Applications as a service refers to the delivery of computer software applications as a service via the Internet. This type of software is also referred to as SaaS (Software as a Service), software on demand and on-demand software. On-demand software has been gaining an increasing share of the software market, due to the cost savings and efficiency gains it can offer to organizations, regardless of their size. On-demand software provides financial benefits to organizations, by eliminating the expense of individual user licenses which normally accompany traditional on-premise software delivery.

Applications as a service can also provide software to enterprise users more efficiently, because it can be distributed and maintained for all users at a single point – in the public cloud (Internet). The efficiency gains are facilitated through the use of various automation tools that can be implemented on the cloud services platform. The automation of functions such as: user provisioning, user account management, user subscription management and application life cycle management make on-demand software a highly efficient and cost effective way to deliver software to enterprise users.

Companies that provide applications as a service (on-demand software) are known as ASPs or application service providers. ASPs are divided into 4 major categories, as follows:

  • Specialist or Functional ASPs – who provide a single application (e.g. a payroll solution)
  • Vertical Market ASPs – who provide a suite of software applications for a particular market (e.g. software for the food service industry)
  • Enterprise ASPs – who provide integrated applications for management of multiple functional areas within a single organization.
  • Local ASPs – who provide a variety of applications, primarily to small businesses, within a specific geographical area

ASPs own the software that they deliver to consumers, as well as the hardware which supports the software. ASPs bill on a per use basis, on a monthly basis or on an annual basis – making software on demand a very affordable option for many organizations. On-demand software provides small and medium size businesses with a method of accessing software that may have previously been financially out of reach, due to software licensing costs and additional hardware costs. The SaaS, on-demand or applications as a service model of software delivery offers a long list of benefits to subscribers, including: an elimination of many software integration issues, improved reliability of applications, increased availability of applications, increased security of applications, access to dedicated experts for each on-demand software service subscribed to, an overall reduction in IT operational costs and guaranteed service levels from ASPs.

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