ASP basics

What is an application service provider (ASP)? According to the ASP Industry Consortium (, a trade organization that represents ASPs, "Application service providers deliver and manage applications and computer services from remote data centers to multiple users via the internet or a private network.

By Jack Smith, Senior Editor, Plant Engineering Magazine October 1, 2001

Sections: Types of ASPs CMMS/EAM E-procurement Project management ERP Selecting an ASP

Sidebars: Glossary of ASP terminology

What is an application service provider (ASP)? According to the ASP Industry Consortium (, a trade organization that represents ASPs, “Application service providers deliver and manage applications and computer services from remote data centers to multiple users via the internet or a private network. Obtaining these applications from an outside supplier is a cost-effective solution to the demands of systems ownership: up-front capital expenses, implementation challenges, and a continuing need for maintenance, upgrades, and customization.”

A couple of examples immediately come to mind. Leasing the use of software from a provider is like leasing a car. You get the benefits of ownership without some of the problems that owning can bring. The ASP model is very much like the timesharing days when the data center hosted applications and each user paid for a slice of the computer time to use them. These were primarily financial and business applications. Much has changed. But the more things change, the more they stay the same.

ASPs give customers a viable option to obtaining and implementing complex systems themselves. “In some cases,” says the ASP Industry Consortium, “ASPs even provide customers with a comprehensive alternative to building and managing internal information technology operations. ASP customers also are able to control more precisely the total cost of technology ownership through scheduled payment schemes. And with data processing performed off-site by a third party, organizations can focus on their areas of core expertise.”

Using an ASP, small and midsized plants can make use of applications that, without an ASP, would involve massive investments in software, deployment time, and IT personnel. Plants can benefit from the efficiencies of integrated enterprise applications that were previously not cost effective to develop and use.

The role of an ASP is to make the management of information technology as transparent and reliable as possible. Plants who turn to ASPs often find better application reliability and availability than they experienced from their internal IT departments. Taking care of these information systems for other companies is the ASP’s primary business. The ASP has the staff, expertise, and equipment to maintain and sustain many applications and services.

Types of ASPs

Several types of ASPs are emerging. Pure-play ASPs license software from a number of vendors. They provide an integrated suite of off-the-shelf applications. Typically these applications can be deployed quickly and inexpensively.

Best-of-breed ASPs host, maintain, and distribute their products over the internet as yet another distribution channel. Typically, the hosted solutions are packaged. However, software providers may customize their products to fit individual needs.

Another emerging ASP model is the convergence of ASPs and electronic trading exchanges and/or marketplaces. Both pure-play and web-enabled software providers are exploring partnerships with these marketplaces and exchanges in order to offer services beyond the buy/sell model.

Some software providers actually develop applications with ASP delivery in mind. CMMS/EAM, e-procurement, project management, and ERP solution providers fall into this category.


CMMS software has been available for many years as plant-resident programs. However, some popular programs for helping plant engineers maintain their plants and manage their assets are moving to the ASP model. Typical CMMS/EAM programs available as ASP solutions have some of the following features that enable you to:

Organize and track inventory

Manage equipment costs

Track equipment history

Schedule preventive maintenance tasks

Maintain confidential labor records

Allocate resources

Generate work orders

Requisition and purchase parts

Project equipment failure

Assist in root cause failure analysis

Export work orders

Help investigate equipment downtime

Identify hot maintenance spots in the facility

Provide justification for additional resources

Produce precise plant-level reports.

Many ASP solutions for CMMS/EAM are available for both Oracle and Microsoft SQL Server databases. Some have open system architectures, which enable them to share information and functionally integrate with other Microsoft Windows-based software packages.


The promise of e-procurement involves web-based purchasing. However, the concept goes beyond using the internet to order maintenance and repair parts. To be effective, a partnership, alliance, or some other positive relationship must be forged between the supplier and the plant. Some call these relationships supply chain management (SCM). SCM is an approach in which business partners agree to work closely together to bring greater value to the plant for the least possible overall supply cost. This includes order generation, order taking, and order fulfillment/distribution of products, services, or information.

ASPs can free plants to focus on key issues rather than application maintenance and ballooning IT costs. Instead of client/server applications, ASPs are web-based and require only an internet browser for access.

