremely skilled developers. Clients can anticipate and stipulate full security services which must be met by the ASP.
  6. Compared to holding in-house support staff that work for merely eight to ten hours a twenty-four hours, ASPs can supply round the clock handiness of aid desk services ( 24×7 ) through different mediums such as electronic mail or by telephone.


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