Project management

Another high-demand software application for plants is project management. In the past, plant engineers would typically use off-the- shelf project management software. Now, even project management is available in the ASP model. When embarking on a large plant project, the organization and management of the project team can present as many challenges as the design and construction of the project. Some ASPs are now offering web-based document and business process management tools. Users interact through a variety of document, file, schedule, and communication management tools using an internet browser. These features, combined with comprehensive audit trail and progress reporting tools, provide a complete, end-to-end solution for the design and deployment of complex projects.


Enterprise Resource Planning (ERP) is not new. Typically, ERP software enables plants to improve their efficiency by applying technology. The concept involves providing a common software platform that facilitates everything within a manufacturing business from order entry to billing. This includes planning, engineering, manufacturing, bill-of-material (BOM) generation and management, inventory, records, scheduling, report generation, and more.

Some ASPs offer web-based systems that include engineer-to-order, assemble-to-order, make-to-order, make-to-stock, and mixed mode manufacturing models. They allow plants to automate business processes, from quoting and estimating to sales order entry, procurement, job/work orders, shop floor routing, shipping and receiving, general ledger, and payroll. Typical offerings include configurable reports, Windows-based platforms, and user-friendly operator interfaces.

Selecting an ASP

If you are interested in implementing an ASP, you should do your homework. You should determine what applications you want to rent and which qualities of the application and/or ASP are important to you. Issues to inquire about include reliability, availability, security, management, and customer service. Determine what features are most important to you and choose your ASP based on who has the strongest offering of what you need.

Glossary of ASP terminology

The following is a list of ASP terms that are applicable to industrial plants.

Application logic— The computational aspects of an application, including a list of instructions that tells a software application how to operate.

Application service provider (ASP)— An ASP deploys, hosts, and manages access to a packaged application to multiple parties from a centrally managed facility. The applications are delivered over networks on a subscription basis. This delivery model speeds implementation, minimizes the expenses and risks incurred across the application life cycle, and overcomes the chronic shortage of qualified technical personnel available inhouse.

Application maintenance outsourcing provider— These providers manage a proprietary or packaged application from either the customer’s or the provider’s site.

Availability— The portion of time that a system can be used for productive work, expressed as a percentage.

Backbone— A centralized high-speed network that interconnects smaller, independent networks.

Bandwidth— The number of bits of information that can move through a communications medium in a given amount of time; the capacity of a telecommunications circuit/network to carry voice, data, and video information. Typically measured in Kbps and Mbps. Bandwidth from public networks is typically available to business and residential end users in increments from 56 Kbps to T-3.

Business-critical applications— The vital software needed to run a business, whether custom written or commercially packaged, such as accounting/finance, CMMS/EAM, ERP, manufacturing, human resources, and sales databases.

Capacity— The ability for a network to provide sufficient transmitting capabilities among its available transmission media, and respond to customer demand for communications transport, especially at peak times.

Client/device— Hardware that retrieves information from a server.

Clustering— Group of independent systems working together as a single system. Clustering technology allows groups of servers to access a single disk array containing applications and data.

Data mart— A subset of a data warehouse, for use by a single department or function.

Data warehouse— A database containing copious amounts of information, organized to aid decision-making in an organization. Data warehouses receive batch updates, and are configured for fast online queries to produce succinct summaries of data.

Dedicated line— A point-to-point, hard wire connection between two service locations.

Demarcation line— The point at which the local operating company’s responsibility for the local loop ends. Beyond the demarcation point (also known as the network interface), the customer is responsible for installing and maintaining all equipment and wiring.

Electronic data interchange (EDI)— The electronic communication of the business transactions (orders, confirmations, invoices, etc.) of organizations with differing platforms. Third parties provide EDI services that enable the connection of organizations with incompatible equipment.

Enterprise relationship management (ERM)— Solutions that enable the enterprise to share comprehensive, up-to-date customer, product, competitor, and market information; for the end goals of long-term customer satisfaction, increased revenues, and higher profitability.

Enterprise resource planning (ERP)— An information system or process integrating all manufacturing and related applications for an entire enterprise. ERP systems permit organizations to manage resources across the enterprise and completely integrate manufacturing systems.

Ethernet— A local area network (LAN) used to connect computers, printers, workstations, and other devices within the same building. Ethernet operates over twisted wire and coaxial cable.

Fat client— A computer that includes an operating system, RAM, ROM, a powerful processor and a wide range of installed applications that can execute either on the desktop or on the server to which it is connected. Fat clients can operate in a server-based computing environment or in a stand-alone fashion.

Hosted outsourcing— Complete outsourcing of a company’s information technology applications and associated hardware systems to an ASP.

Integrated services digital network (ISDN)— An information transfer standard for transmitting digital voice and data over telephone lines at speeds up to 128 Kbps.

Internet service provider (ISP)— Company that provides access for users and businesses to the internet.

Independent software vendor (ISV)— Generally a firm that develops software applications that is not a part of a computer systems manufacturer.

Leased line— A telecommunications line dedicated to a particular customer along predetermined routers.

Local loop— The wires that connect an individual subscriber’s telephone or data connection to the telephone company central office or other local terminating point.

Modem— A device for converting digital (data) signals to analog, and vice versa, for data transmission over an analog telephone line.

Multiplexing— The combining of multiple data channels onto a single transmission medium. Sharing a circuit normally dedicated to a single user between multiple users.

Multiuser— The ability for multiple concurrent users to log on and run applications from a single server.

Network computer (NC)— A “thin” client hardware device that executes applications locally by downloading them from the network. NCs adhere to a specification jointly developed by Sun, IBM, Oracle, Apple, and Netscape. They typically run Java applets within a Java browser, or Java applications within the Java Virtual Machine.

Online analytical processing (OLAP)— Software that enables decision support via rapid queries to large databases storing corporate data in multidimensional hierarchies and views.

Outsourcing — The transfer of components or large segments of an organization’s internal IT infrastructure, staff, processes, or applications to an external resource such as an ASP.

Packaged software application — A computer program developed for sale to consumers or businesses, generally designed to appeal to more than a single customer. While some tailoring of the program may be possible, it is not intended to be custom-designed for each user or organization.

Performance — A major factor in determining the overall productivity of a system, performance is primarily tied to availability, throughput, and response time.

Remote access — The hookup of a remote computing device via communications lines such as ordinary phone lines or wide area networks to access distant network applications and information.

Reseller/VAR — An intermediary between software and hardware producers and end users. Resellers frequently “add value” (thus value-added reseller, or VAR) by performing consulting, system integration, and product enhancement.

Router — A communications device between networks that determines the best path between them for optimal performance. Routers are used in complex networks of networks such as enterprise-wide networks and the internet.

Scalability — The ability to expand the number of users or increase the capabilities of a computing solution without making major changes to the systems or application software.

Server — The computer on a local area network that often acts as a data and application repository and that controls an application’s access to workstations, printers and other parts of the network.

Server-based computing — A server-based approach to delivering business-critical applications to end-user devices, whereby an application’s logic executes on the server and only the user interface is transmitted across a network to the client. Its benefits include single-point management, universal application access, bandwidth-independent performance, and improved security for business applications.

Single-point control — One of the benefits of the ASP model, single-point control helps reduce the total cost of application ownership by enabling widely used applications and data to be deployed, managed, and supported at one location. Single-point control enables application installations, updates, and additions to be made once, on the server, which are then instantly available to users anywhere.

Thin client — A low-cost computing device that accesses applications and/or data from a central server over a network. Categories of thin clients include Windows-based terminals (WBT, which comprise the largest segment), X-terminals, and network computers (NC).

Total cost of ownership (TCO) — Model that helps IT professionals understand and manage the budgeted (direct) and unbudgeted (indirect) costs incurred for acquiring, maintaining and using an application or a computing system. TCO normally includes training, upgrades, and administration as well as the purchase price. Lowering TCO through single-point control is a key benefit of server-based computing.

Transmission control protocol/internet protocol (TCP/IP) — A suite of network protocols that allow computers with different architectures and operating system software to communicate with other computers on the internet.

User interface — The part of an application that the end user sees on the screen and works with to operate the application, such as menus, forms, and “buttons.”

Virtual private network (VPN) — A secure, encrypted private internet connection.

Web hosting — Placing a consumer’s or organization’s web page or web site on a server that can be accessed via the internet.

Wide area network (WAN) — Local area networks linked together across a large geographic area.

Windows-based terminal – Thin clients with the lowest cost of ownership, as there are no local applications running on the device. Standards are based on Microsoft’s WBT specification developed in conjunction with Wyse Technology, NCD, and other thin client companies.

—Source: ASP Industry Consortium — used with permission